Now, Do-Fluoride Chemicals plans to acquire Hongxing Automobile, leveraging its industrial chain advantages in lithium-ion battery power systems to quickly enter the new energy vehicle market, hoping to become a dark horse in my country's new energy vehicle sector and gain a share of the rapidly growing new energy vehicle market.
According to its plan, Do-Fluoride Chemicals intends to produce 4,000 vehicles in 2015 (1,000 of which will be gasoline-powered vehicles), with more models expected to enter mass production in the first half of 2016. At that time, new energy vehicles are expected to become a significant driver of the listed company's performance. It is worth noting that Do-Fluoride Chemicals' power lithium-ion battery production is increasing rapidly. With the commissioning of projects funded by its refinancing, production will increase from the current 70 million AH to 300 million AH in 2016. Due to the long-term supply shortage of the company's power lithium-ion batteries, this rapid expansion in production is expected to drive explosive growth in the company's performance over the next two years.
Possessing innovative genes
Do-Fluoride Chemicals is the world's largest and most technologically advanced inorganic fluorine chemical company, primarily engaged in the research, development, production, and sales of high-performance inorganic fluorides, lithium-ion batteries, and related materials. Its main products include cryolite, anhydrous aluminum fluoride, lithium hexafluorophosphate, lithium-ion battery cathode materials (lithium manganese oxide, ternary lithium), electrolytes, and separators (non-woven fabric method). In recent years, leveraging its advantages in the lithium-ion battery industry chain, the company has aggressively entered the fields of power lithium-ion battery manufacturing, powertrain systems, and new energy vehicle manufacturing.
Do-Fluoride Chemicals has consistently focused on technological innovation for transformation and upgrading. Whenever the company decides to enter a particular field, it almost always becomes a leader or a strong competitor in that field. In the fluoride salt sector (including cryolite and aluminum fluoride), Do-Fluoride Chemicals, leveraging its unique technology and cost advantages, broke the long-standing monopoly of foreign companies with high-quality, low-priced products, establishing its absolute global dominance in the fluoride salt field and bringing pride to Chinese national companies.
After achieving great success in the field of fluoride salts, Do-Fluoride Chemicals set its sights on lithium hexafluorophosphate, a core material for lithium-ion battery electrolytes. Due to the complexity and high difficulty of the lithium hexafluorophosphate process, the core technology is largely monopolized by a few Japanese companies such as Morita Chemical and Kanto Denka, forcing domestic lithium-ion battery companies to import it at high prices. Recognizing the huge import substitution market and promising development prospects of lithium hexafluorophosphate, Do-Fluoride Chemicals began research and development in 2007, achieving a technological breakthrough and realizing small-scale production of 200 tons of lithium hexafluorophosphate in 2011.
Following its initial public offering (IPO), Do-Fluoride Chemicals used excess funds raised to launch a "2,000-ton-per-year lithium hexafluorophosphate and related products project," which went into full production by the end of 2013, propelling the company to become the world's largest producer of lithium hexafluorophosphate. Leveraging its cost and quality advantages, Do-Fluoride's lithium hexafluorophosphate products quickly replaced imports and captured the domestic market, subsequently entering the supply chains of Japan and South Korea and penetrating overseas markets. Despite its global leading production volume, Do-Fluoride's lithium hexafluorophosphate products remain in high demand, and the company plans to further expand production to solidify its global leadership. Due to Do-Fluoride's innovator role, the price of lithium hexafluorophosphate has dropped from over 300,000 yuan/ton to around 90,000 yuan/ton. Despite this, Do-Fluoride maintains a gross profit margin of over 30% while other manufacturers struggle to profit, largely due to its significant cost and technological advantages in the lithium hexafluorophosphate field.
Mastering lithium-ion battery power systems
After establishing an absolute advantage in the lithium hexafluorophosphate (electrolyte) field, Do-Fluoride Chemicals extended its industrial chain to multiple areas of lithium-ion battery materials, including battery cathodes and separators. Through years of accumulation, Do-Fluoride Chemicals has become one of the most technologically advanced and industrially complete companies in the entire lithium-ion battery material system. It is precisely because of its profound understanding of lithium-ion battery materials and its upstream industrial chain advantages that Do-Fluoride Chemicals has achieved rapid development in the field of power lithium-ion batteries. Since entering the lithium-ion battery manufacturing field in 2010, it has quickly become a leading power lithium-ion battery manufacturer in terms of production and sales volume. In particular, in 2015, Do-Fluoride Chemicals launched a 300 million AH battery project, which adopted fully automated production equipment, significantly improving production efficiency and reducing production costs.
To better extend its industrial chain, Do-Fluoride Chemicals has gradually expanded from pure lithium-ion battery manufacturing to the design and development of battery management systems (BMS), which are the core components of electric vehicles. In addition, the company has also made inroads into important motor control systems, having independently developed and designed electric vehicle motors and control systems, and integrated them into electric vehicle powertrains.
Thanks to its unique processes and technologies, Do-Fluoride's powertrain systems possess numerous superior characteristics, including high capacity, long lifespan, and excellent safety. For example, in the production of power lithium-ion batteries, the company employs a challenging bag-stacking process (currently used only by Japanese manufacturers globally). This process results in lower internal resistance, higher safety and reliability for lithium-ion batteries, thereby improving the overall performance of the battery.
Leveraging its outstanding advantages in the industrial chain, cost, and quality, Do-Fluoride Chemicals has successfully developed numerous corporate clients in the fields of electric vehicles, electric bicycles, and energy storage. Among its most important clients are Xindayang and Shikong, with their respective key models being the Zotye Zhidou (a collaboration between Zotye and Xindayang) and the Zotye Shikong E20 (also a collaboration between Zotye and Shikong), as well as the Geely Zhidou. Currently, the company has become a stable partner of Xindayang and Shikong Automotive, and has also partnered with Henan Shaolin Bus on new energy bus business, as well as with Dongfeng Xiangyang Travel and other companies. Furthermore, the company's products have successfully entered the European market, and Do-Fluoride Chemicals' products have passed the rigorous testing of the University of Pisa's comprehensive laboratory in Italy.
Do-Fluoride Chemicals currently has an annual lithium-ion battery production capacity of around 100 million Ah. Due to its popularity with customers, the company's power lithium-ion batteries are in short supply, resulting in a severe production shortage. To better meet customer demand, Do-Fluoride Chemicals is seeking to expand production, expecting its lithium-ion battery production to reach 300 million Ah in 2016. With the increased production leading to a surge in sales of power lithium-ion batteries, lithium-ion batteries are projected to become a key driver of the company's performance growth in the coming years, leading to explosive growth in the company's revenue.
Building new energy vehicles
In July of this year, Do-Fluoride Chemicals announced that it would acquire a 69% stake in Hongxing Automobile through equity acquisition and monetary capital increase, thereby gaining control of Hongxing Automobile and obtaining the qualification to produce new energy vehicles.
Since Do-Fluoride already possesses a complete industrial chain for power lithium-ion batteries, including electronic-grade hydrofluoric acid, lithium fluoride, lithium hexafluorophosphate, cathode materials, and power lithium-ion battery assemblies, and has mastered core technologies for new energy vehicle power systems such as batteries, motors, and electronic controls, this acquisition of Hongxing Auto will help the company's industrial chain continue to extend downstream into the new energy vehicle manufacturing field, making Do-Fluoride one of the new energy vehicle manufacturers with the most complete industrial chain.
In terms of production, Do-Fluoride plans to produce 4,000 vehicles in 2015, of which 1,000 will be gasoline-powered vehicles. It is understood that after acquiring Hongxing Automobile, Do-Fluoride is accelerating the research and development and design of new models. If all goes smoothly, the new models are expected to be mass-produced and launched for sale in March next year.
Industry insiders say that new energy vehicles, due to strong policy support and substantial government subsidies, have much higher gross profit margins than gasoline vehicles. Coupled with a promising industry outlook, they have become a target for numerous manufacturers. Despite the intense competition, they remain very optimistic about the future development of Do-Fluoride Chemicals in the new energy vehicle industry. The reasons are as follows: First, Do-Fluoride's lithium-ion battery power system has been practically applied in 12,000 new energy vehicles of downstream customers (including Zotye Time & Space, Zotye Zhidou, Geely Zhidou D2, etc.) for more than two years without any safety accidents or major quality problems, fully verifying the good safety and stability of Do-Fluoride's lithium-ion battery power system; Second, Hongxing Auto has good process, technology accumulation and brand awareness in the field of complete vehicles and parts. Combining this advantage with Do-Fluoride's advantages in the power lithium-ion battery industry chain, the company will gain a unique industry chain advantage in the new energy vehicle field; Third, Do-Fluoride has always had a strong "innovation" and "disruptive" gene. This gene has helped the company disrupt the fluoride salt and lithium hexafluorophosphate industries and become a leader in the field in a short period of time. With Do-Fluoride entering the new energy vehicle field, it is possible that the company will stand out and become a strong competitor in the new energy vehicle field.
