With the dust settling on the new energy vehicle subsidy fraud scandal in my country in 2016, the new energy vehicle industry began to accelerate its development after March 2017. Globally, new energy vehicle development targets were also successively introduced in 2017, and multinational automakers accelerated their development of new energy vehicles. In my country, the promotion of new energy vehicles in the transportation sector has exceeded expectations. Therefore, doubling the current total scale by 2020 is no longer a problem.
On September 24, Cai Tuanjie, Deputy Director of the Transportation Services Department of the Ministry of Transport, publicly stated that based on the current rate of development, it is expected that by the end of this year, the overall scale of new energy vehicles in my country's urban public transport, taxis, and urban logistics distribution sectors will exceed 300,000 vehicles, achieving the predetermined development target for 2020 ahead of schedule. Therefore, my country will double this target for 2020 to 600,000 vehicles, indicating that my country is likely to become the first country to achieve full electrification in the fields of urban public transport, taxis, garbage trucks, and urban logistics distribution.
Industry-driven: Pure electric logistics vehicles are gaining popularity, becoming a dark horse in the logistics industry!
Eight major trends in the future development of lithium batteries in my country
As the largest producer and the most important application market, my country's position in the global lithium-ion battery industry has been further enhanced.
Since the beginning of this year, with the steady adjustment of support policies for new energy vehicles, the growth rate of my country's new energy vehicle production has further stabilized. Power batteries will drive the continued rapid growth of my country's lithium-ion battery scale in the future. At the same time, with the global trend of vigorously developing new energy vehicles already in place, my country's power battery market share in the world will continue to increase. Especially with the continuous introduction of support policies and power battery standards in my country, the power battery sector in my country is expected to form the following development trends in the future.
Trend 1: The industry scale is growing steadily, and China's advantages are expected to expand.
In 2017, the growth rate of major lithium-ion battery application markets slowed down, with the global lithium-ion battery industry exceeding 300 billion RMB, a 4 percentage point decrease in growth rate compared to 2016. Driven by continued policies promoting new energy vehicles, China's electric vehicle production reached 650,000 units in 2017, further increasing its share of the global electric vehicle market.
lithium battery development trend
Trend Two: Power batteries will lead growth, with a market share exceeding 60%.
In 2017, as domestic mobile phone brands have basically occupied the domestic market and the difficulty of expanding into the international market has increased, the growth rate is expected to drop to around 10%. The decline in the production of laptops and tablets will continue to narrow, but will still maintain a downward trend. Wearable devices, drones and other consumer products are expected to show rapid growth momentum, but the overall scale is relatively small. Overall, the demand for consumer lithium-ion batteries in 2017 will maintain a low growth rate of around 3%.
Driven by strong government subsidies, my country's new energy vehicle market is expected to expand to 650,000 units in 2017, a year-on-year increase of 25%. The market for lithium-ion battery electric bicycles is expected to reach 5 million units. Including power tools and other sectors, the market size for power lithium-ion batteries is expected to reach 30 GWh in 2017, a year-on-year increase of approximately 30%. Overall, in 2017, power batteries will lead the growth of my country's lithium-ion battery market, with their share expected to exceed 60%, and their contribution to the growth of my country's lithium-ion battery industry exceeding 90%.
Trend 3: Subsidies are declining rapidly, and the growth rate of new energy vehicles is slowing down.
At the end of 2016, the Ministry of Finance, the Ministry of Science and Technology, the Ministry of Industry and Information Technology, and the National Development and Reform Commission jointly issued the "Notice on Adjusting the Fiscal Subsidy Policy for the Promotion and Application of New Energy Vehicles" (hereinafter referred to as the "Notice"). According to the Notice, subsidies for new energy passenger vehicles remained largely unchanged, decreasing by only 20% according to the established subsidy reduction mechanism. Subsidies for new energy buses saw a larger reduction, exceeding 40%. The substantial reduction in battery subsidies far exceeded previous market expectations and introduced higher technical requirements.
Development trend of power batteries
Trend 4: Accelerated application of new technologies, disruptive products expected
As lithium-ion batteries are increasingly widely used in various fields, especially in electric vehicles, new energy, and special applications, countries and major companies are increasing their R&D support. At the same time, advanced material preparation technologies such as graphene and nanomaterials are constantly improving and rapidly integrating with lithium-ion battery R&D, accelerating the innovation speed of the lithium-ion battery industry. Various products are emerging and entering the market, generating considerable buzz. In the future, with the continued advancement of various new technologies, new materials, including silicon-carbon composites and solid-state electrolytes, are expected to be widely used in lithium-ion batteries, potentially leading to new disruptive lithium-ion battery products in specific application areas such as wearable devices and special environments.
Trend 5: Lithium-ion battery performance is limited, and commercialization of new battery technologies will take time.
Currently, most new battery technologies, such as lithium-sulfur batteries, lithium-air batteries, aluminum-graphite dual-ion batteries, lithium ceramic batteries, and novel lithium-oxygen batteries, are still in the laboratory research stage. According to the industrialization process of technological achievements, it will take at least 10 years for them to be widely applied and promoted.
Considering battery safety factors, the verification process may take longer. For some technologies that are gradually maturing, such as dual-carbon batteries and solid-state lithium-ion batteries, the manufacturing processes are not yet mature, and the core technologies are controlled by one or two companies, resulting in limited production and high prices, making large-scale application difficult in the near future. As for technologies such as supercapacitors, hydrogen fuel cells, and zinc and lithium metal fuel cells, which have already begun small-scale production, their high prices mean market acceptance will take time.
Trend Six: Sudden Changes in Power Battery Policies Lead to Major Adjustments in the Industry Landscape
In November 2016, the Equipment Industry Department of the Ministry of Industry and Information Technology officially solicited opinions from all sectors of society on the "Automotive Power Battery Industry Standard Conditions (2017)" (Draft for Comments). The "Automotive Power Battery Industry Standard Conditions (2017)" (Draft for Comments) significantly increased the annual production capacity requirement for lithium-ion power batteries from 0.2 GWh/year to 8 GWh/year, based on the "Automotive Power Battery Industry Standard Conditions" released and implemented in 2015.
Currently, the lithium-ion power battery market is highly competitive, and the industry is at a critical turning point. The landscape of my country's lithium-ion battery industry may face significant adjustments.
Trend 7: Leading enterprises consolidate their advantages, and industry concentration further increases.
In 2016, my country's new energy vehicle production continued to grow, but the concentration of the power battery market further increased, with the market share of the top 10 power battery suppliers rising from less than 70% in 2015 to 82% in 2016.
Therefore, it is expected that the leading advantages of backbone enterprises will continue to be consolidated in 2017, and their market share in the power battery market will be further increased. The market share of the top 10 suppliers will exceed 87%, an increase of more than 5 percentage points compared with 2016.
Trend 8: Standardized conditions are officially implemented; their effectiveness remains to be tested by the market.
In September 2015, the "Standard Conditions for the Lithium-ion Battery Industry" (hereinafter referred to as the "Standard Conditions") was officially released and implemented. After procedures such as reporting, approval, and verification, the first batch of companies that meet the "Standard Conditions" was announced in 2017.
In comparison to the implementation of the "Standard Conditions for the Automotive Power Battery Industry," which released five batches of lists, essentially encompassing major lithium-ion power battery companies, the latter, lacking specific technical indicators and only specifying production capacity, accelerated capacity growth and did not significantly contribute to regulating industry development. While the "Standard Conditions for the Lithium-ion Battery Industry" set technical indicators, the requirements were not stringent, and over 70% of companies could meet them. Currently, there are over 400 upstream and downstream companies in my country's lithium-ion battery industry, with varying levels of development. The effectiveness of the "Standard Conditions for the Lithium-ion Battery Industry" remains to be seen and will be tested by the market.
