Zeng Yuqun, founder of Ningde era, once said:

The Japanese invented the lithium battery, the Koreans made it bigger, and the Chinese made it number one in the world.

This sentence is probably the highest summary of the history of lithium battery development in the world.

As early as the 1990s, consumer electronics companies represented by Japan's Sony Group Corp began to use lithium batteries on a large scale. One of the winners of this year's Nobel Prize in chemistry, Japan's Akira Yoshino (Akira Yoshino), is recognized as the father of lithium electronic batteries.

In the 21st century, South Korean "students" have quickly opened up the market in the field of lithium batteries with the advantages of keeping up with Japan in technology and cheaper products. At present, LG Chemical and Samsung SDI firmly occupy the top two positions in global consumer battery shipments, while power battery shipments also rank among the global TOP5.

And then, like many other industries, as soon as Chinese players made their debut, they swept the entire industrial chain.

Chinese battery companies, represented by BYD and Ningde era, have become the world's largest lithium battery supplier since 2015 with the cost advantage of "Chinese factory" and the accelerated innovation of "Chinese speed". It delivers more than 70% of the world's power batteries.

Guotai Junan Research Institute Product Center jointly launched the "next decade" special research series, the first article will focus on the field of lithium batteries.

Guotai Junan Dianxin team believes that although Japan's Panasonic, South Korea's Samsung and LG may still have certain technological advantages, considering that China has a more complete industrial chain and better cost control capabilities, Chinese battery companies represented by BYD and Ningde will gradually narrow the gap in the next decade and begin to lead the global lithium battery industry chain.

China: the King of Lithium under the Power Battery shuffle

When it comes to BYD cars, everyone is no stranger. But building cars is not the foundation for the BYD family to get rich.

In 1995, Wang Chuanfu, a senior engineer at the China Nonferrous Metals Research Institute, was aware of the high cost of the domestic "mobile phone" and realized the broad prospect of mobile phone batteries in his field.

After careful consideration, Wang Chuanfu quit his golden rice bowl and founded BYD Electronics Factory with his cousin Lu Xiangyang.

At that time, Japanese battery companies were in an absolute monopoly position, and Wang Chuanfu decided to start the technological research and development of Ni-Cr batteries in order to open up the market.

With continuous technical research, BYD has rigidly reduced the price of lithium batteries of the same specification to 1/3 of that of Japanese products.

In 2000, BYD became the first company in China to obtain an order for lithium battery for Motorola mobile phones, which also marks the recognition of China's lithium battery technology by the global mainstream industry chain.

But just as BYD later moved to new energy vehicles, the real dominance of lithium batteries in China began with power batteries, and lithium batteries from mobile phones to cars also ushered in hundreds of times more room for imagination.

Take a pure electric car as an example, its battery capacity is equivalent to about 5000 mobile phone batteries. If it is an electric bus, it is tens of thousands of mobile phone batteries.

Because of this, domestic lithium battery manufacturers have increased the size of power batteries, and even appeared the situation of overcapacity in a short time.

However, looking forward to 2030, Guotai Junan Dianxin team believes that the profit margin of the entire power battery industry in the world will reach 140 billion, which means that the net profit will increase more than tenfold within a decade, and the leading enterprises of lithium batteries and materials will also usher in the era of giants.

Ten times in ten years: power battery Nuggets opportunity

Optimistic about the field of new energy vehicles and lithium batteries, mainly based on the following six hypotheses:

Hypothesis 1: global car sales are growing steadily, and the penetration rate of new energy vehicles is expected to reach 30% by 2030.

Global car sales reached 95.06 million in 2018, down 0.6% from a year earlier and falling for the first time since 2009. In 2019, China's cars are still under great pressure, and sales have declined significantly compared with the same period last year.

However, considering that the global GDP growth rate will remain stable, we cautiously expect global vehicle sales to reach 100 million units in 2030, an increase of 5.2% year-on-year compared with 2018, with an average annual compound growth rate of 0.42%.

In December 2019, the Ministry of Industry and Information Technology issued the Development Plan of New Energy vehicle Industry (2021-2035) (draft for soliciting opinions), which mentioned that China's new energy vehicle sales accounted for 25% by 2025. On this basis, we assume that new energy vehicles account for 30% of sales by 2030.

Hypothesis 2: the penetration rate of new energy vehicles is expected to reach 30% in 2030, when annual sales will reach 30 million.

From overseas, Volkswagen and BMW have made great strides in the field of new energy vehicles. Among them, Volkswagen aims to account for more than 20% of new energy vehicle sales by 2025, up from about 1% in 2019. At the same time, BMW has signed battery supply contracts with Ningde Times and Samsung SDI for a total of 10.3 billion euros from 2021 to 2031.

Therefore, we expect that the process of overseas vehicle manufacturers in electric vehicles will advance rapidly and the penetration rate will increase rapidly.

According to the global car sales of 100 million units in 2030 and the penetration rate of new energy vehicles reaching 30%, the annual sales of new energy vehicles will reach 30 million.

Hypothesis 3: at present, the new models launched by Tesla, Inc. and BYD are mainly those with a range of about 500km, which currently requires about 13-14 kilowatt-hours of electricity per 100km on average.

Taking into account technological progress, assuming that 12 kilowatt-hours of electricity are needed for every 100km in the future, according to the range of 500km per bike, that is, each vehicle carries about 65 kilowatt-hours of electricity (including 5 kilowatt-hours of standby power), the demand for power batteries corresponding to the sales of 30 million new energy vehicles in 2030 will reach 1950GWH.

Hypothesis 4: the price of lithium battery has continued to decline in the past decade, and lithium battery is still in the process of large-scale promotion. With the continuous maturity of technology and the further highlight of the scale advantage of subsequent capacity improvement, battery cost will also be further reduced.

We predict that the average price of lithium battery will drop from 0.85-0.95 yuan / wh to 0.5-0.6 yuan / wh by 2030. According to the 1950GWH calculation of power battery demand in 2030, the battery market space will be between 1-1.1 trillion yuan.

Hypothesis 5: according to the above assumption, the overall operating income of the global power battery will be 1 trillion yuan in 2030. If the profit margin of the mature manufacturing leader Gree Electric Appliance is about 14%, then the power battery industry will have a profit margin of 140 billion.

If the market share of Chinese power battery companies is 40% Mur50% (China accounted for 45% of the world's power battery shipments in 2018), that is, Chinese power battery companies will carve up 56-70 billion yuan in profits.

Hypothesis 6: even if the penetration rate of new energy vehicles reaches 30% by 2030, there is still huge room for growth. At the same time, the market share of Chinese power battery companies in the world is only 40-50%. If the market share of photovoltaic in China is more than 70%, there is still room for power cells to increase their market share.

According to the valuation of 25 times PE, the market capitalization of lithium battery enterprises in the future will reach 1.5 trillion-1.7 trillion, while the market capitalization of BYD, Ningde era, Yiwei LiNeng and other enterprises as a whole is only more than 300 billion.

Based on the analysis, we believe that under the background of the irreversible development trend of new energy vehicles, with the increase of permeability and the improvement of bicycle carrying capacity, the power battery industry has broad development prospects.

One of the reasons why China has a future: the most complete lithium battery industry chain in the world

According to the "White Paper on the Development of Lithium Ion Battery Industry (2019)" issued by China Electronic Information Industry Development Research Institute, statistics show:

At present, about 95% of the world's lithium batteries are owned by China, Japan and South Korea, of which China has overtaken Japan and South Korea to become the world's largest producer of lithium batteries since 2015.

This paper analyzes the reasons for the rapid rise of China's lithium battery industry, on the one hand, it is related to the rapid increase of the global share of mobile phone companies represented by OPPO, Huawei and XIAOMI, but also benefits from the promotion of new energy automobile industry in China.

However, the advantage of the development of China's lithium battery industry goes far beyond policy and demand. More importantly, China already has the largest and most complete lithium battery industry chain in the world.

Upstream: strong control ability of raw material resources

The main raw materials of power battery include cobalt, lithium, nickel, manganese, aluminum, copper and other metals, but the core is lithium and cobalt.

From the perspective of lithium resources, China has formed an industrial chain with Tianqi lithium industry and Ganfeng Lithium as the leader.

Among them, Tianqi Lithium Industry has 51 per cent control of the Terison mine, which can meet the demand for 13000 GWH lithium batteries and about 30m electric vehicles.

From the perspective of cobalt resources, China's cobalt metal enterprises represented by Huayou Cobalt Industry and Hanrui Cobalt Industry already have a large number of cobalt mine reserves. Tenke mine of Luo Mo is also one of the copper and cobalt minerals with the largest reserves and the highest grade in the world.

In addition to basically achieving self-sufficiency, some lithium materials such as positive electrodes, negative electrodes, diaphragms and electrolytes are also exported in bulk.

Middle reaches: the rapid rise of domestic lithium power equipment manufacturers

Although Japan and South Korea have developed early in the lithium battery industry and have certain advantages in production equipment, with the rapid breakthroughs of leading intelligence, Yonghe technology and other enterprises, the whole lithium battery industry chain equipment has been basically localized.

Take the pilot intelligence as an example, it already has relatively perfect lithium battery production equipment.

At the same time, pilot Intelligence has also reached strategic cooperation with Panasonic, LG Chemical, Tesla, Inc. and other well-known overseas battery companies.

The revenue of leading intelligent lithium battery equipment grows rapidly Note: in 2017, the company acquired Titan New Power data Source: Wind, Guotai Junan Securities Research

Downstream: Ningde era, BYD's forge ahead

It is undeniable that the whole vehicle field is still the weakest link in China's industrial chain, but in the process of rapid progress in applied technology, China usually surpasses it with speed and "boldness".

For example, in the field of photovoltaic, it is China that expands the single crystal furnace from 90 kg to more than 450 kg, and the continuous feeding can reach 1 ton, which greatly reduces the cost of photovoltaic.

In the field of lithium batteries, the same thing is happening.

1) Square battery

The largest unification of lithium batteries is the birth of 18650 cylindrical batteries, which can quickly reduce production costs through standardized products. But the 18650 battery is so small that it is very difficult to package, and Tesla, Inc. is also worried about it, thus promoting the 21700 battery with a larger unit.

Chinese lithium battery companies, including BYD and Ningde Times, choose to produce large square lithium batteries directly, which can not only quickly reduce the difficulty of packaging, but also reduce the difficulty of battery thermal management.

2) Ningde era: CTP technology

The CTP technology of the Ningde era was unveiled at the Frankfurt Motor Show in September 2019. unlike the traditional cell-module-PACK production mode, CTP technology omits the assembly of battery modules, increases the overall battery package volume utilization efficiency by 15%, and reduces the number of battery package parts by 40%. At the same time, the energy density of the battery pack reaches 200wh/kg.

3) BYD: Super lithium iron phosphate

BYD's super lithium iron phosphate battery further enlarges the lithium battery monomer and reduces module links to further increase the volume energy density. It is estimated that in 2020, the cost of lithium iron phosphate battery is expected to be reduced to 0.5-0.6 yuan, thus further reducing the cost of electric vehicles.

The second reason why China has the future: its unparalleled advantage in cost control

With the world's largest lithium battery industry chain and production advantages, China has successfully reduced the global lithium battery price and cost by 90% in the past 9 years.

According to the latest lithium-ion battery price research report released by Bloomberg New Energy Finance (BNEF) on December 3rd:

The average global price of lithium-ion battery packs this year is $156 per kilowatt-hour, down 13 per cent from a year earlier and 87 per cent lower than in 2010.

Among them, the average price of lithium battery packs in the Chinese market this year is as low as 147 US dollars / kWh, the lowest in the world.

The report believes that the rise in sales of electric vehicles and the rapid promotion of lower-cost cathode materials are the main reasons for the decline in battery prices.

Under the downward pressure of global power battery prices, Ningde era and BYD still show the strongest manufacturing cost control ability in the world compared with the power battery companies in Japan and South Korea.

Judging from the profit margins of various enterprises in 2018:

The operating profit margin (Operating ProfitMargin) of LG Chemical Battery Division (Energy Solution, including small batteries, power batteries and energy storage batteries) is 3.2%

Samsung SDI Battery Division (Energy Solution, including small batteries, power batteries and energy storage batteries) has an operating profit margin of 5.7%

According to the domestic situation, BYD is difficult to split the profit of power batteries due to vertical integration, while Ningde's operating profit margin of 14.08% in 2018 is much higher than Samsung SDI and LG Chemistry.

At the same time, in terms of industry concentration, the combined market share of the top 10 shipments in the industry increased from 71% in 2017 to 88% in the first half of 2019-with Ningde era and BYD accounting for nearly 70%.

With the continuous expansion of the follow-up scale, the advantage of cost control of leading enterprises is expected to be more prominent, and the power battery industry will remain strong. The leaders represented by Ningde era and BYD will set off waves in the global market.