In fact, driven by the popularity of new energy electric vehicles, batteries have also become a hot investment target. In addition to Shanghai Gepai, many companies, including Youfu, Sidu Holding Group, and Tairui, have embarked on the "track" of power batteries; the words "power battery" have also appeared in the investment promotion documents of many local governments, and Chongqing Zhongxian County, Hubei Yicheng City, Shandong Weishan County and other places have introduced lithium-ion power battery projects.
However, as part of the National Science and Technology Ministry's 863 Program for Electric Vehicles, Wang Binggang emphasized to reporters: "The development of new energy vehicles and the international ban on gasoline vehicles have indeed boosted the development of the power battery industry, but capital and local governments should not be too blind. Investment in batteries requires sufficient technology and R&D capabilities, and there are still many important issues to be resolved in the development of the entire industry."
Power batteries are favored
According to public information, Shanghai Gepai was established in 2006. Its main business is to provide basic materials such as cobalt, lithium, nickel and manganese, ternary precursors (nickel cobalt manganese hydroxide) and cathode materials for the new energy power battery industry. Xiaoxian Jiuyou Fund is an industrial fund established in 2015 by Anhui Xiaoxian County and Shanghai Jiuyou Equity Investment Fund Management Co., Ltd., with the aim of guiding enterprises to settle in Zhangjiang Xiaoxian High-tech Park.
According to the cooperation agreement between the two parties, Xiaoxian Jiuyou Fund will invest 400 million yuan in Shanghai Gepai, which will then register Anhui Gepai Technology Co., Ltd. in Xiaoxian as the listing entity and set up a wholly-owned subsidiary to produce lithium battery cathode materials.
Cao Dongqiang believes that Xiaoxian County, located in northern Anhui Province, is well-connected by railways and highways, which can effectively reach markets in East China, South China, and North China. Furthermore, the Shanghai Zhangjiang Xiaoxian High-Tech Park is the first joint construction project between Shanghai Zhangjiang High-Tech Zone and a county-level city, and it boasts a favorable development environment.
It is understood that Shanghai Gepai will establish a production base in Xiaoxian County, which is planned to be completed in about 12 months, with a production capacity of 15,000 tons of ternary 811 (with an increased proportion of nickel and a decreased proportion of cobalt and manganese). After reaching full production capacity, the annual revenue is expected to reach 2.7 billion yuan.
According to Cao Dongqiang, the main reason for choosing to focus on upstream materials for power batteries is the continuously expanding market demand. "The entire market has now taken off, and the policies supporting the new energy vehicle industry are very strong. Currently, the demand for resources is increasing daily. We had already made many arrangements before, and after cooperating with Xiaoxian Jiuyou Fund, we can move forward faster and more advanced in our arrangements."
In fact, the power battery industry seems to have become a "darling" of many investors, with several other companies besides Shanghai Gepai investing in it.
For example, in August 2017, Huachi Battery (Zhejiang), a subsidiary of Sidu Holdings Group, broke ground on a 1 billion Ah power lithium battery factory project in Songyang County, Zhejiang Province; in September of the same year, Tairui Group announced that it had acquired 51.4% of the equity of Shenzhen Zhongmai Technology Co., Ltd. for 144 million yuan. Zhongmai is a company engaged in the production of lithium batteries and supercapacitors. Data from relevant research institutions shows that there were approximately 84 power battery companies in China in 2015. However, data from other sources indicates that the number of power battery companies reached over 200 in 2017.
Furthermore, power batteries have become a frequent topic in local government investment promotion plans. Many places, including Zhongxian County in Chongqing, Yicheng City in Hubei, Weishan County in Shandong, and Jingxi City in Guangxi, have introduced lithium battery projects. For example, at the end of 2017, the Zhongxian County Government of Chongqing signed an agreement with Shenzhen Daima Electronics Technology Co., Ltd., under which the latter would invest 600 million yuan to build a production project in Zhongxian with a daily output of 1.2 million power storage lithium batteries; in September of the same year, the Yicheng City Government of Hubei signed a lithium battery project cooperation agreement with Mengshi Technology, under which the latter would invest an additional 2 billion yuan to build a 5GWh power lithium battery project.
Industry insiders believe that both enterprises and local governments are vying to enter the power battery industry because they are optimistic about its market prospects and the relevant policies supporting its development.
According to statistics from relevant research institutions, China's power lithium battery production capacity increased from 73MWh to 204MWh in 2015, representing a year-on-year increase of 179%. A research report from Shenwan Hongyuan also suggests that my country's power lithium battery shipments increased by 293%, 188%, and 79% year-on-year from 2014 to 2016, and the demand for power lithium batteries is expected to maintain rapid growth in the future, driven by the increasing demand for new energy vehicles.
Policies are also helping the battery industry develop. For example, in March 2017, the Ministry of Industry and Information Technology, the Ministry of Science and Technology, and other four ministries jointly issued the "Action Plan for Promoting the Development of the Automotive Power Battery Industry" (hereinafter referred to as the "Plan"), which proposed to vigorously promote the research and development and industrialization of new lithium-ion power batteries and achieve large-scale application by 2020; give full play to the guiding role of government investment in social capital, and encourage the use of social capital to establish a power battery industry development fund, etc.
Research and development capabilities become key
It is worth noting that, while encouraging the development of the power battery industry, the plan also points out the current shortcomings of the industry: the performance, quality and cost of power battery products are still difficult to meet the needs of the promotion and popularization of new energy vehicles, especially in terms of basic key materials, system integration technology, manufacturing equipment and processes, there is still a large gap with the international advanced level.
Wang Binggang, a member of the National 863 Program's Major Science and Technology Project for Electric Vehicles, said in an interview: "Currently, there is a big difference in the quality of power batteries. Some of the better companies are improving their quality very quickly and are close to the level of major Japanese and South Korean companies. However, a large number of companies are still producing power batteries of very poor quality."
Wang Binggang emphasized that quality issues involve multiple aspects, including R&D capabilities, technical level, and management capabilities. Neither capital nor local governments should be too reckless in developing the power battery industry, because battery investment requires substantial funds and technological support. Furthermore, technology changes rapidly; without sufficient R&D capabilities, one can only follow in others' footsteps.
In addition, raw material and manufacturing costs are also considered important factors restricting the large-scale development of the power battery industry. As Cao Dongqiang pointed out to reporters: "From the perspective of the entire industry, the main issue is still upstream resources. The key is whether upstream costs can be reduced, as resource costs are increasing rapidly now."
