Editor's note: This article comes from “Investment China Network”, author: Fei Xue, website editor: Qi Yan,36Posted with permission. Original title “A New Battleground for Lithium Batteries: CTP Batteries”

Power battery leader Ningde era (300750.SZ), is facing a “sniper battle”. The initiator is the former bossBYD(002594.SZ).

BYD is a well-known manufacturer that first entered the field of new energy vehicles and power batteries in China, and has established a leading position in the field of power batteries in China. In recent years, its leading position in the battery field has been replaced by the Ningde era.

Recently, BYD launched a “blade battery” that may challenge the competitive advantage of the Ningde era in power batteries. On January 12, BYD Chairman Wang Chuanfu stated at the 2020 Electric Vehicle 100 People's Conference that BYD's “blade battery” will be mass-produced in March 2020, and that the battery will first be installed on the “Han” models launched in June 2020, with a planned battery life of up to 600 kilometers.

The introduction of the “blade battery” mentioned above was two months ahead of the original plan, indicating that BYD's research and development in the battery field is speeding up. Otherwise, the gap between the battery field and the Ningde era will further widen. Against the backdrop of declining subsidies and joint ventures joining the competition, the era of BYD and Ningde will enter a new round of competition.Power battery rivalry: the Ningde era overtakes BYD

Ningde Era was founded in 2010 by Zeng Yuqun, a domestic power battery expert. As a vertical producer in the field of new energy vehicle batteries, the company explores the market by establishing extensive cooperation with NEV manufacturers — this is completely different from BYD's “closure” strategy. With the above strategy, the Ningde era replaced BYD's leading position.

Behind the decline in BYD's market share and influence is a long-term closed pattern and strategic mistakes in the development of ternary lithium batteries. For a long time, BYD's power batteries were not sold abroad to guarantee its own demand for new energy vehicles and hinder attacks by other new energy automakers at the same time.

Lithium-ion batteries are composed of four parts: cathode material, anode material, diaphragm, and electrolyte. Among them, the cost of cathode materials has reached 30%, which is currently the key to improving battery performance. According to the different materials used, it is divided into six types: lithium titanate, lithium cobalt acid, lithium manganate, lithium iron phosphate, nickel cobalt manganese, and nickel cobalt aluminum. The latter two are ternary lithium batteries.

Compared with ternary lithium batteries, lithium iron phosphate batteries are safer, have a longer cycle life, and are cheaper, but there is less room for energy density improvement, which determines that the vehicle's battery life is limited. However, with the gradual resolution of the safety issues of ternary lithium batteries, ternary lithium batteries have gradually become mainstream in the market.

Previously, in terms of battery technology, BYD always adhered to the lithium iron phosphate route. Due to changes in the subsidy policy in the past two years, it has had to follow market trends. According to China's new energy subsidy policy, battery energy density is also an important factor in how much subsidies it receives. Some progress has been made in the development of its ternary lithium “811” battery.

Ningde Era successfully surpassed BYD with its advantages in ternary lithium technology. Take the energy density, which is an important indicator of power batteries, as an example. In the Ningde era, the current energy density of the square ternary 811 series battery is as high as 245 wh/kg, which is slightly lower than the international leaders LG and SK. Compared with domestic BYD,Guoxuan Hi-TechThe energy density of ternary batteries in the Ningde era was ahead by an absolute advantage.

In terms of lithium iron phosphate batteries, the energy density of square lithium iron in the Ningde era was 167 wh/kg, BYD was about 157 wh/kg, and Guoxuan Hi-Tech had an average of about 170 wh/kg. BYD had no advantage. Furthermore, BYD has been slow to advance in terms of the high energy density 811 battery.

In 2017, the battery sales volume of the Ningde era began to surpass that of BYD, and the gap between the two sides continued to widen.

Data sources: company announcements, news websites

According to statistics from the Research Department of the Power Battery Application Branch, the total number of power batteries installed in China in 2019 was 62.2 GWH, of which Ningde Times sold 31.71 GWH, capturing more than 51% of the market share. In the same period, BYD won 17% of the national market share, with a total sales volume of 10.76 GWH, which is only one-third of the market share of the Ningde era. This data makes BYD's 100GWH planned power battery production capacity very embarrassing.

In the first half of 2019, BYD's battery business achieved total revenue of 12.2 billion yuan (including internal transactions, mobile phone batteries, etc.), and Ningde Shidai's battery business achieved 16.9 billion yuan. The later generation of Ningde surpassed BYD with a market capitalization of 250 billion dollars. The latter's total market value was 158.1 billion, only 60% of the former.

Under the new competitive trend of declining financial subsidies for new energy vehicles, in order to establish a competitive advantage, battery manufacturers must drive costs down and increase energy density through technological changes. Judging from the cost reduction path, leading companies all chose to reduce the cost of power battery systems by streamlining structural design.

In September 2019, Ningde Shidai pioneered CTP battery technology. Ningde Times claims that by omitting the battery module assembly process, the volume utilization rate of CTP battery packs has been increased by 15%-20% compared to traditional battery packs, the number of battery pack components has been reduced by 40%, production efficiency has increased by 50%, and the energy density of battery packs has increased by 10%-15%, which will greatly reduce the manufacturing cost of power batteries.

CTP power battery pack literally means cell to pack. Previously, domestic pure electric vehicles used battery cells connected in series into battery modules, and the battery modules were then connected in series into a complete package. CTP battery packs, on the other hand, are battery cells that directly form power battery packs. The purpose is to reduce production costs and increase energy density.Tesla, Honeycomb Energy are all deploying CTP battery pack technology.

On the part of automakers, there are alreadyBAICNew Energy cooperated with Ningde Times to launch the world's first CTP battery pack.

These actions will further consolidate and even expand the leading position in the Ningde era. Four months later, BYD began organizing snipers.BYD Strikes Back: Introducing Blade Batteries

On January 11, BYD Chairman and CEO Wang Chuanfu revealed at the China Electric Vehicle 100 People's Conference Forum (2020) that the newly launched blade battery will increase volumetric energy density by 50%, have good heat dissipation effect, and reduce battery pack manufacturing costs by about 30%. It has characteristics such as high safety and long life, and the vehicle life span can reach more than one million kilometers.

According to information, BYD's “blade battery” is a square aluminum case lithium iron phosphate battery that uses GCTP technology to increase the length of the battery cell. It is named “blade” because the single cell is long and flat.

The above news has greatly boosted investor sentiment. Since the news was released, within five trading days, BYD's stock price has risen 21%.

Wang Chuanfu stressed that from a safety point of view, iron batteries are the best batteries in the passenger car sector. The market generally believes that lithium iron batteries have better safety than ternary lithium batteries. This is also an important reason why BYD's transition to ternary lithium batteries was slow in previous years.

In terms of energy density, BYD claims a 50% increase compared to traditional iron batteries. This conclusion has been contested by the agency:CITIC SecuritiesAccording to the published research report, BYD's blade batteries are expected to increase energy density by more than 30%.

However, Jia Xinguang, executive director of the China Automobile Dealers Association, told China Investment Network that in reality, the two battery packs released by BYD and the Ningde era cannot be discussed as being particularly innovative, mainly through improvements in packaging techniques to achieve an increase in energy density.

However, blade batteries will effectively reduce battery production costs: according to estimates by CITIC Securities, as research and development of “blade batteries” progresses, it is expected that the cost of the company's battery systems will be drastically reduced. Assuming that the company shipped 15 GWh of power batteries in 2020, the replacement ratio of lithium iron phosphate blade batteries is used as a scenario assumption. Assuming that the replacement ratio is 100%/50%/25%/0%, respectively, the replacement of lithium iron phosphate blades will save the company 25.5/12.8/64/0 billion in costs.

CITIC Securities expects that with the start of production of “blade batteries” and the launch of new models in 2020, it is expected that the installed capacity of BYD lithium iron phosphate batteries will increase markedly, and “blade battery” technology will drive demand for lithium iron batteries to pick up. The agency's optimistic forecast means that BYD lithium iron batteries may rise again.

However, from the perspective of market competition, when leading global NEV manufacturers are turning to CTP technology one after another, Jia Xinguang told China Investment Network that it is impossible to talk about whether BYD can use “blade batteries” to win back one city. BYD's current focus is not on battery competition with the Ningde era, but on how to compete with Tesla. As Tesla is fully domesticated, its price will drop. This will put a lot of pressure on BYD, and now it has to compete for costs.

In terms of technology route selection, there is a difference between BYD blade battery and Ningde Era CTP battery. According to public information, the battery technology and production capacity of the two companies mentioned above are compared as follows:

It is easy to see that BYD, which insists on iron batteries, is seeking a competitive route that differentiates itself from the high-nickel ternary batteries of the Ningde era.

BYD and the Ningde era represent the two technology routes of lithium iron and ternary respectively. The choice of battery materials between the two is different, and the size of end use on this basis determines the future market space.

BYD uses a 180wh/kg lithium iron phosphate monomer battery. The terminal is aimed at mid-range and low-end models. The Ningde Era, on the other hand, is based on a high-nickel ternary power battery pack with lower development cost and higher system energy. The terminal is aimed at mid-range and high-end models. From the point of view of value, BYD has little chance of winning.

When it comes to energy density, neither side has much advantage. According to the plan of the Ningde era, the system energy density of the CTP power battery pack of the Ningde era will reach 200 wh/kg in 2020. The current energy density of BYD's lithium iron battery is 157 wh/kg. According to an increase of 30-50%, it is expected to reach the level of 204-236 wh/kg. It can be seen that the lower limit of energy density of BYD iron-lithium batteries after adopting new technology is close to the average of the Ningde era.

In terms of the competitive landscape, Ningde Times reached cooperation with BAIC New Energy and Volkswagen Truck; BYD andToyota, Audi reached a strategic cooperation, and also announced that it is preparing to discuss cooperation with BAIC New Energy Vehicles in the battery field.

However, in terms of market share, the higher popularity of ternary lithium batteries will pose a challenge to BYD, which mainly uses lithium iron batteries: according to statistics from the Research Department of the Power Battery Application Branch, the total installed volume of power batteries in China in 2019 was about 62.2 GWh, up 9.3% year on year. Among them, the latest market share of ternary lithium batteries was 65.2%, significantly ahead of lithium iron batteries: in addition, ternary battery capacity increased by 22.5% year on year, and lithium iron phosphate battery loading volume fell 9.0% year on year.The plight of the leading Ningde era

The predecessor of Ningde Era was New Energy Technology Co., Ltd. (ATL), which was founded in 1999 by Zeng Yuqun and others.applesThe battery core supplier is the exclusive supplier of batteries for the 2014 OPPO “charge for five minutes, talk for two hours” Find 7 model. In 2010, the BMW Group screened power battery suppliers worldwide, and ATL was selected and established the Power Battery Systems Division. In 2011, ATL's power battery system department became independent, and Ningde Shidai was officially listed.

Currently, Ningde Times is the first company in the world to mass-produce high-nickel 811 on square batteries, increasing the energy density of battery systems to 170 Wh/kg, and pioneering mass production of 811 batteries. However, for the Ningde era, power battery technology has now basically peaked in the short term, and its leading edge in the battery field is bound to be challenged.

Jia Xinguang told China Investment Network that from the perspective of battery technology, new energy battery technology is currently close to peaking, and there is limited room for further improvement. Lithium iron phosphate batteries are almost the same. Although there is still some room for ternary lithium batteries, they continue to improve, and there are safety risks and cost issues. From a safety point of view, lithium iron phosphate batteries are safer.

Beginning in 2018, Ningde Era took the lead in promoting 811 series lithium batteries, confirming its success in the domestic battery fieldLeading technology。 However, at present, on the one hand, there is still a gap between it and competitors such as LG, and at the same time, domestic competitors such as Lishen and Guoxuan Hi-Tech have also stepped in this field. This means that the leading edge of the Ningde era in this technology will not last long.

On June 21, 2019, the Ministry of Industry and Information Technology officially abolished the policy “Specification Requirements for the Automobile Power Battery Industry”, and at the same time abolished the catalogue of one to four batches of eligible enterprises (“white list” for power batteries), and the domestic market officially opened.Panasonic, Samsung SDI, and LG Chem have restarted domestic factories.

Tianfeng SecuritiesIt was pointed out that LG Chem will be the biggest competitor in the Ningde era. Compared with LG, the cost advantage will be an important competitive advantage for Ningde — the underlying effects are supply chain integration capabilities, material innovation capabilities, and management efficiency capabilities. Entering the country from overseas will have a certain impact on Ningde in the short term, but the long-term comparison is the competitiveness of the two sides. The key is whether Ningde has a competitive advantage over overseas.

While the two leading companies entered CTP, Guoxuan Hi-Tech, another heavyweight in the power battery field, also joined the team and chose to cooperate with automakers to achieve overtaking on curves.

According to some reports, Volkswagen will acquire 20% of Guoxuan Hi-Tech's shares at a cost of 560 million US dollars. If the news is finally true, Guoxuan Hi-Tech's lithium batteries will be directly purchased by Volkswagen, which also means that the market share of the previous Ningde era may be reduced.VolkswagenIt is a world-renowned automobile manufacturer. The company plans to sell more than 3 million pure electric vehicles by 2025.

Predictably, in the future, competition for technology routes in the field of new energy batteries will become more intense, relating to the competitive advantages, market position, and shareholder profits of various power battery manufacturers. Who will win is difficult to determine for the time being.