From more than 200 sharply reduced to less than 100 power battery companies to enter the "elimination phase" stage

For leading companies such as the Ningde era, this year may be a good time for expansion, but for some weak power battery companies, this year means the beginning of the winter.

"The power battery enterprises that have entered the catalogue of the Ministry of Industry and Information Technology have dropped from more than 200 last year to more than 90." Former Guoxuan High-Tech President, National Science and Technology Achievements Transformation Fund, New Energy Vehicle Venture Capital Sub-Fund Executive Partner and President Fang Jianhua introduced. Although the reduction in the number is already a big adjustment in the outside world, in Fang Jianhua's view, this is only the beginning of the adjustment, and the next elimination will be faster.

By 2020, there will be only about 20 power battery companies left, and more than 90% of power battery companies will be eliminated. This is a judgment that Fang Jianhua has repeatedly mentioned in the past two years.

Two squeezed profits fell

The decline in profits, this is one of the key words of the power lithium battery industry this year, the power battery listed company recently released the first three quarters of 2017 financial report also showed this.

From the battery raw materials to the power battery, the layout of new energy vehicles, and the recent increase in the stock price of polyfluoride (SZ.002407) announced on October 23, the total revenue of the first three quarters reached 2.48 billion yuan, an increase of 17.4%; The net profit attributable to shareholders of listed companies was 208 million yuan, a year-on-year decrease of 45.02%. On October 26, Guoxuan Hi-Tech released a report that realized operating income from January to September this year was 3.755 billion yuan, up 9.7% year-on-year; net profit attributable to shareholders of listed companies was 640 million yuan, down 13.27% year-on-year.

On October 30, BYD announced the financial report that from January to September this year, BYD's total operating income was 73.933 billion yuan, an increase of 1.56% year-on-year. The net profit attributable to shareholders of listed companies was 2.791 billion yuan, down 23.82% year-on-year.

On October 30, China Aviation Lithium Power's parent company Chengfei Integration (002190) released the 2017 third quarterly report. The company realized operating income of 1.01 billion yuan from January to September 2017, down 21.19% year-on-year; net profit attributable to shareholders of listed companies was 608,400. Yuan, down 99.32% year-on-year.

For the reasons of the decline in profits, the above listed companies gave different explanations in the financial report, such as rising raw material prices and adjustment of new energy policies. However, one reason why the financial report has not been highlighted but has been repeatedly mentioned by the lithium industry is that the price has fallen.

The prospectus of the Ningde era showed that the unit price of the company's power battery system showed a rapid decline, with the declines of 2015-2017H1 being 21.1%, 9.6% and 26.2% respectively.

"The price of mainstream power battery companies this year has generally dropped by 20%-30% compared with last year, and the price cut will be the main theme of the power battery industry in the future." A person in charge of the name of the power battery company said.

This year, the power battery industry is more obviously squeezed by the upstream and downstream. On the one hand, the price of raw materials for batteries is rising. On the other hand, due to the general decline in the price of lithium battery products in the world, the sales volume of domestic new energy vehicles has risen rapidly, and multiple factors have forced domestic power battery companies. The price reduction, thousands of vehicles in the past few years have been counted as large orders, but now there are tens of thousands of vehicles, the output prices will definitely fall.

Last year, the average price of power battery industry was still 2 yuan / Wh, this year has been reduced to less than 2 yuan. According to reports from the high-tech lithium grid, in the fourth quarter, some battery companies have already lowered their product prices to 1.4 yuan/Wh in order to clean up their inventory.

Fang Jianhua believes that the structural overcapacity of production capacity is also one of the reasons for the decline in the price of power battery companies. The data shows that domestic power battery capacity has reached 120GWh at the end of last year, and may approach 200GWh by the end of this year, and this year's market demand is less than 40GWh.

In Fang Jianhua's view, the price drop is more challenging for the power battery industry than the rising raw materials.

Raw materials are rising, some are due to scarcity of materials and non-renewable, while others are temporarily in short supply. Due to the need for capacity release, short-term supply is in short supply, coupled with capital speculation, resulting in soaring prices, which will not last long. . However, the price decline is determined by the law of the development of the industry, which poses greater challenges to the technology, management and product quality of the enterprise.

Elimination has begun

"The knockout has already begun. Last year, we entered the catalogue of the new energy vehicle promotion catalogue of the Ministry of Industry and Information Technology. There are more than 200 supporting power battery companies, and this year there are only more than 90." Fang Jianhua said.

The industry also made the same judgment: "In terms of quantity, the number of power battery companies has decreased significantly this year, leaving only about 100. From the perspective of living conditions, this year's enterprises are clearly differentiated, some are in short supply, and some are underemployed. And not only the companies at the end of the weak have been eliminated, but some companies that have been very good in the past few years have also experienced a sharp decline this year."

The above-mentioned insiders believe that the reason for this differentiation is the adjustment of the structure of the new energy vehicle market. All along, the domestic power battery industry has a structural excess of low-end products and low-end products. This year, this problem is more prominent.

"The impact of policy adjustment on the new energy vehicle and power battery industry is huge. The actual operation of 30,000 kilometers to receive subsidy policy adjustments has led to a significant impact on the sales of commercial vehicles such as passenger cars. The double-point policy further pushes passenger cars. Enterprises vigorously develop new energy. Correspondingly, the power battery enterprises that originally used bus companies as their main customers are more difficult this year, but they can achieve greater development for passenger car companies. From a technical point of view, for passengers. Cars, especially the thresholds for international brands, are more difficult than commercial vehicles and have higher thresholds."

According to data released by the China Automobile Association, in the first 10 months of this year, China’s new energy vehicles sold a total of 490,000 units, a year-on-year increase of 45.4%. Among them, new energy passenger vehicles sold a total of 393,000 vehicles in January-October, a year-on-year increase of 61.3%. New energy commercial vehicles sold 97,000 vehicles in January-October, up 3.9% year-on-year. Undoubtedly, the new energy passenger car is the growth leader, and the passenger car customer can achieve great development.

The prospectus of the Ningde era showed that its major customers switched from passenger cars to passenger cars. In the first half of this year, its first largest customer has been transferred from Yutong to Geely Holding, and Xiamen Golden Dragon, the fifth largest customer, has been replaced by Dongfeng Motor.

The timely occupancy of the passenger car market has made the average price of the power battery system in the Ningde era down from 2.06 yuan in 2016 to 1.52 yuan in the first half of 2017. The gross profit margin remained at 37.1%.

In contrast, among the new three-board enterprises, Haisidi, Tianfeng Power, Xinlingjia, Weineng Power, Dingneng Kaiyuan, Houneng, Zhuoneng, Ou Pengbach, Xinghai Energy, Shanmu Xinneng, etc. Ten companies that cover power batteries have a gross margin of around 20%. Chengfei's profit fell sharply in the first three quarters of this year. The important reason was that the subsidiary's subsidiary, AVIC Lithium, had insufficient orders in the passenger car market.

The research report shows that the situation of ice and fire is actually starting from the beginning of this year. From the beginning of March to the end of May this year, the research team visited nearly 100 power battery factories and found that some enterprises have less than 30% operating rate. Some enterprises are in short supply, and the watershed is becoming clearer.

According to the statistical analysis conducted by the Tianfeng Securities Research Institute on the 10 batches of recommended application catalogue power battery manufacturers released by the Ministry of Industry and Information Technology this year, CATL has reached 378 models, far exceeding other peers. Ranked second is CITIC Guoan Mengli Power Technology, with 139 models, Shenzhen Waterma battery support models for 137 models, Hefei Guoxuan High-tech power supply models for 114 models, Huizhou Yiwei lithium energy models 108 models, Beijing Guoneng Battery Technology and Huizhou BYD are equipped with 94 models, and the remaining power battery companies are equipped with less than 80 models. The last model is only 18 models.

In terms of market share, statistics show that global power battery shipments in January-September 2017 were 42.6GWh, up 32% year-on-year. Among them, the top ten power battery companies with global shipments totaled 30.98GWh, accounting for 73% of the overall market.

How to break through

Consistent with Fang Jianhua’s judgment, the research report believes that in the next three to five years, China’s lithium battery industry will be deeply reshuffled, and more than 90% of lithium-ion enterprises will be merged, restructured or bankrupted, and truly enter the vehicle supply system. The number will not exceed 20, and the production capacity will be highly concentrated in the first few hands.

But no matter how experts predict the cruelty of competition in the power battery industry, the high valuation of 130 billion yuan in Ningde era, as well as successive investment acquisitions, shows that this industry is still a hot spot for capital chasing. Large and small power battery companies are also busy with financing and expansion, and they all believe that they have the potential to become the lucky winner of 10% after the industry reshuffle.

But the reality is cruel. In the power battery industry, where the technology is rapidly iterating and the market competition is changing rapidly, even the leader may not always be able to stand on the forefront. For example, AESC, which is backed by Nissan and the world leader in previous years, is out of technology this year. The cost is high and it is sold by Nissan. Domestic battery companies also face many challenges.

The biggest challenge comes from the cost and price drop. Not long ago, Wang Binggang, head of the National New Energy Vehicle Technology Innovation Engineering Expert Team, shared a story at the forum. When he visited GAC, people from GAC said that the battery system should be 6 cents per watt hour. It can be competitive without subsidies. Above this price, electric vehicles are not competitive with ordinary cars. But when talking to people in the battery industry, many people think that 6 cents / watt-hour is simply unimaginable and can't be done.

Behind the cost reduction is technology, technology and management, which is actually the core of the company's competitiveness. The second is to upgrade technology and technology to improve production consistency. Also in the above forum, Wang Binggang said that China's power battery companies are still using internal screening methods to ensure product consistency, measured by the traditional manufacturing CPI value of less than 1.67, no one can reach the standard. Failure to meet the quality level of large industrial production indicates that the requirements of the future automotive industry cannot be met.

The third is to establish a close ecological circle of upstream and downstream. Fang Jianhua believes that the current vehicle manufacturers are still the attitude of traditional vehicle manufacturers to spare parts supporting enterprises for power battery companies. Such cooperation relationship cannot meet the development needs of the new energy automobile industry in the future.

"Like the Ningde era, joint ventures with vehicle manufacturers to accept the participation of vehicle manufacturers, this is a way for power battery companies to seek change, but certainly more than these two ways, there will be more ways in the future with industrial development. Wu Hui believes that the establishment of a closer industrial alliance requires the joint efforts of upstream and downstream enterprises.

Wang Binggang believes that in addition to strengthening cooperation with downstream automakers, the current power battery companies and upstream enterprises are also very loose. Buy a little bit of positive and negative materials here, and buy some there. In the long run, it is necessary to establish a close-knit industry alliance. Government authorities also hope to form a huge industrial cluster and group around 2020-2025.