After several years of ups and downs, companies in the new energy vehicle power battery field that cannot really occupy a certain share can only choose to exit the power battery business, start 3C or enter the energy storage field. Other companies that did not foresee the opportunity are also planning early in areas such as electric two-wheelers, three-wheelers, low-speed vehicles and forklifts. With the introduction of the mandatory national standard "Electric Bicycle Safety Technical Specifications" (GB17761-2018), lithium electricity will usher in an explosive period in these fields. Compared with the two giants in the lead-acid field, these transformed power battery companies still have the opportunity to become the dominant players in this field. There are many details on the subsidy policy and the situation over the years in the online comparative research, so I will not repeat it here. Several key issues were briefly introduced. One is to cancel subsidies for pure electric passenger cars. The scope of the subsidy is less than 250km and the energy density of the battery system is less than 125Wh/kg. The second is to reduce the subsidy for pure electric passenger cars between 250 kilometers and 400 kilometers to 18,000 yuan, the subsidy for more than 400 kilometers from 50,000 yuan to 25,000 yuan, and the plug-in hybrid powertrain subsidy is also reduced from 22,000 yuan to 10,000 yuan. Third, in terms of new energy buses, subsidies for non-fast charging pure electric buses, fast charging pure electric buses and plug-in hybrid buses have been reduced from 1,200 yuan/kWh, 2,100 yuan/kWh and 1,500 yuan/kWh to 500 yuan/kWh respectively. Yuan/kWh, 900 Yuan/kWh and 500 Yuan/kWh. Fourth, cancel local subsidies, from subsidizing cars to subsidizing charging infrastructure. Based on the above points, it can be expected that the cost pressure brought by the implementation of the new policy on major original equipment manufacturers will still be great. OEM's future sales pricing and cost control strategies will inevitably be affected by the significant reduction in subsidies. Not only auto parts companies, but especially battery manufacturers and PACK-related parts companies are bound to receive more cost reduction requirements. In order to cope with OEM's cost reduction requirements, battery factories must try to control the procurement costs of battery raw materials and PACK components. Some battery factories have made it a top priority to reduce costs in key tasks in 2019 by at least 35%-40%. Among core materials such as positive and negative electrodes, separators and electrolytes, the prices of electrolytes, separators, etc. have decreased in different proportions in the past few years. However, due to the large proportion of cathode materials, it will be affected by fluctuations in upstream raw material prices. It is completely unrealistic for the battery core to completely follow the ratio of cost reduction. Therefore, core manufacturers can only do their best to reduce packaging costs, from using standard modules to achieve economies of scale, to replacing imported parts with domestic parts as much as possible, and constantly optimizing structural design to reduce the application of redundant parts. Moreover, it is impossible to replace parts by lowering technical standards without affecting overall performance and safety. Some leading battery manufacturers can rely on their market size advantages to further deepen cooperation with various suppliers and form strategic partnerships to ensure that they have a certain bargaining space. Suppliers who are already deeply tied to large factories or operating in other areas will more decisively refuse to cooperate with small and medium-sized battery factories with long account cycles, delayed payments and insufficient funds. Therefore, small and medium-sized battery companies without obvious market scale advantages and financial support may not be able to withstand cost pressures. Without market scale, they have no bargaining power, and cost disadvantages will lead to further loss of market scale, forming an endless cycle. 2019 will be a year for further clean-up and integration of domestic battery factories, and the market structure will become increasingly clear. Competitive Pressure and Development Changes in Domestic Battery Factories According to data released online, the ranking of battery factories in different years from 2015 to 2018 will be slightly different due to differences in company shipments and installed capacity. But judging from the overall trend, the market concentration of the two giants will not change in the next five or 10 years. In the past decade or so, with the development of the power battery industry, the technical routes of square, flexible packaging, and cylindrical shapes have shown a three-pronged trend, and major battery manufacturers have been competing to seize market share. After the Waterma incident, market share began to decline. Square batteries such as CATL and BYD gained absolute advantages, and soft-packaged batteries caught up with each other. In 2018, the number of new energy vehicle soft bags grew rapidly, with 7.5GW installed, an increase of 60.73% over the same period last year, accounting for 13% of the total installed capacity. The top ten companies accounted for 83% of the total installed soft pack batteries, which is also in line with the trend of further concentration of resources in the hands of a few people. The top ten software package companies are: Funeng Technology, National Energy Battery, Carnegie New Energy, Wanxiang 123, Thornton New Energy, Microvast Power, Gitvik Power, CATL, United Shili, Tianjin New Energy. From a technical perspective, the reason for flexible packaging may be that flexible packaging is safer and has higher energy density. From a structural design perspective, the layout method can be flexibly matched to different group requirements. In addition, the thickness of the battery core can be designed to be very thin, and the specific surface area can have strong uniform heat dissipation and heat dissipation capabilities, ensuring the safety of thermal management. According to statistics from the research department of power battery companies, domestic power battery companies reached their peak in 2016. The main reason is that the demand for power batteries exceeds the capacity of the entire industry. At that time, the gross profit of power batteries was still at a high level, and many companies were facing headwinds. However, after the false subsidies, as the country continues to update and improve its subsidy policies, the amount of subsidies has also been reduced, and the technical requirements have also increased. Previously, with the development of commercial vehicles and special vehicles, some leading companies in the industry entered a period of slow growth and their market share continued to decline. Coupled with various downstream cost pressures, the number of power battery companies has gradually decreased since 2017. Those companies that have still failed to truly occupy a certain share of the new energy vehicle battery industry after several years of ups and downs can only exit the battery business, restart 3C or enter energy storage. Other companies that do not foresee many opportunities also have early deployments of electric two-wheelers, three-wheelers, low-speed vehicles and forklifts. After the introduction of the mandatory national standard (gb19761-2017) for "Electric Bicycle Safety Technical Specifications", lithium batteries will cause an outbreak in these areas. Just like the two giants in the lead-acid field, there is still a chance for those modified power battery companies to become the dominant players in this field.

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