Under this new landscape, how will the research and development direction of lithium battery equipment evolve, and how will the market competition landscape change?
With the high barriers to entry and high concentration in the power battery industry, the profit logic of the lithium battery equipment industry is also constantly evolving.
The new round of power battery capacity expansion is characterized by a pressing need for high-end capacity and immense pressure to reduce costs, placing more stringent demands on lithium battery equipment. Specifically: first, stricter requirements for equipment performance; second, extreme cost reduction; and third, shorter delivery cycles. This has brought new impacts to the landscape and development of the lithium battery equipment industry.
A trend of low profit margins and high market concentration is becoming increasingly apparent. According to GGII (Gaogong Lithium Battery Research Institute), since the beginning of this year, bidding for power battery companies has placed stricter requirements on equipment in terms of technology, performance parameters, and operational stability. Meanwhile, in terms of price, the reduction in subsidies has led to a sharp increase in cost-cutting pressure on battery companies, resulting in more aggressive price suppression of bidding equipment.
"The concentration of the domestic power battery industry is constantly increasing, and this trend has also spread to the supply chain. In order to secure large orders and lock in market share, low profit margins and high technology content will gradually become the development trend of domestic lithium battery equipment companies," said an industry insider.
Unlike the market dividends of the previous "Great Leap Forward" style capacity expansion, under the Matthew effect, the logic of benefiting domestic equipment companies has truly upgraded to high-level, all-round competition in terms of technology, cost, scale, delivery cycle, capital, and customer resources.
It is foreseeable that the domestic lithium battery equipment industry will face a low-profit trend in the future. Only companies that focus on R&D and master the key to reducing costs and improving efficiency will have a high probability of winning. There will be fewer new entrants, and industry leaders will gradually emerge in each sub-sector.
Cost-cutting has spawned the problem of "bid-for-performance." Recently, an executive from an equipment company complained to GGII (Gaogong Lithium Battery Research Institute) that many battery companies are now conducting multiple rounds of bidding to drive down prices, resulting in a large influx of equipment suppliers of varying quality and causing market price chaos. There have even been cases of battery companies using bidding to steal solutions from high-end brand suppliers in order to reduce costs.
Against this backdrop, many lithium battery equipment companies are still focused on receiving payments, and the pressure of accounts receivable in the later stages is not small. They also have to absorb a new wave of equipment R&D costs on their own, leaving them with unspeakable difficulties.
“The proliferation of power battery companies from 2015 to 2017 can be described as ‘sprouting everywhere.’ Now it’s the first wave of reshuffling. Suddenly, a hailstorm hits. The equipment companies that survived are the ones that held up. Those that didn’t survive are basically in short supply, with production halted and business settlements suspended,” the head of Rayyu Technology said in a vivid analogy.
"Reshuffling," "survival," and "choosing customers" have become common phrases among equipment companies this year.
Integrated equipment is being deployed more rapidly. Market demand is constantly evolving due to strict control over product processes and costs. Compared to traditional stand-alone equipment, integrated lithium battery equipment offers significant improvements in production efficiency, space saving, energy efficiency, and production costs. Examples include: laser cutting and winding integrated machines, coating and slitting integrated machines, rolling and slitting integrated machines, coating and rolling integrated machines, cutting and stacking integrated machines, and sheet forming and winding integrated machines.
According to GGII (Gaogong Lithium Battery Research Institute), lithium battery equipment companies including Winway Technology, Lead Intelligent Equipment, Hymson, Han's Laser, Haoneng Technology, Jinyinghe, Naconor, Zhuangling Automation, North China Electronics, and Haiyu Best have all been actively working on the integration of front-end equipment.
Industry experts unanimously agree that, assuming individual machine technology is well-developed, equipment integration is a crucial direction for the industry's advancement. However, current lithium battery equipment faces challenges such as inconsistent sizes and a lack of standardization, making integrated development costly. Furthermore, integrated equipment demands higher levels of technological R&D capabilities in areas such as process simplification, precision maintenance, consistency, and stability, posing a significant barrier to entry for equipment manufacturers.
New market opportunities have emerged under the new circumstances. Significant changes occurred in the domestic pouch battery market structure and production capacity layout in 2018. On the one hand, driven by the advantage of energy density, the application penetration of ternary pouch batteries in the domestic new energy passenger vehicle sector accelerated; on the other hand, international automakers' preference for pouch technology was also influencing the technology choices of domestic battery companies.
Roughly estimated, the value of equipment specific to pouch batteries in the entire battery production line is approximately RMB 168 million per GWh. Based on battery manufacturers' capacity layout of approximately 80 GWh, the new demand for specific equipment for pouch power batteries from 2018 to 2020 will be approximately 80 * 1.68 = RMB 134.4 billion, meaning that by 2020, there will be an additional demand of over RMB 134 billion for pouch battery-specific production equipment.
At the same time, with the trend of high-nickel applications, on the one hand, the core equipment and processes for high-nickel cathode materials need to be replaced and adjusted; on the other hand, high-nickel cathodes have stricter requirements for production process control than conventional cathode materials, so the market for specialized high-nickel equipment has also emerged.
Silicon-carbon anode material is used in high-nickel batteries, and to address the issue of low initial efficiency of silicon-carbon anodes, lithium replenishment equipment has become a key technological focus for leading, well-funded, and large-scale power battery manufacturers. However, currently, only a few companies can provide lithium replenishment equipment, and battery companies are actively exploring breakthroughs in lithium replenishment processes.
Furthermore, as Japanese and South Korean battery companies take steps to return to the Chinese market, in order to stabilize the supply chain and reduce manufacturing costs, they will inevitably seek out and cultivate some local Chinese suppliers with core technological potential, strengthen cooperation and integration with the local industrial chain, and thus open up a new opportunity for domestic lithium battery companies to introduce international supply chains.
From December 19th to 21st, the 2018 High-Tech Lithium Battery & Electric Vehicle Annual Conference will be held at the Venus Royal Hotel (Bao'an Shajing), Shenzhen. The theme of this year's conference is "The wind rises and the withered leaves fly, the ice passes and the spring sunshine shines." With 60+ keynote speeches, exposure of 200+ domestic and foreign brands, participation of 1000+ industry chain companies, and interaction of 100,000+ online and offline companies, an annual intellectual feast is in full preparation.
This year's annual meeting will feature a "Opening Ceremony Session" (competition and cooperation between automakers and battery companies), a "Passenger Vehicle and Three-Electric System Session", a "Commercial Vehicle and Three-Electric System Session", a "Power Battery Session", a "Materials Session", a "Equipment Session", a "PACK Session", a "New Applications and Recycling Session", and a "Closing Ceremony Session" (focusing on changes in the market landscape and the next big trend). The meeting will invite leading companies from across the industry chain to share their insights and jointly explore the profound changes that technological innovation will bring to the industry.
