Source: Wall Street News
From rumored power batteries to today's energy storage batteries, can they land this time?
According to the late news,$BYD Company Limited (002594.SZ)$/$BYD COMPANY (01211.HK)$The subsidiary Freddy Battery joined forces in March of this year$Tesla (TSLA.US)$A supply agreement was reached for the Shanghai energy storage plant, and energy storage batteries will be supplied to Tesla in the first quarter of next year.
This means that at a time when the growth of the automobile business is weak, Tesla may begin to vigorously promote the development of the energy storage business in the future and increase battery cell suppliers ahead of schedule to ensure the stability and diversification of battery channels. At the same time, BYD is also expected to fully benefit from this cooperation, increase its market share, and further expand its influence in the field of overseas energy storage.
If the cooperation actually succeeds, it will achieve a win-win situation under strong alliances.
1. The growth rate of new energy vehicles is on the brakes, but the energy storage does not turn off
Compared with the growth rate of the NEV industry, which has clearly slowed down, the energy storage industry is still developing rapidly.
In the first quarter of this year, the total bid scale for domestic energy storage systems and EPCs reached 10 GWh and 24 GWh, with year-on-year growth rates as high as 170% and 130%.
Demand for energy storage will continue to grow, benefiting from the latest domestic electricity price adjustment policy this year and the continued decline in costs.
Since this year, many provinces and cities across the country, such as Zhejiang, Henan, and Jiangsu, have issued time-sharing electricity price adjustment policies. The increase in the price difference between peak and valley electricity (the highest price difference in the country exceeded 0.7 yuan/kwh in June this year) will further stimulate enthusiasm for investment in the energy storage sector.
Take Zhejiang's time-sharing electricity price adjustment policy as an example. The electricity price difference between peak and valley electricity prices before and after the policy adjustment increased from 0.926 yuan/kWh to 0.943 yuan/kWh (calculated at the average level for the full year of 2023), driving the overall return on investment in user-side energy storage projects to rise from 20.52% to 21.29%.
In addition to this, the cost of energy storage is also following the decline in raw material prices.
The average price of energy storage cells has dropped to an all-time low of 0.33 yuan/Wh, and the weighted average bid prices for energy storage systems and EPC have also fallen to historical positions. The latest winning bid prices are 0.69 yuan/Wh and 1.16 yuan/Wh, respectively.
2. BYD and Tesla achieve a win-win situation
BYD and Tesla Energy Storage are expected to cooperate for the first time in the field of batteries.
(1) BYD
From BYD's perspective, in addition to the field of new energy vehicles, the company also has a huge influence in the field of energy storage. In 2023, BYD's energy storage system shipments reached 28.4 GWh, an increase of 136% over the previous year. The growth rate far exceeded the 52.6% growth rate of power batteries. The market share is as high as 13%, ranking second in the world. The shipment volume within China is 10 GWh and overseas shipments are 18.4 GWh (energy storage business covers 107 countries and regions).
According to Wall Street News and Insight Research, the advantages of BYD's energy storage battery products stem from the cost advantage of its independent development and large-scale development.
As BYD Chairman Wang Chuanfu said, “In the future, we need to highly combine automotive battery production capacity with energy storage battery production capacity.” BYD's energy storage battery products come from independent research and development from basic cells to system BMS levels. Star products such as blade batteries and sodium-ion batteries can also be simultaneously used in energy storage battery products. Therefore, compared to a single energy storage system integrator, BYD has a higher cost advantage.
At the same time, BYD's energy storage battery products fully cover the power supply side, power grid side and user side, and can launch targeted solutions according to various scenarios such as industrial parks, seashores, and cities.
This has also enabled BYD to frequently win domestic and international energy storage orders since this year, including the 1.1 GWh energy storage system order signed with Spanish renewable energy developer Grenergy in January, winning the bid for China Datang Group Co., Ltd.'s 0.5c and 1GWh 0.25C energy storage system projects in February, and winning the bid for Linyuan Electric (Nanjing) Co., Ltd.'s 1.4 GWh DC module framework project in March.
If BYD wins the Tesla energy storage order this time, it not only means that the quality of BYD's products has been further recognized by overseas giants, but the supply of energy storage batteries exceeding 8 GWh is also a large order for BYD, which will help increase its market share.
(2) Tesla
From Tesla's perspective, Tesla's core business, the car sales business, has not performed well in recent quarters. In the first quarter of this year, Tesla suffered a sharp collapse in sales and a triple decline in revenue, net profit, and gross margin.
However, in the first quarter of this year, Tesla's energy business revenue increased 7% year on year, and gross profit increased 140% year on year, reaching a record high, and became the only growth point among all Tesla businesses.
Following the launch of new production lines at Tesla's Shanghai energy storage plant and California's Lathrop plant, demand for energy storage batteries is also gradually expanding.
Specifically, Tesla's Shanghai energy storage plant is Tesla's first energy storage gigafactory project outside the mainland of the US. The products are mainly Megapack, a large-scale energy storage system for industry and commerce (Powerwall for households is not involved yet).
The total energy storage scale of the Shanghai Energy Storage Gigafactory has reached about 40 GWh (currently Tesla's Lathrop energy storage plant in California has a production capacity of only 24 GWh). It will be officially put into operation in the first quarter of 2025, and will be able to produce more than 10,000 Megapack energy storage systems every year in the future.
As energy storage production capacity increases, Tesla will definitely increase battery suppliers. This has been verified in the selection of the new energy vehicle supply chain. Therefore, following$Contemporary Amperex Technology (300750.SZ)$In the future, Tesla handing over part of the order to BYD is also a reasonable option.
In today's new energy market, fighting alone is far less effective than joining forces, and I believe cooperation in various industries will continue to exist in the future.
Editor/jayden