Beginning last year, the new energy sector has been sought after by capital. From strong demand for downstream new energy vehicles, extending to the rapid rise in prices of various upstream raw materials, upstream and downstream products in the industrial chain were in short supply at one point, and volume and price have risen sharply.

With more and more players entering the new energy industry chain, it is inevitable that ordinary investors will find it difficult to grasp the key points in many concepts. This article will sort out the context of the entire new energy supply chain by following the flow of “lithium”, a strategic resource in the new energy industry chain.

The following figure shows the flow chart of the new energy industry from raw materials to final application.

According to the flow chart, we can roughly divide the new energy industry chain into the following parts:

Upstream: mineral resources

Midstream: lithium battery materials and lithium battery manufacturing

Downstream: Key components and vehicle manufacturing for new energy

I. Upstream mineral resources

(1) Lithium

Currently, there are three main processes for obtaining lithium resources: lithium extraction from spodumene, lithium extraction from spodumice, and brine (salt lake lithium extraction).

Comparing the three technology routes, spodumene lithium extraction technology has the highest output quality, but most of the high-quality resources of lithium concentrate are concentrated in the South American lithium triangle and Australia. Domestic production capacity depends on imports, and South American resource taxes are constantly rising. Resource costs are high. Australia still has political risks such as restrictions on mineral exports.

However, mature salt lakes are not only distributed in the South American lithium triangle, but are also distributed in the Qinghai and Tibet regions of China. Although lithium extraction in salt lakes is currently difficult and production is low, with the improvement of lithium extraction technology in salt lakes, lithium extraction from salt lakes is expected to become a new trend in lithium resource development in China.

At the same time, Yichun, Jiangxi, China has the largest lithium mica mine in Asia. While preparing lithium carbonate, lithium lithium extraction technology can also obtain useful by-products such as calcium fluoride, aluminum cesium rubidium sulfate, and alum, which can improve resource utilization and greatly reduce production costs.

The following figure summarizes the current estimated resource equity reserves of listed companies in China's lithium industry.

Lithium carbonate and lithium hydroxide prepared by lithium industry companies from lithium ore resources are raw materials for lithium batteries. Generally speaking, batteries produced using lithium hydroxide usually have better performance and a wider range of applications, so the market price of lithium hydroxide has always been higher than lithium carbonate. (Attached is the price of lithium carbonate and lithium hydroxide on June 14)

In terms of preparation costs, spodumene can prepare both lithium hydroxide and lithium carbonate, but the process route is different, the equipment cannot be shared, and there is not much difference in cost; however, the cost of preparing lithium hydroxide from salt lake brine is much higher than that of lithium carbonate, so the vast majority of salt lake lithium companies' products are lithium carbonate.

Currently, the top four lithium hydroxide production capacity companies in China are Ganfeng Lithium, Yahua Group, Tianhua Chaojing, and Shengxin Lithium Energy.

However, there are many listed companies with battery lithium carbonate production capacity in China. The top three are Ganfeng Lithium, Tianqi Lithium, and Shengxin Lithium Energy, followed by Keda Manufacturing (which owns Lanke Lithium), Yongxing Materials, Zangge Holdings, Tibet Mining, and China Mining and China Mining Resources.

Introduction to related individual stocks

[First-line lithium industry]

Ganfeng Lithium: Ganfeng Lithium is an undisputed leader in the lithium industry. It has a full range of raw materials, involving domestic, foreign, salt lakes, ores, and lithium clay. presentlyGanfeng LithiumThe production capacity of lithium hydroxide has surpassed that of the United StatesArpels(ALB) has risen to number one in the world, has a huge cost advantage in lithium hydroxide production, and its lithium carbonate production capacity is also number one in the country.

Tianqi Lithium: Tianqi Lithium has the best quality lithium ore resources in the world. The acquisition of 100% of Australia's shares in Tylyson Lithium was completed for a total of 5.224 billion yuan in March 2013 (Tylyson is the world's largest producer of solid lithium ore, accounting for 2/3 of the global supply of spodumene ore). After buying Terison,Tianqi LithiumAlso, in May 2018, it acquired 23.77% of SQM's shares in Chile with 4,066 billion US dollars to become the second largest shareholder (SQM owns the mining rights of Atacama salt lake, the highest quality salt lake in the world), of which its own capital was only 350 million US dollars. A number of “snakes swallowed” acquisitions have also put tremendous financial pressure on Tianqi Lithium. As it entered the 18-20 lithium price downward cycle, Tianqi Lithium also fell into a debt crisis. Until the introduction of war investment IGO at the end of 2020 and rising industry sentiment, operations have now improved.

[Second-line lithium industry]

Yahua Group:Yahua GroupUsing Minbao as its traditional business, it entered the lithium industry in 2013, and successively controlled 37.25% of Sichuan Guoli's shares and Xingsheng Lithium. The Lijiagou spodumene mine controlled by Dexin Mining, a subsidiary of China Lithium, is one of the largest lithium mines in Asia. Currently, the lithium industry accounts for 20.73% of revenue. At the end of December 2020,TeslaversusYahua GroupA five-year contract was signed to purchase battery-grade lithium hydroxide products worth a total of 630 million to 880 million US dollars to enter Tesla's supply chain.

Shengxin lithium energy: What was the predecessor of Shengxin Lithium EnergyWeihua Co., Ltd.At the beginning of its establishment, the main business was medium/high density fiberboard. As the company increased its capital to hold Zhiyuan Lithium in 2016, the business layout was extended to lithium salts, rare earths, etc.New energyThe materials business, and the company sold the wood-based panel business in September 2020. Currently, it has focused on the lithium salt business, which accounts for 50.85% of revenue.

Rongjie Co., Ltd.:Rongjie Co., Ltd.Formerly known as Lu Xiang Co., Ltd., the original asphalt business has now been completely divested to lay out the entire lithium battery industry chain. In the upstream sector, companies have high-quality lithium methylcarbate mines, andRongjie Co., Ltd.wereBYDThe relevant party, the actual controller is Lu Xiangyang, inNew energyA series of upstream layouts in the lithium battery industry chain are expected to matchBYDThe automotive industry chain forms synergies.

Chuanneng Dynamics:Chuanneng DynamicsBankruptcy and restructuring were carried out in 2016, and the majority shareholder was changed to Sichuan Energy Investment, making it clear that the lithium battery field will be expanded in the next two years. In November 2020, the company announced that it intends to use 927 million yuan in cash to acquire 62.75% of the shares in the lithium investment industry and has mining rights for the Lijiagou lithium mine in Jinchuan County. Currently, the companyNew energyBusiness revenue accounted for 58.61%.

Tianhua Super Clean: Tianyi Lithium, a subsidiary of Tianyi Lithium, currently has a production capacity of 20,000 tons of lithium hydroxide. There is still a 25,000-ton battery-grade lithium hydroxide project under construction. There is a cooperation agreement with Ningde Times, but in the 2020 reportNew energyThe proportion of main business in related businesses has not yet been disclosed.

[Lepidolite to extract lithium]

Jiangte Electric:Jiangte ElectricCurrently, there is a production capacity of 30,000 tons of lithium carbonate, as well as 10,000 tons of lithium hydroxide (under construction) and 50,000 tons of lithium carbonate (under construction). The main business is special motors, and lithium carbonate currently accounts for only 6.75% of sales revenue.

Yongxing materials:Yongxing materialsIt shares shares in Huali Mining with Yichun Mining Company, and has patented technology for preparing battery-grade lithium carbonate using litemica. Currently, a battery-grade lithium carbonate project with an annual output of 10,000 tons has been produced. The revenue from lithium ore mining and lithium salt manufacturing is relatively low at only 6.17%. The main business is still the special steel business.

[Lithium extraction from salt lake]

Made by Kodak:Made by KodakLanke Lithium, which holds 48.58% of the shares, is the largest producer of lithium in salt lake extraction, and the largest salt lake reserves in China. The annual production capacity is 13,600 tons of lithium carbonate, and 20,000 tons of production capacity will be added in 2021. Currently, lithium battery materials account for 5.88% of revenue.

Zangge Holding: It has a mining license for 724.35 square kilometers in the East mining area of Tsarkhan Salt Lake, with an annual production capacity of 10,000 tons of lithium carbonate, accounting for 3.34% of revenue.

Mining in Tibet: The reserves of Zabye Salt Lake are equivalent to 1.84 million tons of lithium carbonate, with an annual production capacity of 8,628 tons of lithium concentrate. Lithium products account for 5.81% of revenue.

Tibet City Investment: The total reserves of Longmucuo and Jize Salt Lake are equivalent to 3.9 million tons of lithium carbonate,Tibet City InvestmentIt accounts for 41%, with a planned production capacity of 5,000 tons.

(ii) Cobalt and nickel

Cobalt and nickel are important components of ternary battery cathode materials. China's cobalt reserves are low but production is high, and 60% of production is used in lithium battery manufacturing. Under the suppression of cobalt-free expectations, the steady decline in cobalt prices has also increased uncertainty about the future of cobalt industry enterprises.

However, nickel, as a raw material for important alloys such as stainless steel, is also priced internationally. Chinese companies have almost no bargaining power, but high-nickel ternary batteries are currently the hot direction of research. The nickel-cobalt-manganese ratio of high-nickel battery cathode materials has increased to 8:1:1. In comparison, there is a higher energy density, which can greatly reduce costs while increasing battery life. Future demand for nickel may increase greatly.

Introduction to related individual stocks

Luoyang molybdenum industry:Luoyang molybdenum industryThrough acquisitions, Freeport's two major copper-cobalt ores in the Democratic Republic of the Congo (DRC) were purchased in 2016 and 2020 respectively. Equity cobalt metal reserves increased dramatically to 4.935 million tons, which is expected to surpass international giantsGlencore, becoming a leader in the copper-cobalt metal segment, domesticNew energyThe development of the industry has sufficient strategic resources.

Huayou Cobalt: AlthoughLuoyang molybdenum industryIt has the largest reserves of cobalt ore, but from the perspective of the company's texture, Huayou Cobalt is recognized by the market as the leader in the cobalt industry.Huayou CobaltThe growth logic is to understand that its profit growth does not come from the elasticity of nickel and cobalt prices, but rather its advantage and barrier brought about by the integration of nickel-cobalt resources to cathode precursor materials. Its excellent cost control ability weakens the cyclical impact of the price cycle on performance, making its growth in the industry the most certain, and can enjoy the high valuation brought about by high market expectations.

Hanrui Cobalt: Compared to the following,Hanrui CobaltIts performance is more dependent on fluctuations in copper and cobalt prices, and is more cyclical.

II. Midstream lithium battery materials

In the middle of the industrial chain, the composition of each module of a lithium battery is as follows:

The four most noteworthy parts are: the cathode, the negative electrode, the diaphragm, and the electrolyte. These four industry segments have relatively higher technical barriers. As you can see in the picture below, the total market share of the top five companies in the industry is over 50%.

(1) Cathode materials and cathode precursors

Currently, there are two mainstream technical routes for cathode materials: the ternary material cathode and the LFP lithium iron phosphate cathode.

The cathode of a ternary material generally refers to a cathode material composed of three components of nickel salt, cobalt salt, and manganese salt adjusted in different proportions, so it is called a “ternary”. It has the advantages of high energy density and long range, but safety is relatively low, and combustion or explosion is likely to occur under the influence of high temperatures. Currently, the ternary cathode is developing in the direction of high nickelization.

However, the LFP lithium iron phosphate cathode uses lithium iron phosphate as the cathode material. The energy density is low, but it has the advantages of high temperature resistance, strong safety, and better circulation performance. Moreover, the main cost of lithium iron phosphate production consists of lithium hydroxide, ferrous sulfate, and ammonium dioxide phosphate. It does not contain the precious metal elements cobalt and nickel, so the cost is low.

According to previous news, the domestic Tesla Model Y may plan to launch a lithium iron phosphate battery version (LFP) model in July, which will be equipped with LFP batteries from the Ningde era.

As can be seen, from the first half of 2019-2021, two declining subsidy policies caused major car companies to launch lithium iron phosphate models one after another to reduce costs. Lithium iron phosphate batteries accounted for a higher and higher share of domestic power batteries. According to data from the China Automobile Association, in May 2021, China's lithium iron phosphate batteries were loaded with a total of 4.5 GWh, up 458.6% from the previous year, accounting for more than ternary batteries, and demand for lithium iron phosphate grew rapidly.

According to the price statistics on June 14, we can see the extent to which the prices of various cathode materials and ternary precursor materials have increased. Among them, the annual increase in the price of lithium iron phosphate produced in China reached a maximum of 45.8%, while cobalt sulfate and nickel sulfate in ternary precursor compounds both had annual increases of about 50%.

Introduction to related individual stocks

[Ternary precursor]

Grimmie:GrimmieIn 2020, there will be an annual production capacity of 130,000 tons of tertiary carbide. In addition, Grammy took the lead in conquering high-nickel NCA&NCM811 precursor and monocrystalline precursor manufacturing technology, and industrialized it on a large scale. The total sales of high-end precursor products accounted for more than 75% of total shipments, and the products were mainly supplied to Samsung, Ningde Shidai, and Rong Encyclopedia.

Zhongwei Co., Ltd: As of the 2020 annual report,Zhongwei Co., LtdIt already has a production capacity of about 110,000 tons/year of ternary precursor and 25,000 tons/year of cobalt tetroxide production capacity, with a market share of about 18%. Downstream customers mainly include LG Chem, Rongbai Technology, etc.

Huayou Cobalt:Huayou CobaltThe transformation from a traditional resource-based enterprise to a growing materials company is progressing rapidly. In May of this year, Huayou Cobalt announced the purchase of 38.62% of its shares in Bamo Technology from Hangzhou Hongyuan. Bamo's market share in the high-nickel cathode field ranked second in China, with a market share of 36% in 2020, second only touse one's skills. In June, another convertible bond was prepared to be issued to raise 7.6 billion dollars for the construction of high-nickel cathodes and tertiary yuan drives. It is expected that they will be completed in 2023.

Xiangtan Electrification: Lithium manganate is one of the essential materials for ternary cathodes.Xiangtan ElectrificationWith years of accumulation in the field of manganese-based materials, lithium manganate and high-purity manganese sulfate products have excellent cost control. At the same time, it also has a layout on lithium iron phosphate cathodes. The participating company Yuneng is a shareholderNew energyIt specializes in lithium iron phosphate cathode materials.

[Three-way cathode]

Dangsheng Technology: A leading enterprise of traditional cathode materials for lithium batteries in China. The top ten lithium battery giants in the world are all corporate customers. Lithium battery products are widely used. In terms of exports, it has become the largest domestic power multi-material exporter for two consecutive years. However, its progress in the direction of high-nickel ternary cathodes has been slow.

use one's skills: Rongbai Technology is currently the only invisible champion in China that mass-produces more than 500 tons of high-nickel ternary cathode materials. The plan is to raise 60,000 tons/year for a three-yuan cathode material precursor production line to supply its own internal cathode material production.

Xiamen tungsten industry: The main business, tungsten, is dragging down performance, and its share of revenue is getting smaller and smaller. With its subsidiary, Xiamen Tungsten Xinneng, its main business has become a cathode material for ternary batteries, and the spin-off of Xiamen Tungsten Xinneng to go public on the Science and Technology Innovation Board has passed smoothly.

【lithium iron phosphate】

German nano: It specializes in nano-lithium iron phosphate cathode materials and is a leading enterprise in the industry. The company is deeply tied to the Ningde era and is the main supplier of iron lithium in Ningde. It accounts for more than 50% of Ningde's demand, and supplies it exclusivelyYiwu lithium energy, officially delivered this yearBYD.

Longpan Technology: The acquisition of Betterry's lithium iron phosphate business currently has a total production capacity of about 32,000 tons/year.

Core titanium dioxide: In addition to traditional leaders, a number of chemical companies involved in titanium dioxide have also begun to enter the lithium iron phosphate cathode field. Since waste acid and ferrous sulfate generated during the production of titanium dioxide can be used as production materials for lithium iron phosphate, titanium dioxide companies have a natural cost advantage in producing lithium iron phosphate. Titanium dioxide is the second oldestCore titanium dioxideThey are very aggressive in expanding lithium iron phosphate production. A production capacity plan of 500,000 tons has been announced, and it is likely that they will compete for the boss of lithium iron phosphate.

(2) Diaphragm

A lithium battery separator is a specially formed polymer film. The film has a microporous structure that allows lithium ions to pass freely.

Among the four industry segments, the lithium battery separator industry has the highest concentration, with CR5 reaching 82.1%, leading onlyEnjie Co., Ltd.The market share reached 44.1%, the industry barriers are high, and it has basically reached an oligopoly pattern.

Looking at the diaphragm market price on June 14, the price of diaphragm products has declined somewhat. However, due to the long expansion cycle of diaphragms and large capital investment, there is currently not much new production capacity on the market. Therefore, in terms of supply and demand, diaphragms may be in short supply from the second half of 2021, which will drive up the price of diaphragms.

Introduction to related individual stocks

Enjie Co., Ltd.:Enjie Co., Ltd.Since acquiring Shanghai Enjie in 2018, it has been the largest domestic lithium battery separator manufacturer. It is an undisputed leading enterprise in the diaphragm industry. The market share in the domestic wet diaphragm field is 44%, and the global market share is 15%. It is also the largest lithium battery separator supplier in the world and has already enteredPanasonic, Samsung, LG Chem,Ningde era,BYDWith the supply chain of domestic lithium battery giants, production capacity has reached 2.3 billion square meters, ranking first in the world in terms of production capacity.

Star source material: Domestic dry diaphragm leaders are currently transitioning from dry to wet methods. The domestic market share is about 20%, making them more resilient to growth.

Sinoma Technology: It has a production capacity of 5-20 μm wet diaphragms and various types of coated diaphragm products, and currently accounts for 3.08% of revenue.

(3) Negative pole

The active substance inside the anode of a lithium battery is graphite, or carbon with a structure similar to graphite, while the conductive collector uses electrolytic copper foil with a thickness of 7-15 microns.

In terms of price, the price of graphite in the anode material has declined, but the price of electrolytic copper foil has increased significantly.

The main reason is that the production capacity of the entire anode materials industry is sufficient and the pattern is scattered, and anodes only account for about 6% of the cost of lithium batteries, and demand is low, according toSociete Generale SecuritiesAccording to estimates by the Institute of Economics and Finance, supply is about 2.5 times demand.

However, while the price of copper foil depends on the price of copper, the electrolytic copper foil market is currently in short supply. The orders of leading companies are already full during the year, and the average cost of electrolytic copper foil processing has risen by nearly 5,000 yuan/ton compared to the end of last year.

Introduction to related individual stocks

[Graphite anode]

Betterie: As a new trifecta, Betteri, inNew energyThe materials industry chain is almost comprehensive, but in order to focus on the anode and high-nickel ternary cathode business, the lithium iron phosphate cathode business was sold toLongpan TechnologyCurrently, it has an anode production capacity of 133,000 tons/year.

Puterai: The company focuses on core research and development of core materials and process equipment upstream of lithium batteries, and always targets the middle and high-end markets, ultimatelyPuteraiAcquire the market quickly, enter the high-end customer market in a short period of time, and obtained ATL, including ATL,Ningde era,BYDApproval from major customers such as Samsung, and LG Chem.

Shanshan Co., Ltd.:Shanshan Co., Ltd.The lithium battery materials sector was comprehensively laid out, and anodes, cathodes, and electrolytes were developed comprehensively. The company has six anode production bases across the country, with a production capacity of 154,400 tons/year. The shipment volume is second only to Betry, ranking second in the industry.

Zhongke Electric: Zhongke Electric is a rapidly developing new anode star. It successfully entered the field of lithium battery anode materials by merging and acquiring Star City Graphite and Greet in 2017 and 2018. In recent years, it has continued to expand in the field of anodes, and partner customers includeBYD,Ningde eraIn addition, it has also successfully developed rapidly rising power companies such as Honeycomb Energy and Ruipu Energy.

[Copper foil]

Jiayuan Technology:Jiayuan TechnologyWe are engaged in the research, production and sale of various types of high-performance electrolytic copper foils. Our main products are ultra-thin lithium battery copper foil and extremely thin lithium battery copper foil. At present, the company has established long-term cooperative relationships with well-known battery manufacturers such as Ningde Shidai, Ningde New Energy, and BYD, and has become its core supplier of lithium battery copper foil, occupying more than 35% of the market share of high-grade electronic copper foil for lithium-ion batteries.

Nord Co., Ltd.: One of the leading copper foils for lithium batteries. At the end of 2020, the company's total copper foil production capacity was 43,000 tons, including 35,000 tons of lithium foil. versusNingde era,BYDMainstream lithium battery companies such as LG Chemical have continuous and stable cooperative relationships.

[Carbon nanotubes]

Tiannai Technology: Tiannai Technology is the world leader in carbon nanotubes. Conductive agents are key auxiliary materials for lithium batteries. They are mixed with positive and negative electrode materials to produce electrode sheets, and carbon nanotubes are expected to accelerate the replacement of traditional conductive agents in the lithium battery field due to their advantages such as excellent conductivity, low addition amount, and low impedance. The company's customers coverBYDLeading domestic lithium battery manufacturers, such as Ningde Shidai, etc.

(4) Organic electrolytes

Lithium battery electrolyte is a carbonate-based solvent in which lithium hexafluorophosphate is dissolved.

Judging from the price increase, electrolyte currently has the most significant demand gap among the four major materials. In particular, lithium hexafluorophosphate materials are among them, with an annual increase of 288.9%. As a direct result, the solute accounts for 50% of the cost.

Due to the dangerous nature of lithium hexafluorophosphate production, EIA and safety assessment requirements for expanding production are high. The overall construction cycle is long, and it takes 1.5 to 2 years. Coupled with high technical barriers to the manufacturing process, production capacity expansion is still quite orderly despite the rapid rise in the price of lithium hexafluorophosphate. Currently, there are limited players in the market. New production capacity is expected to be around 19,000 tons in 2021, and the effective production capacity of the market is expected to be around 62,500 tons in 2021, with a capacity utilization rate of 87.78%, the highest in recent years.

Bypassing the lithium hexafluorophosphate route, LiFSi is a new electrolyte solute with superior performance, conductivity, and thermal stability to hexafluoride. However, due to the difficulty of preparation and not being mass-produced, this is the future development direction of electrolytes. Currently, only Tianci Materials has an operating capacity of more than 1,000 tons among listed companies.

Introduction to related individual stocks

God-given materials: Tianci Materials is a leading electrolyte company with the largest electrolyte business in the world. Crystalline lithium hexafluorophosphate was successfully produced in-house in 2011. Currently, lithium hexafluorophosphate production capacity is the highest in the country, supplying its own electrolyte production, and early integration advantages are remarkable. On June 19, the company announced that it plans to invest to drastically expand production of 150,000 tons of liquid hexafluoroane and 60,000 tons of difluorosulfonimide (HFSI is an intermediate raw material for the production of LiFSi) to strengthen its leading position.

Polyfluoride: Polyfluoride lithium hexafluorophosphate production capacity is mainly supplied to mainstream domestic electrolyte manufacturers. Currently, lithium hexafluorophosphate production capacity is 10,000 tons, which can reach 15,000 tons in the second half of this year, while stabilizing exports to foreign markets such as South Korea and Japan. versusCloud TianhuaThe cooperation formed a joint venture. Relying on the advantages of fluorosilicon resources as a by-product of Yuntianhua's phosphate fertilizer, it is planned to invest 5,000 tons/year of lithium hexafluorophosphate, which is scheduled to be completed in 2022.

Skyrim Co., Ltd.: Tianji Co., Ltd. has a production capacity of 8,160 tons of lithium hexafluorophosphate. Currently, the revenue share of lithium hexafluorophosphate has reached 51.31%. It plans to jointly launch a 10,000 ton lithium hexafluorophosphate project with Xinhua Chemical, the second largest shareholder.

Yongtai Technology: Yongtai Technology is one of the leading fluorine fine chemicals manufacturers in China. It has a layout of three sectors: fluorine-containing pharmaceuticals, pesticides, and new energy materials. In addition to laying out lithium hexafluorophosphate as electrolyte solute, the company also has extremely high technical and patent barriers for the electrolyte additive VC. Currently, the market price has reached 270,000 yuan/ton, up 80% from last year's average price of 150,000 yuan. It is expected that the company's VC and hexafluoride production capacity will reach 3,000 tons and 8,000 tons respectively by the end of 2021. At the same time, it announced plans to expand production of 20,000 tons of lithium hexafluorophosphate and 1,200 tons of related additives in June this year.

Shi Da Shenghua: Shi Dasheng, a leading enterprise in the battery grade solvent industry, is originally a university enterprise of the China University of Petroleum. It controls the raw materials of propane oxide upstream of the solvent, gradually transitioned from traditional basic chemicals to new energy business, and laid out the entire industry chain. Currently, it has 60,000 tons/year of battery-grade solvents and 2,000 tons/year of lithium hexafluorophosphate production capacity.

New Zhoubang: Xinzhoubang's electrolyte market share is only as good as Tianci Materials, but since it does not have its own lithium hexafluorophosphate production capacity, it is mainly obtained through outsourcing, which may lead to a sharp rise in its production costs. Currently, the investment direction announced by Xinzhoubang is mainly electrolyte additives, and plans to build a 59,000 ton lithium battery additive project.

Jiangsu Cathay Pacific: Jiangsu Cathay Pacific produces lithium-ion battery electrolytes and silane coupling agents. Electrolytes have the highest market share, but the company also does not produce lithium hexafluorophosphate on its own. Moreover, its main business is still supply chain services, and the chemical new energy business accounts for only 6.03%.

III. Lithium battery manufacturing

(1) Lithium battery equipment

Lithium battery manufacturing equipment is generally divided into three types: front-end equipment, mid-end equipment, and back-end equipment. The accuracy and level of automation of the equipment will directly affect the production efficiency and consistency of lithium batteries.

Pioneering intelligence: Pioneer Intelligence is a leading lithium battery equipment company in China and can provide integrated front-end to back-end lithium battery line equipment. Moreover, Pioneer Intelligence is already deeply tied to the Ningde Era. In June of this year, Ningde Era was introduced as a strategic investor through additional issuance. The Ningde Era became the second largest shareholder holding 7.15% of the shares.

Hangke Technology: Hangke Technology is a leading lithium battery back-end equipment company. Customers include well-known domestic and foreign lithium battery manufacturers such as Samsung, South Korea's LG, and BYD.

Win with technology: Backed by Shanghai Electric, the majority shareholder, the core production of lithium batteries was extended from front-end and mid-end equipment to back-end assembly and testing. In 2020, orders for lithium battery equipment were signed with leading domestic and foreign companies such as CATL, BYD, and LG Chemical. A total of more than 3.3 billion yuan of new lithium battery orders were signed, increasing the certainty of growth.

Xianhui Technology: It specializes in intelligent manufacturing equipment for new energy vehicles. It is currently one of the few Chinese companies that directly provides power battery pack production lines for major European automobile brands.

(2) Power lithium battery

Power lithium batteries are a core part of new energy vehicles. Based on the fact that the NEV market will continue to grow, power battery companies are still very willing to expand production, and the trend of expanding production on a global scale continues.

There are many power lithium battery players in China. Listed companies mainly include Ningde Shidai, BYD, Yiwei Lithium Energy, Guoxuan Hi-Tech, Weilan Lithium Cell, Funeng Technology, Penghui Energy, and Sunwanda.

However, at present, only Ningde Shidai and BYD are capable of competing with international giants. In particular, in the Ningde era, regardless of shipment volume, market share, technical route layout, and number of partner manufacturers, the “king of lithium batteries” was appropriate. Internationally, LG Chem and Panasonic, which supplied Tesla, followed closely, and BYD, which fought back with blade batteries.

Currently, there are three main research and development directions for lithium power batteries: improving battery life, improving safety, and reducing costs. Although the main research direction of various power battery manufacturers is different, leading companies have more comprehensive competitive advantages in terms of capital and technical reserves, such as the diversified R&D directions of the Ningde era, which effectively guarantees their consolidation of leading positions in the world.

However, the current uncontrollable price increase of upstream raw materials is also a pain point for the further expansion of various lithium battery manufacturers. It is difficult to transfer costs through price increases on the sales side. Therefore, at present, all battery manufacturers are choosing to speed up the expansion of the upstream industry chain to reduce costs and improve efficiency.

Introduction to related individual stocks

Ningde era: The world's largest power lithium battery company, has recently surpassed Wuliangye in market capitalization to become the new “Shenzhen market leader”. In April, it was announced that it plans to invest no more than 19 billion dollars in high-quality listed companies in the industrial chain and prepare to build a vertically integrated layout to build a battery kingdom. Currently, there are more than 20 upstream materials companies that have participated directly or indirectly. The fields covered include lithium, cobalt, nickel, lithium carbonate/lithium hydroxide, positive and negative electrode materials, electrolytes and additives.

BYD: BYD is a company that started with batteries. It grew to become the second largest manufacturer of rechargeable batteries in the world in 2003, and successfully produced lithium iron phosphate power batteries in 2005. BYD began to lay out the entire industry chain a long time ago, with 100% independent R&D and production capacity.

Guoxuan Hi-Tech: Guoxuan Hi-Tech is a power battery manufacturer that mainly focuses on the lithium iron phosphate technology line. It ranks third in the industry among domestic companies and is in the second tier of power battery companies. The technology is excellent. While continuous breakthroughs have been made in battery energy density, the layout of the industrial chain is also very deep. In addition to the four major midstream materials, battery recycling business has also been launched.

Yiwu lithium energy: Everwell Lithium Energy has participated in the shares of e-cigarette equipment manufacturer Smore International. Over the years, it has also been focusing on the innovation and development of lithium batteries, with lithium-ion batteries ranking among the highest in the world. Also a second-line battery factory, Everwell Lithium has chosen to establish joint ventures with leading materials companies such as Betry, German Nano, and Huayou Cobalt to expand the upstream industry chain.

Blue lithium core: Yang Shunchang, originally from Australia, acquired 47.06% of the shares of Jiangsu Luwei Lithium Energy Co., Ltd. in 2016 and entered the lithium battery industry. Beginning in 2019, its main business began to favor small power batteries for power tools.

4. Key components and vehicle manufacturing of new energy vehicles

(1) Electric drive system and intelligent electronic control system

New energy electric drive systems are similar to the role of “engine+electronic control unit+gearbox” in fuel vehicles. They have an important impact on the dynamics, economy, comfort and safety of the entire NEV vehicle, and are an important component of new energy vehicles.

The electronic control system, on the other hand, is the main console of an electric vehicle. Like the “brain of an electric vehicle”, its use determines the main performance indicators of the electric vehicle, such as energy consumption, emissions, dynamics, maneuverability, and comfort.

Both are part of the NEV electronics industry chain. Currently, the domestic electric drive and electronic control system market competition pattern is scattered. Competition in the industry is still fierce, and there is no absolute leader.

Introduction to related individual stocks

Huichuan Technology: Huichuan Technology is a traditional industrial control leader. Its new energy electric drive and electronic control business has developed dramatically. In 2020, the company's share of electronic control products reached 10.6%, ranking second domestically, after BYD in the entire industry chain. Revenue from related businesses increased 839.36% year-on-year in the first quarter of this year. This time, a fixed increase of 2.13 billion yuan was raised, and Gao Yu's two funds have subscribed for a total of 800 million yuan. The main reason is probably that they also look at the development of its new energy vehicle business.

FURIN SEIKO: Benefiting from domestic substitution of key components and major trends in automotive electric intelligence, while Fulin Seiko's core components business maintained steady growth, it continued to enrich its product line and accelerate the industrialization process of new products such as intelligent electronic control systems and new energy vehicle electric drive systems. Customers include international first-tier car companies such as Volkswagen, Audi, BYD, and Tier 1 parts groups.

be at peace and security: Heertai is one of the leading high-end intelligent controllers, and its layout in the electronics and semiconductor business of new energy vehicles is imaginative.

Tuobang Co., Ltd.: The current lithium battery business revenue of Tuobang Co., Ltd. already accounts for 14.22%. This planned increase of 1.05 billion dollars will expand its lithium battery and high-efficiency motor production capacity.

(2) New energy vehicles

New energy vehicles can be roughly divided into passenger cars and commercial vehicles, and passenger cars can also be divided into sedans and SUVs. As traditional car companies transform one after another, there are more and more players in the NEV field. Some foreign countries are unrivaled in sales of new energy vehiclesTesla; There are also a lot of established car companies that are eager to get carried away. There are domestic NEVs that have been deeply involved in new energy vehicles that can compete with TeslaBYD; There are alsoSAIC Motor Group,Great Wall Motors,Changan AutomobileTraditional car companies represented by, etc.; there are alsoWeilai,The ideal car,Xiaopeng MotorsThey are represented by new automobile forces; as well as Xiaomi and Huawei, which recently announced their entry into the electric vehicle field (the first to cooperate with Huawei)Xiaokang Co., LtdwithBAIC Blue Valley) and other ecological giants.

Although new energy vehicles have maintained extremely rapid growth since the epidemic recovered in the second half of last year, production and sales of new energy vehicles both exceeded 900,000 units from January to May, with a year-on-year growth rate of more than 200%. It is expected to reach 2.3 million vehicles for the whole year. However, competition is also fierce. With the exception of Tesla and BYD, the competitive advantage gap between other players is small, so I won't go into detail about individual stocks here.

However, from the perspective of new energy vehicle technology routes, the development of lithium iron phosphate models is already the mainstream direction. The picture below shows the top 10 lithium iron phosphate models currently sold on the market.

Overall, compared to the current competition pattern and growth model of downstream vehicles, there is no clear trend where upstream raw materials and midstream battery materials drive stock price increases through price increases, so investors are more encouraged to pay attention to opportunities for the volume and price of upstream and midstream materials to rise sharply.

Attachment: Upstream and midstream material price changes in the latest week (Source: Changjiang Nonferrous Metals Market)

This article is for reference only and does not constitute investment advice

Author of this article:Guo Weisong_Xinxin Investment, Source: Snowball