Scanning the Global Power Battery Market Pattern in the First Quarter: "Internal and External Rolls Together"

The competitive landscape of the global power battery market is shifting from the "Three Kingdoms Competition" between China, Japan, and South Korea to China's "One Country Dominance".

Recently, data released by South Korean market research firm SNE Research showed that in the first quarter of this year, the global installed capacity of electric vehicle power batteries reached 133GWh, a year-on-year increase of 38.6%, maintaining a steady upward trend.

It is worth noting that among the top ten global power battery companies, Chinese manufacturers led by CATL and BYD occupy 60% (60.9%) of the market share, while CATL and BYD occupy half of the global power battery market (51.2%). Among them, Ningde Times firmly holds the top position in the global power battery field, with a market share of 35%; BYD, with a global market share of 16.2%, surpassed LG New Energy and jumped to second place.

In contrast, the global market share of the three major battery manufacturers in South Korea - LG New Energy, SK On, and Samsung SDI - has decreased by 1.3 percentage points year-on-year, currently less than 1/4; At the same time, Chinese second tier battery manufacturers have also maintained rapid growth and are starting to challenge Japanese and Korean battery companies on the top ten list.

Chinese companies dominate the market, BYD has the strongest growth momentum

Data shows that in the first quarter of this year, the installed capacity of Ningde Times power batteries reached 46.6GWh, a year-on-year increase of 35.9%, occupying over one-third of the global market share and firmly ranking first. Ningde Times has a stable position as an industry leader, with installed capacity and market share more than twice that of BYD, which ranks behind. At the same time, CATL is constantly improving its innovation system, continuously promoting the construction of innovative systems such as battery material systems, system structures, extreme manufacturing, and business models, thereby giving its products a strong competitive advantage.

"In the first quarter of this year, Ningde Times maintained a leading position in the power battery market, with innovation capability as its core driving force." Fan Yongjun, Secretary General of Chengdu New Energy Vehicle Industry Promotion Association, stated in an interview with China Auto News that in terms of technological innovation, Ningde Times has been the first in the industry to launch innovative products such as Kirin batteries, sodium ion batteries, and condensed state batteries in recent years. Among them, the Kirin battery adopts the third-generation CTP technology of CATL, with a global record high system integration, a maximum volume utilization rate of 72%, and an energy density of up to 255Wh/kg. In March of this year, Kirin Battery officially achieved mass production and installation. As the world's first mass-produced model of Kirin Battery, the pure electric mid to large MPV Kirin 009 under Kirin Battery is expected to be delivered in the second quarter of this year. In addition, the new models of the Sailis AITO Wenjie series, as well as new cars such as Changan Automobile and Avita, will also be equipped with Kirin batteries; And CATL's sodium ion batteries will debut in Chery models, while both sides will jointly launch the "ENER-Q" battery brand; Condensed state batteries are a leading new product in the industry, and Ningde Times' condensed state battery vehicle grade application products may achieve mass production within this year.

It is worth noting that in the first quarter of this year, the market share of Ningde Times decreased by 0.8 percentage points, while BYD's market share increased by 5.8%, surpassing LG New Energy and ranking second with a market share of 16.2%. BYD is also the company with the highest growth rate among the top ten global power battery installed capacity in the first quarter, with a year-on-year increase of 115.5% and an installed capacity of 21.5 GWh. In fact, since last year, BYD has been competing with LG New Energy for the runner up position on the list, with a rapid growth rate.

"BYD's installed capacity of power batteries is growing rapidly, which is related to its well-established industrial chain and multi pronged layout." Lin Shuwen, a researcher at the East China Automotive New Materials Technology Research Institute, told China Auto News. On the one hand, BYD, which started with batteries, is constantly innovating in the field of power battery technology. In addition to the second-generation blade batteries that have already been mass-produced in multiple battery factories across the country, it is also developing new products such as solid-state batteries with higher energy density and better safety performance. The energy density of solid-state batteries can reach 400Wh/kg, which is twice that of BYD's second-generation blade batteries with 180Wh/kg, making them more competitive in the market. In January of this year, BYD publicly stated that its R&D team has fully covered various battery technology routes. On the other hand, BYD is accelerating its expansion in the domestic and international power battery markets, with customers now including domestic and foreign electric vehicle brands such as FAW, Lantu, Ford, Toyota, Mercedes Benz, BMW, etc. These developments indicate that BYD's technology and production capacity are constantly improving in the field of power batteries, and surpassing LG's new energy is also a manifestation of its competitiveness enhancement.

Data shows that BYD sold over 550000 electric vehicles globally in the first quarter of this year, a year-on-year increase of 92.81%. While leading the growth of the global electric vehicle market, it has also taken a new step in the global power battery market. "Since BYD's comprehensive transformation to new energy last year, there has been a rapid growth in both electric vehicle sales and installed capacity of power batteries, which can be said to complement each other." Li Ming, a professor at the School of Automotive Engineering at Geely University, said in an interview with China Auto News that BYD's "frenzy" in the power battery market not only shows that its technological research and development capabilities are constantly improving, but also its ability to manage and integrate the supply chain continues to improve. These factors further enhance BYD's price competitiveness in power batteries.

The rise of Chinese second tier manufacturers and the rise of Japanese and Korean companies are being attacked from both sides

In the top ten global power battery installations in the first quarter, LG New Energy, Panasonic, SK On, and Samsung SDI ranked third to sixth in sequence. Due to the rapid growth in sales of electric vehicles in its main overseas markets, Europe and America, the three major battery manufacturers in South Korea have all achieved growth in installed capacity. Among them, LG New Energy, SK On, and Samsung SDI increased by 37.5%, 5.1%, and 52.9% year-on-year, respectively, ranking third, fifth, and sixth. However, although the "three giants" of South Korean batteries have achieved year-on-year growth, their growth rate cannot match that of Chinese battery manufacturers, and their market share has been diluted, which is a natural thing.

"In the top ten global power battery installed capacity rankings in the first quarter, BYD surpassed its Japanese and Korean competitors in both installed capacity and year-on-year growth." Fan Yongjun said that in addition, among Chinese battery manufacturers, Innovation Airlines, Guoxuan High tech, Yiwei Lithium Energy, and Xinwangda ranked seventh to tenth respectively, forming a catching up trend for Japanese and Korean enterprises. Among them, in the first quarter of this year, the installed capacity and market share of China Innovation Airlines approached Samsung SDI. From the ranking list, Samsung SDI is the competitor that China Innovation Airlines most wants to surpass. Ranked eighth, Guoxuan High tech's installed capacity increased by 13.7% year-on-year, helping it achieve a year-on-year revenue growth of 83.26% in the first quarter, reaching 7.177 billion yuan; The net profit attributable to the parent company increased by 134.78% year-on-year to 75.6095 million yuan. In the first quarter, the battery installed capacity of Yiwei Lithium Energy, ranked ninth, increased by 75.5% year-on-year, second only to BYD, and its market share also increased by 0.4 percentage points.

"At present, Japanese and Korean battery manufacturers can be said to be 'under attack'. Xie Yuzhong, an advisor to the Shandong Battery Industry Association, analyzed in an interview with China Auto News that there were Ningde Times and BYD before, and second tier Chinese power battery companies such as Zhongchuanghang, Guoxuan High tech, Yiwei Lithium Energy, and Xinwangda are striving to catch up.".

Xie Yuzhong pointed out that in recent years, the production and sales of electric vehicles in China have continued to grow rapidly. Not only has there been a significant increase in demand for power batteries, but there are also increasing and higher requirements for the variety, type, and quality of batteries. This has prompted many Chinese battery companies to innovate in multiple dimensions, especially in terms of battery structure innovation, which has made rapid progress, such as BYD's blade batteries, GAC's lithium iron phosphate magazine batteries, and Honeycomb Energy's Dragon Scale Armor batteries. However, Japanese and Korean battery manufacturers have certain shortcomings in structural innovation, which is the main reason why their market share has been surpassed by Chinese battery companies. However, last year, South Korean battery manufacturers noticed new market trends and began developing lithium iron phosphate batteries, launching samples earlier this year. Although slowing down in the market, Korean battery companies will still maintain strong market competitiveness due to the faster progress of Japanese and Korean manufacturers in solid-state batteries, as well as their rapid catch-up in lithium iron phosphate batteries.

Market competition is endless, and technological strength is the key to victory. "Japanese and Korean power battery manufacturers still have significant strength that cannot be ignored." Lin Shuwen believes that from a technical perspective, Japanese and Korean companies once held 80% of the world's core lithium battery technology patents. In the current fiercely competitive solid-state battery technology development, Japanese and Korean companies still occupy the top position. From the perspective of supporting customers, Panasonic and LG New Energy are both long-term suppliers of Tesla, which is also the main factor supporting Panasonic and LG New Energy's battery installation volume ranking among the world's top. Among them, LG New Energy does not worry about orders due to its high sales of electric models such as Tesla Model 3, Model Y, Ford Mustang Mach-E, Volkswagen ID.3, Volkswagen ID.4, etc; SK On continues to grow with models such as the Hyundai Ioniq 5, Kia EV6, and Volkswagen ID.4; Samsung SDI has mainly benefited from the sales growth of BMW i4 and iX in the global market, and the sales of the Rivian R1T/S model, a new American car making force supplied by it, have also increased.

As one of Tesla's major battery suppliers, Panasonic's batteries are mainly used for Tesla's models in the North American market. Thanks to multiple price reductions, Tesla delivered a total of 170000 electric vehicles in the United States in the first quarter, a year-on-year increase of 55%. This resulted in Panasonic's global installed capacity of power batteries increasing by 37.7% year-on-year in the first quarter, approaching the average growth rate of 38.6% in the global power battery market and maintaining a market share of 9%.

Cost side improvement of lithium price decline and enhanced profitability of battery manufacturers

Both top battery companies and second - and third tier power battery manufacturers are highly sensitive to fluctuations in lithium prices. As an important raw material for lithium batteries, the price of lithium carbonate has significantly decreased over the past period of time. Since reaching a high of nearly 600000 yuan per ton at the end of last year, the price of lithium carbonate has embarked on a downward trend this year, dropping by about 66% in just over four months, reaching a low of around 170000 yuan per ton. However, it is expected to stabilize in the near future. According to data from Shanghai Steel Union, the price of battery grade lithium carbonate was 216500 yuan/ton on May 10th.

Indeed, the rise and fall of lithium prices are affecting the nerves of the entire power battery industry. "The actual cost of battery grade lithium carbonate should be around 30000 yuan, and there is no reason to increase it to 600000 yuan. It is expected that the price will rapidly decline in the future, and it is not impossible for fluctuations to reach below 100000 yuan per ton." Wang Yu, Chairman of Funeng Technology, made such a prediction at the end of March; Mo Ke, founder and president of True Lithium Research, predicts that the price of lithium carbonate may drop to within 150000 yuan/ton by the end of this year; Wang Qisui, Senior Vice President of Guoxuan High tech and President of China Business Unit, analyzed that the price of lithium carbonate should be relatively reasonable between 150000 and 200000 yuan/ton.

Xie Yuzhong believes that the price of battery grade lithium carbonate has dropped from a high point of nearly 600000 yuan per ton to around 200000 yuan now, reflecting the reality of overcapacity in the global and domestic power battery industry. According to statistical data, the global installed capacity of power batteries reached 517.9GWh in 2022, a year-on-year increase of 71.8%. It is predicted that the global installed capacity of power batteries is expected to reach 1550 GWh by 2025. However, only the expansion projects currently planned and underway domestically are expected to reach around 4000GWh by 2025, which is more than twice the market demand. In this situation, the power battery industry will inevitably face a new round of reshuffle and elimination competition, where advantageous resources may further concentrate on top enterprises. Weak enterprises may be merged, actively transformed, or eliminated.

Due to the decline in lithium prices and improvement in cost, the financial reports of top domestic power battery companies in the first quarter were generally good.

Recently, leading power battery companies Ningde Times and Yiwei Lithium Energy have successively released their first quarter financial reports, both achieving significant growth in performance. According to the financial report, Ningde Times achieved a revenue of 89.38 billion yuan in the first quarter of this year, a year-on-year increase of 82.91%; The net profit was 9.822 billion yuan, a year-on-year increase of 557.97%; Yiwei Lithium Energy also performed well in the first quarter, achieving a revenue of 11.186 billion yuan, a year-on-year increase of 66.11%; The net profit attributable to the parent company was 1.14 billion yuan, a year-on-year increase of 118.68%. In addition, BYD achieved a revenue of approximately 120.174 billion yuan in the first quarter of this year, a year-on-year increase of 79.83%; Realized a net profit of approximately 4.13 billion yuan, a year-on-year increase of 410.89%.

Industry insiders point out that the main reason for the significant increase in performance of power battery companies in the first quarter is the improvement in the cost side. According to a recent research report by Xiangcai Securities, lithium prices have started a downward cycle. With the price of lithium and other lithium battery materials falling back, the cost pressure on power batteries has eased, and power battery manufacturers have entered a period of profit recovery.

The pressure of domestic overcapacity is high, accelerating the layout of "rolling" overseas

From the decline in lithium prices, it can be seen that domestic power batteries have fallen into a crisis of overcapacity. According to the data from the China Automotive Power Battery Industry Innovation Alliance, in 2022, the cumulative production of power batteries in China was 545.9GWh, while the cumulative sales of power batteries were 465.5GWh, with a cumulative installed capacity of only 294.6GWh; In March of this year, the production and installed capacity of power batteries in China were 51.2 GWh and 27.8 GWh, respectively. In the first quarter, the two were 130.0 GWh and 65.9 GWh, respectively. Currently, the production of the domestic power battery industry is far higher than demand, continuing the oversupply trend since last year, and the pressure to reduce inventory has greatly increased. In this context, "going abroad" has become an inevitable option for domestic power battery companies to seek market growth and meet customer needs. Recently, companies such as BYD, CATL, Xinwangda, and Honeycomb Energy have been accelerating their overseas expansion.

At the Shanghai International Auto Show in April this year, Li Yunfei, General Manager of BYD's Brand and Public Relations Department, revealed to reporters that BYD has set a sales target of 3 million new energy vehicles this year, including overseas and Chinese markets. The "overseas" business is becoming a new sales growth point for the company. As a result, BYD's competitiveness in the global power battery market is expected to further enhance. Recently, foreign media reported that BYD may consider building a new battery super factory in Spain. According to German media reports, BYD is supplying lithium iron phosphate blade batteries for the European version of the Model Y rear wheel drive model produced by Tesla's Berlin super factory in Germany. At the same time, other Chinese battery companies are also accelerating their overseas expansion. After acquiring the Bosch G ö ttingen battery factory, Guoxuan High tech will also build factories in Germany, Vietnam, the United States and other places.

It is worth mentioning that the overseas business revenue of Chinese power battery companies continues to grow. Among them, the overseas sales revenue of Guoxuan High tech in 2022 was 2.98 billion yuan, a year-on-year increase of 464.76%. More than 15 new overseas designated customers were added throughout the year, including strategic customers such as overseas passenger cars, commercial vehicles, and energy storage; Yiwei Lithium Energy's revenue reached 11.186 billion yuan in the first quarter of this year, with overseas revenue accounting for about 40%, an increase compared to the same period last year. Overall, in the first quarter of this year, out of the global installed capacity of 133GWh of power batteries, the installed capacity of power batteries in China was about 65.9GWh, and the installed capacity in overseas markets outside of China has reached 67.1GWh, surpassing the Chinese market.

"The trend of China's power batteries accelerating their 'going global' has been deeply reflected in the global power battery installation volume list in the first quarter." Xie Yuzhong said, on the one hand, this is due to the huge pressure of domestic overcapacity; On the other hand, this is also one of the symbols of the continuous improvement of technological innovation capabilities of Chinese power battery enterprises. Overcapacity will certainly force companies to go global and seek new growth points, but without a solid technological foundation as support, it will not go far. In recent years, Chinese power battery companies have continuously emerged with innovative waves, which is the true fulcrum for power battery companies to go global.

"From a global perspective, the electrification of automobiles is becoming an irreversible and accelerating trend, bringing more globalization opportunities to power battery companies than before." Fan Yongjun said that from overseas markets, under the pressure of high subsidies, high carbon emission regulations, and energy crises, the electric vehicle industry in Europe and North America is accelerating. However, there is still a significant gap in the local power battery supply capacity in these regions, making it difficult to provide effective support, which is the window of opportunity for Chinese battery companies. Moreover, European and American car companies are increasingly recognizing the continuously improving quality and increasing variety of Chinese power batteries, which is also a favorable factor for Chinese power battery companies to go global.

It should be noted that some new regulatory changes in the European and American markets will have an impact on China's export of power batteries. For example, the US Inflation Reduction Act requires that power battery raw materials must meet a certain proportion of materials produced in the United States or countries that have signed free trade agreements with the United States, or recycled within North America, in order to enjoy US federal tax breaks. In Europe, the introduction of the EU carbon tariff amendment and the latest revision of the EU Battery Regulation mean that Europe will have stricter control over the power battery industry chain. These all pose serious challenges for Chinese power battery companies to enter Europe and America. "Continuously strengthening technological innovation and actively adapting to market changes are necessary to maintain competitiveness in the international market and enable China's power batteries to better 'go out' and 'go in'," said Fan Yongjun.