Powering up: A look at NEV ‘battery life’ in 2022
Two areas matter for the development of new energy vehicles (NEVs): electrification and smart features. As a rival to the traditional oil industry and a core technology for electrification innovation, the power battery has been riding the crest of the wave of the NEV industry. Under the strong trend of NEV globally, it is expected to become the driving force of industrial innovation through continuous updating.
The power battery is closely related to the development of industrial upgrading of NEVs. The function of a given battery system will make a difference not only to brand image, but directly to the customer experience. As the NEV power battery industry chain is quite sophisticated, the relationship between supply and demand and the competition among upstream, midstream and downstream enterprises is complicated and intense. Driven by demand for improved energy supplements and usage from NEV owners, all kinds of electric battery companies are playing an active role in this technological innovation. Meanwhile, NEV owners expect faster deployment of more advanced power batteries.
In fact, as a major component of the NEV, the power battery has been intertwined with every aspect of the NEV’s cost effectiveness and design. The battery actually determines many key car performance parameters. Overall, efficiency and safety are of vital importance for the improvement of power battery technology, and along with regular technology updates from different subfields, the power battery for NEV is ready to meet all kinds of demands in the future, such as longer mileage. , shorter charging times and safer driving. In addition, the massive commercialization of the 4680 large cylindrical battery, solid-state battery, sodium ion battery and non-spontaneous combustion battery is expected to greatly relieve the pressing demands of NEV owners.
Global NEV Sales Soared to 6.5 Million Units, Driving Power Battery Installed Capacity Doubling
Amid the acceleration of the NEV industry globally, global NEV sales soared to 6.5 million units, while 3.52 million units were sold in China, or 54%. According to EqualOcean forecast, in 2025, global NEV sales will reach 25.8 million units, and sales in China will reach 13.59 million, taking 53% global market share. The market will grow at a compound annual growth rate (CAGR) of 42% from 2020 to 2025.
Driven by the rapid development of the NEV industry, the global lithium battery industry, especially lithium batteries, has also boomed: in 2021, the global installed capacity of power battery was 297 GWh, and the average installed capacity of individual vehicles was 45.7 KWh. EqualOcean projects that the global installed electric battery capacity will be 1485 GWh in 2025, and the average installed capacity of individual vehicles will be 57.6 KWh. The market will grow at a CAGR of 42% from 2020 to 2025.
Battery companies are concentrated, with the top three accounting for more than 65%. Lower cost lithium iron phosphate power battery is the most popular in the market
The global power battery business structure has basically formed. In 2021, CATL, LG Energy Solution and Panasonic ranked in the top three, and BYD ranked fourth. And the Matthew effect in market competition is significant. The top three companies accounted for 65.1% of the market share, while the top 10 accounted for 91.2%. Many more companies were left behind and found to be less competitive. So, overall, the competition has heated up and entered the elimination phase.
Since the second quarter of 2021, the prices of raw materials such as lithium (represented by lithium carbonate), nickel and cobalt have skyrocketed, driving up the cost of electric batteries. Then, the price pressure was passed on to downstream companies from February to March in 2022, so car manufacturers raised their prices accordingly to 170 CNY/KWh (25.36 USD/KWh). On the other hand, since the second quarter of 2021, the market share of lithium iron phosphate electric batteries in China has surpassed ternary lithium with lower relative cost in total. According to EqualOcean, lithium iron phosphate power bank is more popular in the market for its low price increase and better value for money.
Lithium ore is mainly distributed in South America and Australia, and the cost of the core part of a battery is in the positive pole for 40%
The main raw material for lithium-ion batteries is lithium ore (lithium salt). Lithium resources in the world are mainly divided into brine lithium, hard salt lithium and sediment lithium, which account for 59.4%, 34.2% and 6.4% respectively. Currently, lithium brine is mainly produced in South America, the United States and China, while hard salt lithium is mainly produced in Australia and China, and countries with abundant deposits of sedimentary lithium are the Serbia and the United States. Lithium resources are unevenly distributed around the world.
Cathode materials represent approximately 40% of the overall cost of a power battery. And raw materials are the main cost of the positive and negative poles, accounting for 89% and 86% respectively. In addition to raw materials, the ratios of processing cost and manufacturing cost of electrolyte and diaphragm are high components of the overall cost, accounting for 51% and 37% respectively. Therefore, the price of raw materials (lithium salt) is the key factor determining the cost of cathode materials and even the power battery industry chain.
CATL is the hexagonal warrior among power battery companies
EqualOcean selected global electric battery companies with the highest installed capacity between 2021 and the first quarter of 2022, and used the SPC model to analyze the competitiveness of existing electric battery companies. S, P and C are respectively the abbreviations of Strategy&shared value, Product&tech-driven and Customer&operating. In addition, Area A is the core area that represents SPC’s pioneering leaders in the three aspects of the power battery field. Zone B is the secondary central zone, called challengers: B1 represents the strongest on S (not bad either on the other two); B2 represents the strongest on P, and B3 on C. The C area is the edge region, which is called followers: C1 means it is not bad on P and C; C2 stands for pretty good performance in S and C; C3 means quite a bit in S and P.
So far, only one company, CATL, is in the core area, while three companies, BYD, Panasonic and LG Energy Solution are in the secondary core area, performing in S, P and C respectively. The four companies principals of A and B areas have become essential enablers leading the reform of the global electric battery industry, while other chasers are catching up with their advantageous aspects accordingly.
Central area: CATL is the model of all power battery companies in the world with excellent strategic layout. Its products stably balance two ways of ternary lithium and lithium iron phosphate, while its customer group covered many domestic automakers. At present, the only flaw of CATL is that it is not proven in the global market.
Secondary area: BYD’s investment in the field of power batteries over a long period indicates its enterprise value, and its product-level blade battery has entered the market. Panasonic’s cylindrical battery has become a symbol of its technical and innovative strengths, and its partnership with Tesla has boosted its brand awareness. LG Energy Solution has won the cooperation of many auto companies with its excellent management ability and aggressive global disposition.
Peripheral area: Gotion High-tech (Chinese: 国轩高科) and CALB (Chinese: 中创新航) are in the C2 zone, stabilizing in S and C, but are still insufficient in P compared to companies in the core zone. C3 companies are also trying to enter the core domain with strategic vision and technology-driven capability. Moreover, the reason why the C1 area is empty is that no power battery company can rank among the main competitors solely by its technology and commercial capabilities. In fact, strategic layout and sound financing are the major conditions for the development of power battery enterprises.
The NEV power battery market is riding the crest of the wave. As the power battery technology continues to develop and progress, the power battery product with more convenience of use, higher energy density and better security is expected to be successively carried on NEVs, and even be part of the smart electric power grid. Currently, while the global automotive chain has seen great changes due to the rapid development of electric battery, China’s battery has experienced solid growth, and six of the top 10 battery manufacturers are Chinese, with a combined market share of 55 .7%, and the ‘battery + engine’ combination replaces the traditional ‘internal combustion engine + gearbox’ combination. In conclusion, the new global supply chain system has taken shape and new technologies will continue to bring new dynamism and progress to the industry in the future. Meanwhile, the trend of globalization in the power battery industry chain will be further strengthened, and upstream and downstream enterprises are willing to pay more attention to the scope and content of investment. and cooperation.