Large-scale investment to develop a new layout-integration of the industrial chain

On August 11, CATL announced that it intends to invest in high-quality listed companies on the upstream and downstream of the industrial chain at home and abroad in the form of securities investment around the main business, with a total amount of not more than 19.06 billion yuan, of which the total overseas investment will not exceed 2.5 billion US dollars. The validity period is valid within 12 months from the date of approval by the board of directors.

As a leading enterprise in the power battery industry, every move of the Ningde era affects people's hearts. This time, how will it develop a new layout through massive investment? And what variables will this industry giant's actions bring to the new energy automobile industry chain?

Reflect the industry's first ambition and sense of crisis

Cao Guangping, an independent researcher in the new energy automobile industry, believes that this move of the Ningde era is the result of the triple impact of \"reduced capital return, increased market competition and increased technology investment\". In the first half of this year, due to the decline in subsidies for new energy vehicles and the impact of the new crown pneumonia epidemic, the Ningde era power battery shipments decreased to a certain extent. In the long run, the new energy vehicle market will also face pressure after the adjustment of subsidy policies. In terms of market competition, CATL was squeezed by LG Chem, Panasonic and other companies, and faced challenges from BYD and Xinwangda. \"In this case, CATL needs to invest in several production bases at home and abroad to meet the needs of global market competition.\" said Cao Guangping.

\"The low cost and high profit that enterprises with high market share can enjoy are definitely better than other competitors. From the perspective of domestic power battery installed capacity in the first half of this year, CATL’s market share is nearly half. However, at present The new energy automobile industry has shifted from policy-oriented to market-oriented. In the future, in a fully competitive market environment, the market share of No. 1 in the industry may not be so high, and profits may not be maintained at a high level for a long time. \"Zhongguancun New Battery Technology Yu Qingjiao, secretary-general of the Innovation Alliance and chairman of the Battery Hundreds Association, said in a reporter interview.

Good companies tend to be prepared for danger in times of peace. In addition to the pressure of the domestic market, the rise of the European and American new energy vehicle markets has driven the growth of installed capacity of Japanese and Korean power battery companies. In the first quarter of this year, CATL even lost its position as the global power battery market leader, ranking behind LG Chem and Panasonic.

For the Ningde era, how to maintain its core competitiveness has become a top priority given the promising future market prospects. Recently, the Ningde era has moved frequently. Some people in the industry even said that considering that CATL had already deployed in the fields of charging, battery replacement, battery recycling, and echelon utilization in the previous era, plus this investment in the upstream and downstream of the industrial chain, it is very likely to build a power battery. As the core industrial chain \"aircraft carrier\".

In addition, Cao Guangping also mentioned that the global power battery industry is on the eve of achieving a major technological breakthrough. If the CATL wants to ensure its leading position in the market, it must use technology \"speak\". It is reported that in addition to solid-state batteries and cobalt-free batteries, CATL is already deploying a next-generation \"non-rare metal battery\".

The ability of industrial chain integration is related to core competitiveness

For this investment, CATL stated that with the advancement of global energy reforms and transformation and upgrading, and the gradual improvement of environmental protection standards, the new energy vehicles and energy storage industries have developed rapidly in recent years, but there are still imperfect supporting facilities and key resources in the industrial chain. Shortcomings such as insufficient supply may restrict the long-term development of the industry. Based on long-term strategic development considerations, CATL focuses on its main business and invests in high-quality listed companies upstream and downstream of the industrial chain to further strengthen industrial chain cooperation and coordination, improve resource utilization efficiency, and enhance the company's market competitiveness.

The industry research report of Western Securities mentioned that the most important core competitiveness of the power battery industry lies in three aspects: one is the research and development of product materials, the other is the accumulation of production technology, and the third is the ability to integrate the industrial chain. It is worth noting that the first two aspects can be achieved through the company's own R&D investment and experience accumulation, while the industrial chain integration capability requires the vertical layout of the industrial chain.

At the 12th China Automotive Blue Book Forum held a few days ago, the chairman of CATL, Zeng Yuqun, made a rare appearance. He revealed that CATL has formed four major innovation systems, namely, material system innovation, system structure innovation, intelligent manufacturing innovation, and business model innovation. In terms of material system innovation, CATL designed and proposed methods and ideas to improve NCM ternary cathode materials. In terms of system structure innovation, in addition to the world’s first mass-produced and loaded CTP technology, the next step in CATL’s era will be CTC (Cell to Chassis), that is, the battery cell and the chassis are integrated together, and then the motor, electronic control, and vehicle high voltage such as DC/DC, OBC, etc. are integrated together through an innovative architecture, and the intelligent power domain controller optimizes power distribution and Reduce energy consumption. It is not difficult to find that the current round of investment in high-quality listed companies upstream and downstream of the industrial chain will be an important part of improving their core competitiveness.

Prior to this, CATL had already developed a certain degree of layout in the industrial chain, but it seems that the party believes that it is far from enough and it is necessary to further deepen and integrate. As a leader in the power battery industry, Zeng Yuqun also mentioned that the current market price of around 100,000 electric car manufacturers is difficult to survive. CATL is trying to find a breakthrough in the entire industrial chain, integrating upstream and downstream enterprises, expanding scale and reducing costs.

According to industry insiders, CATL’s cost advantage is based on its complete supply chain system. It has formed a strong control over the positive electrode, negative electrode, electrolyte, structural parts, and equipment links. It has formed two shares through equity and joint ventures with the upstream of the positive electrode. Complete supply guarantee from mineral raw materials to anode.

Will change the competitive landscape of the industry chain

According to CATL’s announcement, this investment specifically includes stocks, convertible bonds and other equity investment products of relevant listed companies upstream and downstream of the domestic and foreign industrial chain; investment methods include but are not limited to new share purchases, secondary market securities purchases, and pooling Methods permitted by laws and regulations such as bidding, transfer by agreement, block transactions, and participation in private placement.

In terms of funding sources, Ningde Times owns or self-raised funds, and does not involve the initial and non-public offering of stocks in 2020. It is understood that CATL has 37.1 billion yuan in cash at the end of the first quarter of this year. In August, it will increase funds raised by 19.7 billion yuan. The net cash flow from operating activities in the past two years has exceeded 10 billion yuan.

Yu Qingjiao told reporters that this year's policy and other aspects of support are unprecedented, but the overall market environment is not good. As far as new energy vehicles and power battery businesses are concerned, there are not many companies that can really make money. The phenomenon of increasing revenue without increasing profits, high accounts receivable, loss-making operations, product homogeneity, and structural overcapacity are common. Especially in the diaphragm and electrolyte industries, many companies have expressed difficulty in making profits. The reporter also learned that from the current market concentration of the upstream and downstream of the power battery industry chain, the diaphragm industry has completed the industry reshuffle, and the positive electrode, negative electrode, and electrolyte are still in a state of full competition.

Yu Qingjiao emphasized the need to build a healthy ecological chain of the power battery industry. He said that the policy is guiding the development of the new energy automobile industry to high-quality, and the supply chain is safe and stable. The power battery industry chain needs the coordinated development of \"the tide rises and the boat is high\", not \"the water is clear\". It is reported that during the epidemic, many companies have taken the initiative to help upstream suppliers to resume production.

According to CICC's industry research report, equity investment can help suppliers form scale guarantees. It is reported that the four major material capacity investment required for a single GWh battery is about 240 million yuan, and the direct investment of 20 billion yuan can correspond to the demand for 82GWh. Yu Qingjiao also mentioned that new energy vehicles and power batteries are still a sunrise industry, and there are many high-quality concept stocks with investment value. Ningde Times is also a good choice to diversify investment and control risks while investing and expanding production.

It is reported that in the near future, the upstream and downstream suppliers of the power battery industry chain have a large amount of financing demand. CATL is expected to select high-quality projects for investment layout and optimize the asset integration of the golden track. In the future, due to the participation of the CATL, it is expected that the concentration of the diaphragm link may decrease in the future, and the concentration of the cathode, anode, and electrolyte industries may increase in the future. In addition, cobalt and lithium have become strategic resources, and CATL may also focus on deployment. (China Car News/Zhao Qiong)