4680 battery mass production leads to an outbreak

Tesla's future 4680 battery capacity is expected to exceed 100GWh/year. In September 2020, Tesla released a 4680 battery using a silicon-based negative electrode, with an energy density of 300Wh/kg and a battery capacity five times higher than that of the 21700 battery. The lack of mass production was mainly due to poor yield and consistency levels. We expect that the 4680 battery will be released in 2022-2025 after mass production in 2022. According to Tesla's previous plan, the annual production capacity of the 4680 battery will exceed 100GWh in the future.

Tesla's 4680 battery has been mass-produced, and demand is rapidly increasing. On February 19, 2022, Tesla announced that it had produced its one millionth 4680 battery in January, while the Texas factory will deliver the first Model Y with 4680 batteries this quarter. We expect that with the improvement of the yield rate of 4680 batteries, the products will be promoted in more Tesla models. It is expected that the demand for Tesla 4680 batteries will reach 58/99/128GWh from 2023 to 2025. Overseas, in addition to Tesla's super factories in Texas and Germany, Panasonic and LG Chem are promoting the construction of 4680 large cylindrical battery supporting facilities.

Domestically, CATL is accelerating the pace of research and development, and plans to mass-produce it in 2024; BAK Power began to develop large cylindrical batteries in 2019, and is expected to be mass-produced in 2023; EVE Lithium Energy issued an announcement on November 5, 2021, which will be released in 2021. Jingmen City is building a large cylindrical battery production line with an annual output of 20GWh, and it is expected to achieve mass production in 2024. We expect that under the leadership of Tesla, domestic companies will follow up the deployment of 4680 batteries, which will drive the penetration rate of cylindrical batteries to further increase.

Summary: Global silicon-based anode shipments are expected to reach 100,000 tons in 2025, with a CAGR of 53% in 2021-2025. On the battery side, with the mass production of 4680 large cylindrical batteries, domestic enterprises are driven to follow up their layout, and the continued prosperity of the downstream of lithium batteries will open up the market space for silicon-based negative electrodes. On the vehicle side, the next two years will be the best time window for OEM brands to move up. High-end models are expected to be launched intensively, driving the increase in demand for energy supplements such as fast charging, and the advantages of high specific capacity of silicon carbon materials are gradually highlighted. The industry will usher in rapid growth. During the period, with the increase in penetration rate, the scale of the silicon-based anode industry will expand rapidly.