Future market competition will be even more brutal; both vehicle manufacturers and lithium-ion battery companies need to adjust. Starting now, some of our lithium-ion battery companies should begin to consider and plan accordingly.
This is a quote from Liu Yanlong, Secretary-General of the my country Chemical and Physical Power Sources Industry Association, made at the "Unique Chips, Intelligent Future" New Energy Industry Summit. This statement aptly describes the current situation facing the power lithium-ion battery industry. Liu Yanlong's "considerations and plans" mean that for weaker power lithium-ion battery companies to survive, whether through restructuring with larger companies, resource integration with upstream and downstream companies, or entering more niche markets, these are all things that must be put on the agenda.
Undoubtedly, this is a well-intentioned reminder to the entire power lithium-ion battery industry. Behind this reminder lies the industry-wide surge in capacity expansion and the reality of a severe oversupply of power lithium-ion batteries. There are also concerns among battery experts that the pace of technological advancement is not keeping up with planned goals.
A surge in production expansion of power lithium-ion batteries
According to statistics from the Power Lithium-ion Battery Application Branch of the my country Chemical and Physical Power Sources Industry Association (hereinafter referred to as the "Power Lithium-ion Battery Application Branch"), in 2017, the installed capacity of power lithium-ion batteries for new energy vehicles in my country was 37.06 GWh, an increase of about 20% compared with 2016. The installed capacity of power lithium-ion batteries was far from the 50-60 GWh estimated by the industry at the beginning of 2017.
The production and sales volume of new energy vehicles both approached 800,000 units in 2017, representing a 50% increase compared to 2016. Clearly, the growth rate of installed capacity of power lithium-ion batteries cannot keep pace with the growth rate of new energy vehicle production and sales. A significant reason for this is the change in the production and sales structure of new energy vehicles, with a rapid increase in the proportion of passenger cars and special-purpose vehicles. However, the real problem lies in the fact that the production of power lithium-ion batteries is already severely excessive. According to Liu Yanlong, in 2017, the total output of my country's power lithium-ion battery industry exceeded 200 GWh, while the installed capacity of power lithium-ion batteries is not expected to reach 100 GWh until 2020.
Wang Zidong, director of the 863 Testing Center of Institute 201, bluntly stated: "The next three years will probably be like this (referring to the serious overcapacity situation). I am very worried about the current production of 200GWh of power lithium-ion batteries. Who will buy them in the future?"
In an interview, Liu Yanlong stated that although the overall production volume of power lithium-ion batteries is currently very high, it is difficult to meet the product requirements after the adjustment of national policies. Liu Yanlong expressed his feelings about the iterative upgrades of power lithium-ion battery production lines. He believes that the production lines built by the company are all the most advanced at present, but the equipment iteration speed is fast, and equipment that is idle due to overproduction will be eliminated in a few years.
However, reporters discovered that Jiangsu Tafel New Energy Technology Co., Ltd. (hereinafter referred to as "Tafel") is a maverick battery company amidst the wave of production expansion, making it an exception. In an exclusive interview with Battery my country Network, Tafel's Chairman and President, Long Huijin, stated that Tafel experienced rapid growth in 2017, with production increasing sixfold, and orders pouring in, with all production lines operating at full capacity. However, unlike other companies, Tafel is a somewhat "conservative" technology-driven company, determining its expansion pace based on received orders, thus mitigating the risks of blind expansion to some extent.
Long Huijin, with a technical background, stated that based on current order volume, Tafel will steadily expand production in 2018, continue to refine its technology, improve and perfect its products, and prepare for the development of the next generation of products. In the wave of expansion in the power lithium-ion battery market, Tafel stands out as a rare exception, its avoidance of blind expansion being particularly commendable.
In addition to overcapacity, the market concentration of power lithium-ion batteries is also relatively high. According to statistics, in 2017, six battery companies, namely CATL, Huizhou BYD, Shenzhen Wotema, Hefei Guoxuan High-Tech, Shenzhen BAK Battery, and Tianjin Lishen Battery, accounted for 63.06% of the total installed capacity.
Dr. Fang Kaizheng, Director of the Power Lithium-ion Battery Industry Development Research Office at the my country Automotive Technology Research Center, told reporters that the number of power lithium-ion battery companies decreased significantly in 2017, falling to less than 100, compared to over 150 in 2016. This is especially true for lithium iron phosphate battery manufacturers, which saw a reduction of half compared to 2016. Based on the current industry landscape, it can be inferred that the future new energy vehicle and power lithium-ion battery industries will see a greater concentration of market share and resources.
Power lithium-ion batteries should not be forced to grow too quickly.
“Power lithium-ion batteries contain cells, BMS, connectors, casings, and related protection components. If we break them down, can we achieve the level that the country hopes to reach? The answer is no,” Wang Zidong believes. “The improvement of power lithium-ion battery technology should be comprehensive, not just energy density. Energy density has been overemphasized.”
Tesla's 21700 lithium-ion battery has achieved a power efficiency of 280Wh/kg, while its latest power lithium-ion battery pack only reaches 155Wh/kg. my country aims to achieve 300Wh/kg for individual cells and over 260Wh/kg for systems by 2020. Wang Zidong is not optimistic about this. In his view, power lithium-ion batteries should not be rushed; instead, they should return to basics. High safety, low cost, and long lifespan are the real issues that power lithium-ion batteries need to address after subsidies are phased out.
Objectively speaking, my country's power lithium-ion battery technology has made remarkable progress in the past few years. Fang Kai, reporting from Battery my country, compared the energy density data of power lithium-ion batteries in 2017 and 2012, showing a significant improvement in the company's product technology and performance: In 2017, the energy density of high-end lithium iron phosphate battery cells reached 160Wh/kg (system energy density reached 130Wh/kg); ternary lithium-ion battery cells reached over 220Wh/kg; and the energy density of 18650 cells using the NCA system reached 240Wh/kg, with a system energy density of 150Wh/kg. Comparing 2017 and 2012, the energy density of lithium iron phosphate, ternary lithium-ion, and lithium manganese oxide batteries all increased by more than 30%. Of course, for power lithium-ion battery companies, higher energy density means greater challenges; to achieve the 2020 targets, power lithium-ion battery companies still need to intensify their efforts.
Lin Yi, Dean of the BAIC Lightweight Technology Research Institute, is keenly aware of the powerful influence of the new energy vehicle market and its users. He believes that while range anxiety among users may seem unreasonable in its demands on new energy vehicles and lithium-ion batteries, the primary consideration for any industrial product should be the market—market demand. For vehicle manufacturers and battery companies, the immediate concern is safety, but the most pressing issue in the market is driving range. Therefore, automakers must improve efficiency and reduce costs, while battery companies must increase mileage. While Lin Yi's viewpoint may seem overly focused on range, it has its merits. Of course, the driving range of lithium-ion batteries should not be increased prematurely.
In summary, after a period of rapid growth, the power lithium-ion battery industry has begun to expose some problems, such as structural overcapacity, product structure that needs optimization, and product quality that urgently needs improvement. It is in a critical stage of transitioning from high-speed growth to high-quality growth, and companies that cannot meet market demand will be ruthlessly eliminated by the market.
In the development of the power lithium-ion battery industry, as emphasized by relevant departments, industry associations play a crucial role. Industry associations must conduct thorough company research and promptly release reliable data to the market to guide industry development. According to Zhang Yu, Secretary-General of the Power Lithium-ion Battery Application Branch of the my country Chemical and Physical Power Sources Industry Association, the 2017 Power Lithium-ion Battery Industry Report, compiled by the branch, will be released soon. This report accurately reflects the industry's development in 2017, and the branch will promptly provide feedback to relevant departments.
