According to the Futu Securities app, Cui Dongshu, secretary general of the China Passenger Car Association, stated in his article that lithium battery shipments in June 2024 were 43GWh, up 30% YoY, with ternary battery shipments of 11GWh, accounting for 26%, lower than the same period; while shipments of lithium iron phosphate batteries were 32GWh, accounting for 74%, and ternary battery growth slowed down. From January to June, lithium battery shipments were 203G, up 34% YoY.

Cui Dongshu pointed out that in the past two years, the new energy automobile and energy storage industry have been highly prosperous, with rapid growth in battery demand, and a decline in the proportion of electric vehicle battery shipments. Due to the high price of nickel and cobalt, there has been differentiated growth between ternary lithium batteries and lithium iron phosphate batteries. As long-range products grow, ternary batteries still have a market, and the price reduction drives an increase in the share of lithium iron phosphate batteries. With the adjustment and promotion of tax exemptions for electric vehicle range extension policies, low-end micro-electric vehicles have declined, and pure electric vehicle trends have weakened, while extended-range and plug-in hybrid vehicles have continued to grow strong. Due to the vehicle purchase tax policy suppressing the development of short-range micro-electric vehicles, the demand for electric vehicle battery shipments has continued to grow slower than the overall vehicle growth.

1. Power battery shipments as a proportion

Currently, the proportion of batteries produced in power battery output is continuously decreasing. In 2021, the production battery installation rate of power battery shipments reached 70%, in 2022, it was 54%, in 2023, it was 50%, and it will drop to 47% from January to June 2024.

With the development of energy storage and other industries, especially the world energy crisis brought about by the Russo-Ukrainian crisis, the demand for batteries in the energy storage industry is growing rapidly, resulting in a significant decrease in the proportion of batteries shipped. Both power and energy storage batteries are relatively under pressure from oversupply and inventory. The growth rate of power batteries in 2021 and 2022 was lower than that of the overall vehicle, and the power battery shipments in 2024 were low, with battery production higher than shipment growth.

2. The ternary proportion of internal combustion certificate battery shipments is gradually recovering

The demand for power battery shipments is fluctuating. In 2019, demand increased by 10%; in 2020, the power battery shipments of domestic sales models was 64GWh, and demand grew by 2%; in 2021, the power battery shipments were 155GWh, and demand grew by 143%; in 2022, shipments were 295GWh, and demand grew by 91%; in 2023, shipments were 388GWh.

Lithium battery shipments in June 2024 were 43GWh, up 30% YoY, with ternary battery shipments of 11GWh, accounting for 26%, lower than the same period; while shipments of lithium iron phosphate batteries were 32GWh, accounting for 74%, and ternary battery growth slowed down. From January to June, lithium battery shipments were 203G, up 34% YoY.

3. The demand for automotive batteries continues to grow strongly

The demand for automotive batteries continues to grow strongly, with pure electric passenger vehicle battery demand expected to grow by 16% in 2024, while plug-in hybrid passenger vehicle battery demand grows by 89%, continuing to grow strongly. Due to the low base number factors of subsidy exit, the demand for passenger car batteries has relatively rebounded, and the demand for special-purpose vehicles has also grown significantly.

Looking at the proportion of battery shipments, the demand structure of power batteries has been rapidly changing in recent years. In 2020, pure electric passenger cars were still first, pure electric buses were second, and pure electric special-purpose vehicles were third, while plug-in hybrid passenger cars were only fourth. However, by this year, pure electric passenger cars still maintained the first position, while plug-in hybrid passenger cars rose to second place, pure electric special-purpose cars rose to third place, and pure electric buses fell to the fourth level.

In recent years, the pure electric bus market has sharply declined, while the pure electric special-purpose vehicle maintains a relatively fast rise in battery usage. At present, the pure electric passenger car has dropped from 18.5% in 2020 to a cumulative level of 1% in 2024, a drop of 17 percentage points. The growth of plug-in hybrid passenger car battery usage is relatively rapid. Currently, it has risen from 7% in 2021 to 22% this year, an increase of 15%, while pure electric has declined to 67%. Plug-in hybrids and pure electric vehicles maintain the absolute core characteristics of the battery demand structure, accounting for about 90% of the passenger vehicle battery demand.

4. Automobile certification production

According to the certification battery measurement, the production volume of certified products in June 2024 is expected to be 0.92 million units. From January to June, it was strong at 4.32 million units, of which pure electric passenger cars were 2.38 million units, plug-in hybrid passenger cars were 1.71 million units, and pure electric special-purpose vehicles were 0.21 million units, which is still a good output data.

16. Supporting battery companies are far from fully competitive

In the past few years, the competitive landscape of the battery market has not changed significantly. Due to the relatively slow technological progress in the power battery market and the relatively obvious characteristics of scale growth, battery companies have obtained the characteristics of strong production and shipment quantity growth.

The original battery structure has not changed significantly. Whoever invests more will be able to obtain a larger market share, thus forming the characteristics of strong performance of the main battery company's expansion; while small and medium-sized battery companies also have the opportunity to gain certain growth by breaking through technology or other aspects. Therefore, the battery structure should be relatively stable in the high-speed growth.

However, there are relatively great opportunities for changes in the future of the battery industry. The trend of whole vehicle companies manufacturing batteries or joint ventures of companies related to whole vehicles producing batteries together is becoming increasingly obvious. Battery companies will gradually form core supporting products for whole vehicles.

Currently, the demand for high-end electric vehicle market is not very strong, but the demand for upgraded small and micro cars, as well as low-end family commuting needs, is greater, especially under the influence of the epidemic, the market demand for A0-class and A00-class cars is high.

Looking at the supply chain issue, whole vehicle companies will become increasingly stronger in the future, and their control over battery companies and upstream industrial chains will be further strengthened, while their control over downstream brand marketing capabilities will also be further strengthened. Under the new energy system, the 'whole vehicle is king' feature will continue to be reflected.

6. The battery of lithium iron phosphate needs to decrease.

Currently, the energy density range of the main electric vehicle battery is between 125 and 160. In particular, in June 2024, the proportion of batteries between 125 and 140, which performed prominently, reached 48%, an increase of 8 percentage points compared to the same period last year.

In the first half of 2024, the proportion of models with an energy density above 160 was 13%, which showed a significant decrease compared to 19% in 2023. This is mainly due to the decrease in energy density of lithium iron phosphate batteries replaced by ternary batteries. The proportion of products with energy density below 125 decreased from 9% in 2023 to 4% in 2024, and dropped to 1% in the second quarter.

7. Battery companies pattern.

The competition pattern of the battery industry is characterized by the relatively strong features of CATL and BYD. Currently, there is still a large gap between BYD and CATL. BYD's proportion increased from 15% in 2020 to 25% in 2024, and reached 27.5% in the second quarter, while CATL's proportion in the second quarter decreased to 44.7%, and the proportion of other battery companies also showed obvious differentiation.

The head enterprises’ aggregation effect of battery companies is slowing down. The proportion of the top two companies in 2022 is 72%, which remains at 72% this year. Other companies only have a proportion of nearly 30%.

The product differentiation advantages of lithium iron phosphate batteries are obvious. BYD is relatively outstanding, but it was in a period of adjustment at the beginning of this year, and then brought incremental benefits after the price reduction. The proportion of CATL's lithium iron phosphate batteries surpassed BYD's in the first quarter of this year, and BYD began to exert force to recover from the second quarter of this year. The performance of EVE Energy and CCTEV is relatively stable. Sunwoda Electronic, Riipolinkinn, and Jiadian New Energy have improved significantly.

Due to BYD's comprehensive transformation into lithium iron phosphate batteries, the advantage of the top three ternary batteries such as CATL is more obvious, and Fuhua Energy has performed well recently.