The concept of new energy was first proposed in the 1980s. Since the beginning of the 21st century, with the continuous depletion of non-renewable energy and the increasing environmental awareness of the public, the new energy industry has ushered in an era of rapid development.
In the domestic market, the new energy vehicle industry is clearly the most watched sector. Since 2014, with substantial government subsidies and favorable policies, the development of new energy vehicles in China has been rapid. For example, in 2014 and 2015, the production and sales of new energy vehicles in China increased by more than three times, and the overall industry scale expanded rapidly.
As the heart of new energy vehicles, the development of the power battery industry is highly correlated with the development of new energy vehicles. In recent years, with the decline in national subsidies, the new energy vehicle industry has cooled down significantly. Amidst this downturn, the power battery industry has also found itself in a predicament, facing competition from both upstream and downstream players.
Former Wolf: Security Issues
As a means of transportation, the fundamental purpose of new energy vehicles is to enable people to travel more efficiently in a safe environment. Like the ancients, many hoped to travel on wheels of fire, without the risk of being burned. However, the current power battery industry seems to have failed to effectively control this potential problem. In the past month, several incidents of spontaneous combustion in new energy vehicles, including those from Tesla and Lifan, have forced people to re-examine the development of the power battery industry.
As is well known, due to the inherent limitations of materials, power batteries have always faced the dilemma of balancing high performance and safety. Currently, the most widely used lithium iron phosphate batteries and ternary lithium batteries in the domestic market can be considered representative products of safety and high performance, respectively.
Also due to limitations in its materials, lithium iron phosphate batteries have a relatively low upper limit on energy density. While this ensures the current state of power batteries, it cannot support their future development. For example, at the end of 2017, the system energy density of lithium iron phosphate batteries from mainstream domestic manufacturers was 130Wh/kg, and this year it has only increased to around 140Wh/kg. Even if it increases to 180Wh/kg or even 200Wh/kg in the future, it will still be far from meeting the Ministry of Industry and Information Technology's industry target of 260Wh/kg for 2020.
Currently, only ternary lithium batteries, or more precisely, high-nickel ternary lithium batteries, can meet this requirement. Only ternary lithium batteries using NCM811 as the cathode material have the potential to achieve a system specific energy of 260Wh/kg in the future. However, the problem lies in the fact that increasing the nickel content in the ternary material reduces the overall thermal stability of the battery. Furthermore, the presence of a large amount of Ni2+ makes the electrolyte prone to slow oxidation and gas release, severely compromising the safety performance of the entire battery system. Moreover, under current technological conditions, there is no good solution to this problem. In response, some have jokingly remarked that the key factor for the widespread application of ternary lithium batteries in the future lies not in the battery itself, but in the adequacy of vehicle escape systems and related insurance systems. The corresponding technical challenges are evident.
As for the technical issues of power batteries, the market and consumers are not too concerned; their biggest demand is for people to leave home happily and return home safely. However, the recent spate of spontaneous combustion incidents involving new energy vehicles will undoubtedly make consumers more hesitant to choose them, thus suppressing demand. However, overemphasizing safety will inevitably limit innovation in power battery technology, and given that the overall performance of new energy vehicles is already inferior to that of traditional fuel vehicles, their future development will also be constrained.
Houhu: Recycling Issues
The period of rapid growth in domestic production and sales of new energy vehicles was 2013-2014. As time goes on, the core components of the first batch of new energy vehicles will also usher in a peak period of replacement. Naturally, this brings with it the problem of disposing of a large number of scrapped power batteries.
While new energy vehicles can guarantee environmental protection during operation, this environmental protection will inevitably be questionable if the discarded power batteries are not properly disposed of. This is because current power battery systems still suffer from problems such as electrolyte pollution and cobalt heavy metal pollution.
Given the current level of national attention to environmental protection, the issue of battery recycling for power battery companies is inevitable in the future. However, the current domestic power battery recycling system is imperfect, still plagued by various problems such as low battery recycling rates, low resource recovery rates, and indiscriminate pollutant emissions. Currently, the main methods for handling end-of-life power batteries in China are cascade utilization and dismantling and recycling, but both methods have significant room for improvement.
Since the disposal of power batteries is not a complete failure in the traditional sense, but only a reduction in their capacity, they can still be used in various fields such as low-speed electric vehicles, medical equipment, and energy storage devices. This method obviously greatly improves resource utilization. However, the reality is harsh. Although power batteries with a capacity reduction of 40%-80% are within the range of secondary use, the secondary use rate of scrapped power batteries in China is still less than 10%.
Secondary utilization is not simply the reuse of scrapped power batteries. In the same equipment, the reused power batteries need to have a high degree of consistency in battery parameters and energy degradation. This means that scrapped power batteries need to undergo multiple processes such as recycling, testing, and screening before they can be reused, which greatly increases costs. In addition, addressing consumer concerns is also a problem that needs to be solved, as the lifespan and safety of the power battery system after secondary utilization are uncertain factors.
Although over 90% of China's power batteries are absorbed by the market through dismantling and recycling, these are mostly handled by informal small and medium-sized workshops. These workshops have significant loopholes and hidden dangers in their disposal methods and pollutant treatment. Compared to legitimate companies, these small and medium-sized workshops do not need to invest heavily in equipment, labor, and environmental protection costs, allowing them to offer higher prices for recycled power batteries and attract more buyers. This means that legitimate companies are doing a thankless and arduous task in the recycling sector.
However, recycling remains a necessary and essential link for power battery companies. Establishing a comprehensive recycling system not only improves the utilization rate of scrapped power batteries but also allows for the recovery of valuable metals such as cobalt and nickel, thus reducing costs to some extent. Furthermore, a good recycling system enhances a company's reputation and influence, thereby positively impacting the market. In short, although the recycling industry is at the end of the power battery industry chain, it is also at the forefront of the industry's future. Enabling a closed-loop system for the entire industry chain can yield predictable benefits for companies. Of course, while envisioning the future, we must also face reality. The current challenges in the power battery recycling sector are undeniable. Early entrants face thin profits and significant risks. Given the relatively low level of consumer awareness regarding recycling at the time, the survival of recycling companies remained precarious.
Overall, the domestic power battery industry is currently facing a shift from quantity to quality. Whether companies can ensure future product quality while effectively recycling large quantities of end-of-life products will be a key factor influencing their development. How power battery companies will break through this predicament will depend not only on strong policy support but also on their own continuous self-improvement.
