Tesla, Inc. (TSLA.US) Battery Day (Battery Day) was held on September 23, Beijing time. The Battery Day mainly announced the technological innovation path of battery design, battery factory, cathode material, anode material and vehicle battery integration. At the same time, forward-looking guidance shows that after the realization of the five major technological innovations, the battery cost is reduced by 56%, the battery life is increased by 54%, and the battery production unit is reduced by 75%. Tesla, Inc. actively promotes the progress of battery technology and has ambitious future sales targets, benefiting the Chinese lithium raw materials and equipment enterprises with the strongest global competitiveness in the supply chain; at the same time, Tesla, Inc. promotes battery cost reduction and plans to launch a $25000 car model. Vehicle sales are expected to accelerate volume, directly benefiting its supply chain. Continue to recommend Tesla, Inc. supply chain investment opportunities.

The long-term demand for batteries is huge, and Tesla, Inc. released an ambitious sales target.

Tesla, Inc. pointed out at the shareholders' meeting and the Battery Day press conference that sales growth is expected to reach 30-40% in 2020. Tesla, Inc. estimates that in order to achieve 100% car electrification, the future battery demand will reach 10TWh, including: small car, Robotaxi demand 1500GWh, compact, medium-sized car demand 3500GWh, luxury car, SUV demand 900GWh, pickup demand 1100GWh, truck demand 3000GWh. In order to meet the needs of electric vehicles and energy storage, Tesla, Inc. aims to make self-made 10GWh in 2021, 100GWh in 2022 and 3TWh in 2030.

Battery Day releases five major technological innovations: battery design, battery factory, positive material, negative material, vehicle battery integration.

In order to achieve sustainable energy development and meet battery demand, Tesla, Inc. released a self-made battery to be put into production in 2022. The Battery Day conference announced five major technological innovations.

1) Battery Design, cost reduction 14%: size upgrade large cylindrical (46800) battery, using non-polar ear design

2) Battery factory, cost reduction of 18%: dry electrode, continuous processing process (single-line 20GWh capacity), huge capacity target (75% reduction in single GWh capacity investment)

3) cathode materials, cost reduction of 12%: different models use LFP, Ni-mn, high-Ni cathode materials, and set up cathode material factories in the United States to layout battery recycling.

4) anode material, reduce cost by 5%: use Si material.

5) the battery is integrated with the car body, reducing the cost by 7%: the battery is directly built into the car structure to reduce the amount of parts.

Reduce costs and increase efficiency to promote the popularity of electric smart vehicles.

We believe that the technological innovation and existing technology improvement path released by the battery are in line with expectations. At present, the focus on the battery technology route is in the optimization and upgrading of chemical system, technical process improvement and so on. Based on the five major technological innovations, the future battery production cost is expected to decline: 54% increase in battery mileage, 56% reduction in battery cost, and 69% reduction in investment cost per GWh capacity. In the future, Tesla, Inc. plans to launch a model with a price of $25000 based on new technology within three years. At present, nearly 80% of fuel-fueled vehicles under 200000 account for nearly 80%, and there is plenty of room for replacement, which is expected to accelerate the improvement of electric vehicle penetration.

Tesla, Inc. actively promotes the progress of battery technology, and the supply chain is expected to benefit.

1) Chinese lithium battery raw materials and equipment suppliers have the strongest global competitiveness. Tesla, Inc. proposed key technologies, supplies, and plans for self-made batteries. Chinese lithium battery manufacturers have more or less explored the layout. China's lithium power supply chain is expected to benefit from direct matching Tesla, Inc. and so on.

2) Tesla, Inc. 's efforts to reduce the cost of batteries will push Tesla, Inc. 's whole vehicle to further reduce its cost and volume, which will be good for Tesla, Inc. 's supply chain, including traditional parts, thermal management, automotive electronics and so on.

3) the impact on the third-party battery enterprises: a) Tesla, Inc. is more to promote industrial progress, coordination with the existing battery enterprises, not direct competition. B) Tesla, Inc. has been promoting energy reform, and the power battery is an important part of the electrification of fuel vehicles. Tesla, Inc. has invested a lot in research and development, technology and production. Considering Tesla, Inc. 's huge battery demand (expected to exceed 100GWh in 2023) and the battery industry's own characteristics (heavy assets, economies of scale, technology-intensive), it is expected that Tesla, Inc. 's follow-up batteries will still be jointly supplied by Panasonic, LG Chemical, Ningde Times and other battery companies.

Risk factors:

The sales volume is less than expected, the project production schedule is not as expected, and the technical route is changed.

Investment strategy:

Tesla, Inc. is expected to continue to promote the progress of battery technology and reduce the cost in the future, so as to promote the popularity of electric vehicles and accelerate the reform of the automobile industry and even the energy industry. The leaders of China's electric vehicle supply chain and lithium industry are globally competitive and are expected to benefit from the global volume of electric vehicles, especially the related investment opportunities in Tesla, Inc. 's supply chain are clearer:

1) Lithium electricity link: Ningde era (battery), BYD (Abachet01211), Enjie shares (diaphragm), German Nano (LFP material), Pu Tailai (negative electrode), New Zebang (electrolyte), Divine material (electrolyte), it is recommended to pay attention to Kodali (shell), Xiang Fenghua (negative electrode), etc.

2) upstream equipment and resources: pilot Intelligence (equipment), Hangke Science and Technology (equipment), Ganfeng Lithium

3) in the field of thermal management, recommended: Sanhua Intelligent Control (thermal management), Silverwheel shares (thermal management)

4) spare parts, selected recommendations: top Group, Fuyao Glass Industry Group (03606), Xinquan shares, suggested attention: Xusheng shares.