Song Qiuling, Deputy Director of the Economic Construction Department of the Ministry of Finance, stated at the 2018 China Automotive Industry Development (TEDA) International Forum that the structural overcapacity risk in the new energy vehicle industry is intensifying, with overcapacity in low-end products and insufficient capacity in high-end products. The industry is exhibiting signs of blind expansion, and investment is showing signs of overheating. Managing the overcapacity of power batteries will be a key focus going forward.
As of August 2018, global electric vehicle sales reached approximately 4 million units, with the Chinese market playing a pivotal role. It is understood that China accounted for 37% of global electric vehicle sales. Experts estimate that by March 2019, cumulative global electric vehicle sales are expected to exceed 5 million units, with China's market share growing to around 42%.
Against this backdrop, the development speed of China's electric vehicle industry has indeed been too rapid. Driven by subsidies, a large amount of capital has begun to flow into the industry. As early as 2009, the sales volume of new energy vehicles by various companies was less than 500 units, while by 2017, domestic sales of new energy vehicles had reached 794,000 and 777,000 units respectively. According to data released by the China Association of Automobile Manufacturers, in the first seven months of 2018, China's production and sales of new energy vehicles reached 504,000 and 496,000 units respectively, representing year-on-year increases of 85% and 97.1%.
With the rapid development of the electric vehicle industry, its upstream power battery industry has also developed rapidly. Data shows that from 2014 to 2016, the average annual growth rate of China's power battery industry reached 368%, 324%, and 78.6% respectively, and the investment in the power battery sector exceeded 100 billion yuan in 2016. However, at the same time, the problem of overcapacity has also begun to emerge.
Yu Xiao, a new energy vehicle analyst at Huachuang Securities, stated in a media interview that "the capacity problem of power batteries emerged as early as 2017," and that based on current total demand and supply, there is an overcapacity in power batteries. Recently, Huang Shilin, vice chairman of CATL, stated at an event that the structural overcapacity in the domestic power battery industry is expected to continue until 2023.
It is understood that the lifespan of a typical power battery is 5-8 years. my country began promoting the use of new energy vehicles in 2014, making this year the first year of power battery "retirement." According to a report by the China Automotive Technology Research Center, the cumulative amount of scrapped power batteries nationwide will reach 120,000-200,000 tons from 2018 to 2020, and may reach 350,000 tons by 2025.
In anticipation of the upcoming surge in power battery recycling, on September 5th, the Ministry of Industry and Information Technology (MIIT) released the first batch of companies that meet the "Industry Standard Conditions for Comprehensive Utilization of Waste Power Batteries for New Energy Vehicles." The release of these standards signifies that China will begin a standardized recycling model to prevent irregularities such as substandard recycled batteries and the refurbishment and reuse of old batteries.
However, only five companies were announced this time, which is relatively insufficient to meet the upcoming wave of recycling. But this is only the beginning stage, and adjustments will be made as problems arise. It is also hoped that more power battery recycling companies can enter the market and find more efficient solutions, thereby further promoting the reduction of power battery costs.
