\"Midfield Warfare\" for electric vehicle batteries: Ningde era, BYD shopping Samsung, Panasonic-reproduced

Yu Qingjiao, Secretary General of Zhongguancun New Battery Technology Innovation Alliance and Chairman of the Hundred Battery Association surveyed the Ningde era

On June 10, 2020, the young Tesla surpassed the century-old Toyota, and its stock price once exceeded $1,000, ranking the first in the global market value of auto companies. This is a day worth remembering for the automotive industry. A new era of electric vehicles has arrived.

However, Tesla a year ago was not as optimistic as it is now. At that time, Tesla's stock price once fell below $200, and it almost lost the trust of the capital market. Although, at that time, Tesla had launched a more friendly model 3, and received a large number of orders. However, due to the delay in production capacity, sales have not been able to rise.

An important reason for restricting production capacity is Panasonic, Tesla's only battery supplier. Musk directly accused Panasonic on Twitter, saying that the production of Model 3 was restricted because of Panasonic's poor production efficiency. Matsushita CEO Tsuga Tsukahiko bluntly said that because Musk kept squeezing costs, the price of power batteries supplied by Panasonic was constantly lowered. Iron Man Musk was stuck in the \"throat\", the contradiction between the two sides intensified once, and the relationship fell to the freezing point.

At the end of 2019, the Tesla Shanghai plant was completed and put into production, and Panasonic is no longer Tesla's only choice. Tesla first joined hands with South Korean battery manufacturer LG Chem. In July this year, it will use batteries from the local company Ningde era.

The cooperation with Tesla has ushered in a small upsurge in the stock price of Ningde Times (300750.SZ). As of June 24, Ningde Times reported closing at 171.5 yuan, with a market value of up to 378.52 billion yuan, a 7-fold increase from the 25.14 yuan issue price when it was listed on the GEM two years ago. The market value of the Ningde era is also twice that of SAIC, China's largest car company.

The Ningde era, established in 2011, has grown with the rapid development of China's new energy vehicles in the past decade and has won market dividends. The success of the Ningde era also allowed BYD to see the great potential of power batteries. BYD changed its thinking and adjusted its open strategy and launched blade batteries in 2020.

The power battery is the \"heart\" of an electric vehicle and occupies more than one third of the cost of an electric vehicle. Electrification is the general trend of the global automotive industry. In the next ten years, with the growth of the global electric vehicle market, the battery industry will also move towards a broader blue ocean.

In 2019, Ningde Times won a 41.6% market share in the domestic market with a loading capacity of 31.46GWh, occupying half of the country. However, whether it is BYD's counterattack, the participation of Japanese and Korean batteries, or the strategic transformation of OEMs and the competition for technical routes, the competition in the battery industry will become more intense. The pattern is uncertain, and the midfield battle of the power battery has already begun.

The rise of the Ningde era

The rise of the Ningde era is inseparable from the \"\"Power Battery White List\" released by the Ministry of Industry and Information Technology in 2015. This list has blocked Japanese and Korean batteries from the electric vehicle subsidy catalog. Many domestic OEMs have abandoned the use of cheap Japanese batteries with certain quality assurance. Domestic battery companies such as Ningde Times and BYD have quickly \"香饽饽\" that became the market.

At that time, the domestic power battery supply was very tight, and for a time many new energy vehicle companies could not buy good batteries. The market shortage of high-quality power batteries has allowed BYD to see opportunities. In order to ensure the leading position of new energy vehicles in the market, BYD chairman Wang Chuanfu closed the export channel of power batteries.

This has obtained a competitive advantage for BYD's new energy vehicles. BYD not only lacks batteries, but also has better quality than average.

In fact, at the time, a new energy vehicle company had contacted BYD to discuss the possibility of selling a power battery, but it was rejected by BYD. \"At that time, power battery production capacity must be given priority to ensure its own supply.\" A BYD executive told the 21st Century Business Herald.

This closed strategy has allowed BYD's sales of new energy vehicles to grow rapidly. But at the same time, it also achieved the Ningde era, within two years, the shipment and installed capacity of the Ningde era increased significantly.

In 2016, the shipment of power batteries in the Ningde era was 6.72GWh, ranking third in the world after Panasonic and BYD. By 2017, Ningde Times shipments rose 73% to 11.8GWh, becoming the world's first.

The reason why the Ningde era can surpass the big brother BYD is another important reason for the choice of technology.

In the past decade, power batteries have experienced two eras led by lithium iron phosphate and ternary lithium batteries. In simple terms, the lithium iron phosphate battery fuel has higher thermal stability, safety, lower cost, and long service life, but the disadvantage is that the battery has low energy density and poor endurance. The ternary lithium battery is just the opposite.

With the advancement of technology, the improvement of energy density, and the standard adjustment of the cruising range of the subsidy policy, the market is chasing high energy density, which also makes ternary lithium batteries the mainstream of the new energy passenger car market.

Judging from the development direction in recent years, the development of ternary cathode materials toward high nickel is a trend. The NCM811 battery in the Ningde era refers to a battery with a positive electrode material nickel, cobalt, and manganese in a ternary lithium battery with a ratio of 8:1:1. Compared with the common NCM523 and NCM622 batteries on the market today, the nickel The content simultaneously reduces the amount of cobalt and lithium. Increasing the proportion of nickel can increase the energy density, but it also brings a more intense electrochemical reaction and affects the safety performance of the battery. However, due to the reduction in the amount of cobalt, the NCM811 battery will also significantly reduce the price of the battery. For car companies, such a battery is very attractive.

\"Whether you are worried about safety or not, you can’t stop the energy density from going forward. This is the industry trend and market demand.\" Some people in the battery industry have previously said in an interview with the 21st Century Business Herald.

It is worth noting that the frequent occurrence of spontaneous combustion accidents in electric vehicles in recent years has also sounded the alarm for the industry. The industry is concerned that this is the consequence of excessive pursuit of high energy density. From the perspective of the development trend of ternary lithium batteries, the energy density of batteries will continue to increase, and the increase in volume and energy is an irreversible trend.

The market advantage of Ningde Times in the ternary lithium battery is difficult to shake. To fight against the era of Ningde, BYD needs a new entry point. This entry point is the blade battery of lithium iron phosphate material which is the main \"safety\".

Open fight

In 2020, a controversy triggered by a steel needle put the open battle between BYD and Ningde in front of the stage.

On March 29th, BYD announced the video of the blade battery successfully passing the \"acupuncture test\" at the \"blade battery\" press conference. \"Battery acupuncture test is just like the difficulty of climbing Everest.\" At that time, He Long, vice president of BYD and chairman of Ford Battery, described it to recommend the high safety of the blade battery.

BYD's three power battery acupuncture control test results showed that: the ternary lithium battery quickly smoked and burned violently after the steel needle was pierced, the surface temperature exceeded 500°C, and the eggs on the surface of the battery were blown off; lithium iron phosphate was massive Although the battery has no open flame after acupuncture, there is smoke, the surface temperature of the battery exceeds 200-400°C, and the eggs on the surface of the battery are burnt; while the BYD blade battery has no open flame and smoke, the surface temperature is only 30-60°C, the battery The eggs on the surface are unchanged.

\"Blade batteries will change the industry’s dependence on ternary lithium batteries, return the technical route of power batteries to the right path, and redefine the safety standards of new energy vehicles.\" said Wang Chuanfu, chairman of BYD.

The acupuncture test also triggered the \"separation between each other\" between BYD and Ningde era. In the Ningde era, it has repeatedly released its own short video of the ternary lithium battery pack acupuncture test to prove that it can also realize the technology of acupuncture.

Ningde Times also stated that the safety of the battery runs through the entire use of the battery and is a system engineering, including the battery's single design, system integration, dynamic monitoring and system protection. Therefore, the Ningde era focused on the overall safety of the battery. \"Technically speaking, there is a more optimized safety solution at the battery pack level, and the actual demand for single-cell acupuncture testing no longer exists.\" Ningde Times said.

However, some industry analysts believe that high battery life is still an important factor for consumers to buy cars at this stage. In the short term, the mainstream market position of ternary lithium batteries is difficult to change.

\"In terms of energy density and other aspects, lithium iron phosphate batteries always have limitations. BYD Han EV can achieve the level of 600 kilometers, which is very good. However, from the current development of electric vehicles, consumers are instinctive I want to buy a car with a higher cruising range.\" Some people in the automotive industry told the 21st Century Economic Report.

Of course, the release of the blade battery has also opened up a situation for BYD, which is opening up external supply channels.

\"Many car companies are discussing with us about blade battery cooperation, of course, including some foreign companies.\"On June 3, Li Yunfei, deputy general manager of BYD Auto Sales, accepted the 21st century at BYD’s Chongqing battery factory The Economic Reporter said in an interview.

BYD's battery technology has high recognition in the industry. Prior to this, Mercedes-Benz and BYD have established a joint venture company to produce Tengshi brand cars. In the process of technology joint venture, Mercedes-Benz is most important to BYD's power battery.

On June 1, the Ministry of Industry and Information Technology website showed that a plug-in hybrid model declared by Changan Ford will be powered by BYD's subsidiary Xi'an Zhongdi Lithium Battery Co., Ltd. This is the first time BYD has supplied batteries to a joint venture company of a major multinational auto company in China.

In addition, in 2019, Toyota and BYD also announced a cooperation to establish a joint venture new energy vehicle company in China to produce Toyota vehicles and BYD to supply batteries. Judging from the current public information, BYD relies on power batteries to occupy the absolute dominance in this new joint venture.

OEM game

However, BYD's battery supply is destined to be full of challenges. BYD itself is also an automobile manufacturing company, and the production of complete vehicles is its biggest business. Whether the use of batteries produced by competitors will bring risks is a question that car companies need to measure.

In fact, in recent years, in the game between auto OEMs and battery manufacturers, many car companies have fallen into a passive position, and high-quality power battery suppliers have higher bargaining power. This makes OEMs have an increasingly strong desire to control power batteries.

However, the battery is different from the traditional machinery industry. For automotive companies, the power battery is indeed an \"interlaced\" industry, especially the battery component \"cell\", which is naturally different from the traditional automobile manufacturing industry. Industry barriers. At present, from the perspective of industrial division of labor, most car companies mainly make their own battery packs (Pack) and battery management systems (BMS) in the field of power batteries, and batteries are purchased from outside.

At present, there are four main modes of cooperation between car companies and battery companies. The first one is the same as the traditional automobile supply chain system. Through large-scale global procurement, the cost is effectively controlled. Similar to the traditional supply chain system in the automotive industry, in order to get rid of over-reliance on one supplier, many car companies have separately found multiple suppliers. Secondly, OEMs cooperate with battery companies to establish joint venture companies to ensure the stability of battery supply and product quality, and master some core technologies in deep cooperation with battery companies to promote the improvement of self-technical level, such as Toyota and Panasonic. Ningde Times and SAIC, GAC, FAW and other domestic auto companies. The third type is self-development. BYD is well-known to the outside world, but BYD itself is transforming from a battery company to a complete vehicle. Great Wall Motors also established Honeycomb Energy to develop batteries. The fourth is to acquire battery companies. In 2019, Volkswagen invested 900 million euros to acquire a 20% stake in the Swedish company Northvolt, and this year spent 1.1 billion euros to acquire a 26% stake in Hefei Guoxuan Hi-Tech, becoming its largest shareholder.

Ningde Times told the 21st Century Business Herald that the relationship between the power battery plant and the OEM is not a simple part manufacturing and assembly integration. As the core component of new energy vehicles, the power battery is an important part of the directional development of the OEM The environment requires continuous exchange of test and verification data between enterprises to improve battery stability. Power battery companies can accumulate a large amount of practical data and solutions in the process of serving OEMs. The huge database will provide important support for subsequent research and development.

OEMs have inherent convenience and data availability in battery research and development. However, if mass production is to be carried out, the path of laboratory technology to the commercial market is very long, and a large amount of capital investment is required. Therefore, the powerful OEMs are more inclined to the R&D and manufacturing of PACK and BMS. It has the advantages of scale and is subject to cost, or it will still be mainly based on procurement, supplemented by joint ventures with battery factories or development and joint construction to achieve a win-win effect.

At present, battery technology is in a period of rapid iteration and change. The competition of power batteries will rise to the height of industry chain competition. If OEMs want to gain an advantage in the field of new energy vehicles, they must continue to make in-depth arrangements in all aspects of the battery industry chain.

Car companies are also facing many risks when deploying power batteries. \"During the deployment of the battery business, the difficulties faced by car companies are mainly the pressure of decentralization of funds and the selection of technical routes.\" Yu Qingjiao, Secretary General of Zhongguancun New Battery Technology Innovation Alliance, said.

During the transition from traditional fuel to new energy vehicles, traditional auto giants are reluctant to leave the center of the stage. This is also an important reason why Volkswagen holds Guoxuan Hi-Tech. \"If you want to promote the Volkswagen Group’s electric strategy, the investment in the battery business is a very important point.\"On May 29, Volkswagen Group CEO Diss said in an interview with the 21st Century Business Herald reporter, \"According to the Volkswagen Group Plans to deliver 1.5 million new energy vehicles in China by 2025, and there is a huge demand for battery production capacity. Therefore, Volkswagen needs to have multiple suppliers layout, not only to meet the increase in greater demand, but also in risk management Can help us achieve a more balanced. In the future battery cell supply pattern of Volkswagen, Guoxuan Hi-Tech will become an indispensable important link.\"

For Guoxuan Hi-Tech, deep bundling with the public is also an important way to regain market opportunities.

After several years of market-oriented competition, the pattern of the domestic power battery industry has initially taken shape. \"Structural overcapacity, but insufficient high-quality capacity\". After a round of survival and elimination of the fittest, two leading enterprises, Ningde Times and BYD, were formed. Leading the situation, but the survival environment of the second and third line battery companies is not optimistic. In 2018, Waterma, the third-largest battery supplier in China, thundered and was eventually eliminated, which also confirmed the cruelty of this industry.

The power battery industry has obvious scale advantages. On the one hand, with the tightening of subsidy policies, OEMs are facing tremendous cost-cutting pressure, which has an impact on battery companies. On the other hand, the requirements of the market continue to increase. Without sufficient funds to improve the level of research and development, the technology will be abandoned by the times once it lags behind. This is an inevitable result of the industry's transition to high-quality development.

China, Japan and South Korea \"Three Kingdoms\"

With the retreat of subsidies for new energy vehicles, Japanese and Korean battery companies are making a comeback, and China's power battery market will enter more intense competition. From the current point of view, China's Ningde era, BYD, South Korea's Samsung SDI, LG Chem, SKI and Japan's Panasonic are in the first echelon of the global battery industry, forming a situation of\"Three Kingdoms\" in China, Japan and South Korea.

Thanks to China's huge market base and the advantages of the local industry chain, Ningde Times is currently the battery company with the highest profit rate, with a net profit of 4.56 billion yuan in 2019. Other leading power battery companies are in a state of low profits or even losses. South Korea's LG Chem and Samsung SDI crossed the breakeven point in 2018. SKI is still in a loss period and is expected to be profitable in 2022. The operating profit of Panasonic's battery business is still a loss.

Like Tesla, which relies on China for profitability, the Chinese market will also be an important part of Japanese and Korean battery companies.

In the first quarter of this year, Panasonic and LG Chem relied on the supply of domestic Tesla batteries to squeeze into the first echelon of Chinese power batteries. Although there is still a big gap between the battery load and the Ningde era, it is comparable to BYD.

With the continuous expansion of production capacity in China and the cooperation with more Chinese car companies, Japan and South Korea batteries may rewrite the pattern of power batteries.

Faced with the development of Japanese and Korean power battery companies in China, Ningde Times stated: \"Our energy density, charging speed, cycle life and other indicators are competitive compared with foreign competitors, and the cost is also competitive with foreign competitors. The advantages of large-scale procurement and localized supply.\"

Cui Dongshu, secretary general of the All China Federation of Trade Unions, told the 21st Century Business Herald that for local battery companies, in addition to localization advantages, local companies need to work harder in R&D in addition to localization advantages.

At the Frankfurt Motor Show in September 2019, Ningde Times launched a new CTP highly integrated power battery development platform. Due to the elimination of battery module assembly, the volume utilization rate of CTP battery packs has increased by 15% compared to traditional battery packs. 20%, the number of battery pack parts is reduced by 40%, production efficiency is increased by 50%, and battery pack energy density is increased by 10%-15%, which will greatly reduce the manufacturing cost of power batteries.

According to Zeng Yuqun, chairman of Ningde Times, Ningde Times has developed a battery that can be used for 16 years and 2 million kilometers. \"We are ready for mass production at any time. In addition, Ningde Times also has a technical reserve for cobalt-free batteries.\"He says.

For Chinese battery companies, it is more important to go global.

At present, the overseas battery market is mainly occupied by Japanese and Korean battery companies, and the export scale of Chinese battery companies is relatively small. In the face of the characteristics of the globalization of the automotive industry, Chinese battery companies are also accelerating the pace of building factories overseas. Both BYD and Ningde have plans to enter Europe.

In October 2019, the first overseas factory of Ningde Times in Thuringia, Germany, officially broke ground. According to the plan, Ningde Times will form a global supply base circle with Germany as the center and the United States, France, Japan, and Canada as the base point. Promote the globalization strategy.

The rapid development of China's new energy industry has made such giants as the Ningde era, but sooner or later China's battery industry needs to face the competition with international giants. In the next ten years, the power battery industry will enter a new round of heavy volume as the electric vehicle market expands. The competition among leading companies in China, Japan, and South Korea may form a real industry oligarch. For the Chinese battery companies represented by the Ningde era and BYD, the battle has entered the midfield stage and the test has just begun.