On November 17, Financial Associated Press reported (Reporter: Zeng Chuchu) that under the double attack of falling lithium carbonate prices and price wars among auto companies, the lithium battery industry has entered a deep water zone of elimination. The 11th China (Guangzhou) International Summit Forum on the Battery New Energy Industry (Battery "Davos") was held in Guangzhou on the morning of November 14-15.

An analyst from citic sec stated at the conference that based on the financial data analysis of representative listed companies in the lithium battery sector, the year-on-year growth rate of fixed assets and construction in progress is at a historical low, and the proportion of newly added capacity to existing capacity is also at a low level. The overall capacity utilization rate in the industry is expected to increase next year.

Although there is a general expectation in the industry for solid state batteries to become a breakthrough for the "next generation battery," experts point out that issues such as conductivity, production equipment, and costs still need to be addressed. At the same time, due to the sharp decline in lithium prices, the industrialization speed of sodium-ion batteries has slowed down. Wu Hui, director of the Yivi Economic Research Institute, stated that in the future, sodium-ion batteries still need time to reduce costs and improve efficiency to gain market share in a new round of energy storage competition.

Lithium battery clearance is ongoing and capacity growth will slow down.

In the past two years, the prices of upstream raw materials for lithium batteries, particularly lithium carbonate, have continued to decline, and the pressure from price wars among downstream auto companies is being transmitted, leading to an internal competition consensus within the power battery industry. After the frenzied expansion boom, industry elimination has entered a deep water zone.

Research institution EV Tank's data shows that in 2023, the global market shares of cathode material, anode material, separator, and electrolyte in china reached 86%, 94%, 84%, and 87% respectively, already establishing a dominant position.

"Although our country has achieved remarkable results in the battery new energy sector, it cannot be denied that this round of industry reshuffle in battery new energy is still in a 'deep water zone'." Yu Qingjiao, secretary-general of the Beijing Centergate Technologies New Battery Technology Innovation Alliance and chairman of the Battery Hundred People's Association, stated, "There is a structural mismatch in supply and demand, product prices are internally competitive; domestic effective demand is insufficient, and there are numerous international trade barriers; accounts receivable and inventory remain high, putting pressure on corporate profitability; challenges from new technologies remain to be resolved, with hidden safety risks, etc."

Regarding the dispute over battery production capacity surplus in china, Wu Hui, general manager of the research department at the Yiyi Economic Research Institute and director of the China Battery Industry Research Institute, stated that in the long-term market perspective, the global battery industry basically does not face a surplus issue; however, china currently faces risks of "structural" surplus and low capacity utilization rates in the "short to medium term." The long-term capacity utilization rate of global batteries will tend to be reasonable, and it is expected that by 2030, the total global battery capacity will reach 7.5 TWh. To meet the demand of 5 TWh, the capacity utilization rate will be 5 TWh/7.5 TWh ≈ 67%, which is at a relatively reasonable level.

Wang Jin, chairman of Han's Laser's subsidiary Han's Lithium Battery, analyzed that the domestic lithium battery industry is currently facing a capacity clearance, and the elimination of backward capacity is proceeding in an orderly manner, with the new capacity layout being rationally optimized.

Analysts at CITIC Sec stated that based on financial data analysis of representative listed companies in the lithium battery sector, the growth rate of fixed assets plus ongoing projects is at a historical low, and the proportion of ongoing projects in fixed assets has dropped to less than 40%. The supply-demand issue will certainly phase out, which may involve a bottoming-out process. Moreover, dividing ongoing projects by fixed assets, assuming all are released, the new capacity that can be added accounts for 37% of the existing capacity, according to the latest data, but this is not capacity that can be released in a year, and it will take at least nearly two years. A straightforward division by two would suggest that the capacity coming from ongoing projects across the industry will not exceed 20 percentage points, and there is a high probability that next year the industry's demand will surpass supply, providing an opportunity for overall capacity utilization in the industry to rise.

Despite facing capacity and profit pressures, the rapid development of new energy storage, low-altitude economy, and growth of humanoid robot products provide new support for lithium battery products. Continuous mergers, acquisitions, and strategic collaborations in the industry are leading to a further concentration of market share among leading enterprises.

Mass production equipment for all-solid-state batteries is a major challenge.

As the "next generation battery" that has received high expectations, the advancements in solid-state batteries from various companies this year have continuously attracted attention from capital markets.

Recently, the domestic company Beijing Pure Lithium New Energy Technology has launched the first mass production line for all-solid-state lithium batteries; Chery Autos also publicly disclosed plans for in-vehicle testing of all-solid-state batteries in 2026, aiming for large-scale production in 2027. Chongqing Changan Automobile and Tailan New Energy jointly announced a "membrane-free solid-state lithium battery" in November.

Additionally, reports indicate that Contemporary Amperex Technology has increased its R&D investment in all-solid-state batteries this year and expanded its R&D team for all-solid-state batteries to over 1,000 people. The company is currently focusing on the sulfide route and has entered the prototype stage for 20Ah samples.

Despite the industry's high expectations for solid state batteries, large-scale commercialization still faces many challenges.

The conductivity, interface stability, and production costs of solid electrolyte materials are currently the main technical bottlenecks. Industry experts have previously pointed out that the production of solid state batteries requires significant modifications to existing lithium battery production lines, and issues of compatibility between the electrolyte and electrode materials must also be resolved to truly achieve large-scale production.

Previously, industry insiders told reporters from the Financial Alliance that semi-solid batteries are similar in production process to existing liquid lithium batteries, but full solid state batteries do not have separators. Currently, different companies have different development paths and material selections, and the processes may also vary, making it difficult to predict the future forms.

The requirements and degree of change of solid state batteries for lithium equipment are also of concern in the industry.

Xu Hangyu, R&D director of Weilan New Energy, stated that Weilan chose the in-situ curing route, and an important aspect is that this strategy is basically compatible with the production process of traditional lithium-ion batteries, compatible with most processes and equipment, enabling low costs.

Yang Yi, head of the research institute of Times High-Tech Co., Ltd., told reporters from the Financial Alliance that the changes brought by full solid state batteries compared to existing liquid battery production lines could be revolutionary. In terms of equipment, the currently implemented semi-solid state remains mainstream.

Yang Yi further stated that the current layout of battery factories for full solid state batteries is more about upgrading existing capacities, gradually transitioning from semi-solid to full solid state in this transformation process. "I believe large manufacturers are all like this, because it is difficult to pivot a big ship. Therefore, currently, most electrolytes in the country are mainly based on polymer and oxide. In fact, the sulfide route is very difficult to follow because it must proceed as full solid state. So personally, I believe it will not transform completely to full solid state all at once, and a few years are needed to improve the entire production equipment."

Xu Hangyu believes that in the long run, solid state batteries can achieve lower costs than liquid ones. On one hand, most of the current materials used in the industry are next-generation cathode and anode materials, such as the ultra-high nickel ternary materials of Rongbai's 9 series. If these materials see real volume growth in the future, the costs may not be high. On the other hand, full solid state batteries are not as sensitive to transition metal impurities, and in the future, industrial-grade lithium carbonate could be considered as a replacement for raw materials.

Xu Hangyu mentioned that in the direction of power and energy storage, Weilan New Energy currently plans a total production capacity of about 50 GWh. The capacity currently in production is 5.6 GWh. Additionally, the company has ideas for industrialization layout in Nansha and Zhuhai, Guangzhou.

Sodium batteries continue to reduce costs, but industrialization is below expectations.

When lithium prices reached a peak of 0.6 million yuan/ton in 2022, sodium-ion batteries experienced explosive development, but in the past two years, with lithium prices crashing, the cost advantage of sodium-ion batteries relative to lithium batteries has rapidly diminished, and the speed of industrialization has slowed. From the current situation, downstream applications have become clearer, but industrial scale is still in the development stage.

"Due to the rapid decline in lithium battery costs, the industrialization of sodium batteries is below expectations," Wu Hui stated at the meeting, but he was pleased to see that sodium battery costs are also dropping quickly, now as low as 0.45 yuan/wh. Additionally, sodium batteries have made significant progress in terms of energy density, cycle life, and other performance aspects. "We also believe that sodium batteries will be industrialized in many scenarios in the future, just with a little delay in timing."

Sunwoda Electronic (300207.SZ) sodium battery product head An Li stated that the company has launched a product level of 160Wh/kg, capable of achieving a capacity retention rate greater than 90% at minus 40 degrees. Our next generation product is 200Wh/kg, and the company has been early in patent布局, with more than 50 patents to date. Under the same environmental conditions, compared to lithium iron phosphate batteries, sodium batteries demonstrate endurance advantages in conditions of minus 10 degrees, showing significant potential in low-temperature conditions.

Combining views from industry insiders, sodium batteries are gradually landing in downstream applications, but due to the level of industrialization still falling short of expectations, there is no significant cost advantage relative to lithium batteries. Cao Dongqiang, chairman of Shanghai Ge Pai Nickel Cobalt Materials Co., Ltd., stated that currently, the cost of sodium-ion is still lagging behind lithium iron phosphate, as lithium iron phosphate has production capacities exceeding one million tons, while the true production capacity of sodium-ion battery cathode and anode materials does not exceed 20,000 tons, most still in the hundreds and thousands of tons.

Cao Dongqiang stated that as time progresses and the process of industrialization accelerates, it can be seen that by mid-next year or this time next year, the whole industry will have at least 50,000 tons of cathode material production capacity put into operation. If production reaches the 50,000 to 100,000 ton level, it is believed that costs and cost-performance ratio can be aligned with lithium iron phosphate. If the timeline is appropriately extended, it is expected that by 2026 or 2027, the advantages of sodium-ion batteries can be fully realized.

Recently, industry leader Contemporary Amperex Technology has also released positive signals regarding the development of sodium-ion batteries.

Contemporary Amperex Technology previously launched new hybrid battery products, once again opening up new application scenarios for sodium-ion batteries. Recently, during an exclusive interview with Reuters, the chairman and CEO of Contemporary Amperex Technology, Zeng Yuqun, mentioned that sodium-ion batteries are a better choice and could potentially replace half of the current market share of lithium iron phosphate batteries dominated by Contemporary Amperex Technology.

The High Industry Research Institute (GGII) predicts that the shipment volume of sodium-ion batteries in China will exceed 1.5 GWh in 2024, exceed 4.5 GWh in 2025, and is expected to exceed 30 GWh by 2030.