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Full Liberalization Of Power Battery Market: Local Enterprises Face FDI Competition

2019/12/10 20:36:00 0

PowerBatteriesMarketsLocal BusinessesForeign CapitalCompetition

"The wolf in the power battery industry." Recently, the Ministry of industry and information technology issued a regular directory to let the industry send such a feeling.

According to the catalogue of new energy vehicles recommended for use and promotion (the eleventh batch in 2019), new energy vehicles equipped with foreign batteries will receive subsidies for the first time in China. This means that following the abolition of the white list in June this year, China's power battery market is officially open to foreign investment.

The recommended models include 26 passenger cars, including 22 pure electric vehicles, including the upcoming Tesla pure electric car. At present, Tesla's domestic battery suppliers are not yet clear about who will spend their money, but after entering the subsidy catalog, the relevant vehicle rate will be subsidized. In addition to Tesla, foreign brand Mercedes Benz and TOYOTA have also entered the recommended catalogue.

In the past few years, China's subsidies for new energy vehicles are strongly related to the selected power battery manufacturers. The battery that is produced by battery "white list" enterprises and entering the recommended catalogue is the first step to get subsidies. Therefore, in recent years, Tesla based import of new energy vehicles has not been subsidized, domestic new energy vehicle companies and power battery enterprises have enjoyed several years of rapid development "window period".

But the real maturity of the industry can not be separated from the market test. With the gradual increase of the sales volume and the quantity of new energy vehicles, the relevant departments are also guiding the development of the industry from policy driven to market driven. On the one hand, subsidies for new energy vehicles are decreasing year by year, and will be completely withdrawn from the market by the end of 2020. On the other hand, the "white list" of power batteries will be abolished in late June this year.

Obviously, before the subsidy goes down completely, China's new energy vehicle industry will first face competition from foreign counterparts, and the power battery industry will bear the brunt.

Foreign battery completely liberalized

From the latest catalog, Tesla, Mercedes Benz, TOYOTA and other foreign brands of new energy vehicles have entered the subsidy sequence. Among them, Tesla entered the catalog of the models to declare two versions, corresponding to different battery system energy density and mileage.

Why does the same car of Tesla have such a difference? To a certain extent, this is related to more than one supplier selected by Tesla. This year, Tesla has been traced to "no exclusion" agreements with a number of power battery companies, including the Ningde era, LG chemistry and so on.

Tesla's battery suppliers have been confusing. A report of the battery research branch of the China battery power grid pointed out that the Tesla Model selected in the recommended catalogue carries the "three yuan battery produced by Tesla (Shanghai)".

Tesla has always produced its own battery module, but who will provide it? A long-time observer for Tesla analyzed the two energy density of the vehicle because of the battery monomer (electric core) of the two companies of Panasonic and LG chemical, according to the twenty-first Century economic report.

"This is the first time that a battery carrying foreign battery models has entered the subsidy catalog." This person pointed out that in addition to Tesla, Beijing Benz and GAC TOYOTA's two cars have also entered the subsidy directory, they are not equipped with domestic batteries.

Tesla did not respond to the specific use of the core of the company, but since the abolition of the white list of power batteries, it is only a matter of time before the battery produced by foreign-funded enterprises and those carrying these batteries will enter the subsidy catalogue.

In March 2015, the Ministry of industry and Commerce issued the "automotive power battery industry standard". The battery that was approved by the enterprise was used as the basic condition to get subsidies for new energy vehicles. Since then, the Ministry of industry and information has issued four batch of power battery manufacturers directory (that is, "white list"), which has built a "wall" for China's power battery industry.

Information shows that the 57 selected battery manufacturers are all local enterprises, but before yesterday, SAIC, Changan, Chery and many other car companies used Panasonic, Samsung, LG chemical and other battery manufacturers were not listed. Because of subsidies, these foreign battery companies can only temporarily withdraw from the Chinese market.

However, the "white list" has long been out of line with the development of the industry. In twenty-first Century, the business reporter has learned that in practice, the implementation of the "white list" is not so strict. Some of them have not used the "prescribed" battery models, and have entered the product catalogue of the Ministry of industry. Meanwhile, with the increase of market concentration, some enterprises in the "white list" have already reduced their businesses or even gone bankrupt.

Industry analysts believe that the abolition of the battery "white list" and the liberalization of the power battery market to foreign capital are the key step for China's new energy vehicle to move from policy driven to market driven. Only more powerful enterprises can enter the bureau to increase production capacity and reduce the cost to achieve the true development of new energy vehicles.

Marketization is the trend of the times. The release of "white list" is a direct step to promote the marketization of the industry. Recently released the "new energy automotive industry development plan (2021-2035 years)" (Draft) also clearly proposed that we should promote the optimization and reorganization of power battery enterprises, improve industrial concentration.

Cost reduction is the key.

With the support and encouragement of industry policies, a number of power battery enterprises have been growing rapidly in recent years, including the Ningde era, BYD, national high tech, etc. Among them, the Ningde era has become the "overlord" in the industry. According to the latest data, the share of the Ningde market in the domestic market has risen to 51% in the first three quarters of this year.

Under the trend of gradual liberalization of the market, foreign power battery enterprises have also made layout in China. In 2018, LG chemical landed in the power battery investment project in Nanjing. Panasonic also plans to manufacture batteries for electric vehicles in Dalian factories.

It is worth mentioning that after Tesla's domestic battery suppliers, Panasonic and LG chemistry are popular rumors. Among them, Panasonic is Tesla's "familiar" partner, and Tesla is supplied by Panasonic.

Tesla's "hesitating" and "two hands preparation" reflect the fierce competition in the power battery industry to a certain extent. But in the Chinese market, the local brands have been developing rapidly for several years. Can we face the competition of foreign brands directly this time?

A person close to the power battery industry told reporters on twenty-first Century economic report that the competitive advantage of foreign power battery is mainly technology and cost control, and formed a "barrier" in the market. Taking Panasonic as an example, there is an industry analysis that although the same production is made of three yuan lithium battery, Panasonic is using a different proportion of raw materials, which can increase energy density and reduce costs.

However, in recent years, with the development of scale, the cost of domestic power batteries is decreasing year by year. Take the Ningde era as an example, in 2015, the price of its power battery system was 2.27 yuan /Wh, and it dropped to 1.16 yuan /Wh in 2018, with an annual compound decrease of about 20%.

Domestic power battery enterprises have also made many attempts to reduce this aspect. For example, BYD and Ningde are developing CTP (Cell to Pack, no module power battery pack) technology, trying to use more streamlined battery pack interior design to enhance battery performance, and billion cubic meters of lithium energy and other enterprises also expressed in the annual report to enhance the automation level of the production line, to improve the yield and reduce costs.

CTP technology still has many difficulties to overcome. However, recent news shows that the CTP battery pack in Ningde era has entered the stage of mass introduction to commercial production. In the signing ceremony of the December 6th Ningde era and the deepening of strategic cooperation of new energy in Beiqi, Ceng Yuqun, chairman of the Ningde era, said: "CTP technology will cover all the mainstream models of the existing and upcoming launch of Beiqi new energy."

Upgrading the technology level and reducing the cost is the key method. China's power battery enterprises represented by the Ningde era will soon usher in the market's real "review".

 

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