How can a battery company break ice and save space?

In 2017, the battery market was extremely bustling, with an influx of over 100 billion yuan of capital. The auto companies set off an upsurge of self-built systems, and prices of raw materials have risen successively, all of which have revealed an elusive sense of helplessness.

The drop in battery prices is even more difficult for power battery companies, especially SMEs, caught in the middle.

Who is behind the battery price cut?

Lithium battery prices have plummeted by 20% to 30% this year. On the one hand, the price of upstream materials has been changing rapidly. On the other side, the downstream car companies have also strongly demanded price cuts. The battery companies are sandwiched between the two companies and are under pressure. They face the dual pressure of market and cost.

1 Upstream material prices have been changing rapidly. At the beginning of this year, the price of cobalt rose sharply. In August, the price of lithium carbonate soared. During the National Day, the nickel price soared. The price of raw materials in the upper reaches remained strong, and the economy is expected to continue. A person in charge of a power battery company said that due to the rise in price of cobalt, lithium and other raw materials in the upper reaches, the cost of this year's enterprises has increased by at least 15%.

2Exemption of purchase tax will end at the end of this year, and the current subsidy standard will be 20% downgraded in 2018. Among them, passenger cars and special vehicles will be subsidized by about 20% for slope retreat, 30%-50% for passenger cars, and the ratio of local supporting subsidies will be reduced from 1:1 to 1:0.5. The new energy car companies that rely heavily on government subsidies to “nurture” have been hit hard for a while, demanding that power battery companies significantly reduce prices.

The purchase tax and subsidy policy information is shown below:

3 In the first half of 2017, the overall auto market was sluggish and sales volume was dismal, which was directly transmitted to the upstream battery companies. Only 2 months from the end of the year, the impact of subsidy retreat in advance, is expected to appear in 2018 rush to install the market, do not rule out some battery manufacturers thus launched a promotional price war.

Under the dual pressure of car enterprises and materials companies, battery companies not only have to share the costs, but also have to bear the price reduction requirements of the overall environment, so the profitability declines.

How can a battery company break ice and save space?

At present, China's new energy automobile market is entering a new period of expansion. As the core of new energy vehicles, the battery is standing at the outlet and still faces many challenges.

First, car companies build their own supply system. On the one hand, a number of automakers are planning to build their own battery system. Some automakers use PACK as an entry point in an attempt to seize key components. For example, on October 24th, BMW Brilliance’s Power Battery Center project in Shenyang and Dongfeng Motor Group held shares in the Ningde era; on the other hand, many European and American large car companies began to directly conduct advanced battery material R&D and evaluation to occupy The “heart” technology highland of new energy vehicles continues to lead the industry in the development of new energy vehicles, such as BMW, Mercedes-Benz, Volkswagen and General Motors and other international car giants.

Second, the upper-middle-stream enterprises are waiting in the wings. Lithium upstream companies rely on their own advantages in the industrial chain to enter the power battery industry.

Third, foreign-funded or joint venture battery companies began to gradually enter the promotion catalog. For local battery companies, the pressure is on the increase, and for SMEs it can be described as a devastating shock.

In addition to the group of wolves ringing, the battery company's own quality and cost reduction problems are still "heart disease."

At present, the shipments of both Sanyuan Battery and lithium iron phosphate battery basically accounted for 95% of the shipments of the power battery market in 2016, but due to obvious concentration differentiation, shipments of other materials are extremely low, with type competition. Intense, exacerbated the excess capacity of the power battery.

With the increase in the scale of leading enterprises, the yield rate will increase, the upstream lithium, cobalt and nickel will increase in rotation, and the subsidies will be lowered in the downstream. The situation under which the two battery companies are under pressure will become more obvious. The cost reduction may be very difficult.

Lithium Battery understands that the price of the battery system has decreased from 3.5 yuan/Wh five years ago to 1.8 yuan/Wh today, and it is necessary to achieve the goal of reducing the battery pack cost of the Ministry of Industry to 1 yuan/Wh by 2020. A long way to go.

It is worth mentioning that the price cuts of different batteries are different, further reducing the profits of battery companies. In 2017, the price drop of lithium iron phosphate battery was about 20%-30%, while that of Sanyuan Battery was about 10%-15%.

Industry insiders believe that although battery prices have fallen significantly, it does not mean that the cost reduction space will be compressed. In his opinion, the biggest space is the increase in battery energy density brought about by technological advances. If the energy density is doubled, it would mean that the cost of the battery can be reduced by nearly half.

Under this circumstance, if you want to remain high, you must master the core technology and do a good job of strengthening product quality before you can lower your costs and improve your profitability, otherwise you will be eliminated.