How to deal with the development difficulties of power L822 battery industry

In recent years, driven by the rapid development of my country's new energy vehicle industry, the power battery industry as a core component has also developed rapidly. In 2017, the scale of my country's power battery industry ranked first in the world. However, while the industry is developing rapidly, there are also problems such as a sharp drop in corporate profits, lack of core technology, overcapacity and difficulty in recycling. We should actively respond to these problems from the aspects of strengthening top-level design, improving corporate R&D capabilities, reducing corporate production costs, improving the recycling system, and accelerating talent training, so as to help my country's new energy vehicle industry become bigger and stronger.

As one of the strategic emerging industries that my country focuses on developing, the new energy vehicle industry has shown an explosive development trend in recent years. Power batteries are the "heart" and "soul" of new energy vehicles, the link with the highest added value in the new energy vehicle industry chain, and the first of the three core technologies for the development of new energy vehicles. The development of the power battery industry and the breakthrough of related technologies are an effective way to break the power bottleneck of new energy vehicles, the key to boosting the growth and strength of my country's new energy vehicle industry, and will ultimately determine whether my country can transform from a traditional automobile power to a modern automobile power.

In recent years, my country's power battery industry has developed strongly. According to statistics, my country's power battery shipments reached 44.5GWh in 2017, with a year-on-year growth rate of 44%, accounting for more than 70% of the global market share, and the industry scale ranks first in the world. However, while the industry is developing rapidly, four major problems have also emerged: a sharp drop in corporate profits, lack of core technology, overcapacity and difficulty in recycling and utilization, which need to be actively addressed.

The development of the power battery industry faces a situation of "too many soldiers and too few generals"

First, the profits of power battery companies have been greatly reduced, and the industry reshuffle has been accelerating. Statistics show that in 2017, the overall operating income of the new energy vehicle industry increased by 13.2%, down about 4.6% from the previous year; the net profit attributable to the parent company increased by 7.9% year-on-year, and the growth rate was about 20% lower than the previous year; the gross profit margin was 31.4%, down 1.4% year-on-year. In addition, the reshuffle of the power battery industry has been accelerating recently. In 2015, there were 150 power battery-related companies in the country, and by the end of 2017, it had dropped to about 100.

Second, multinational companies have formed patent control over my country's power battery industry technology. According to the latest version of the International Patent Classification (IPC), the top ten companies in the global power battery industry are monopolized by countries such as Japan, the United States, South Korea and Germany. The total number of patents of these ten companies is 3,278, and no Chinese company is on the top ten list. This shows that there is a significant gap between Chinese companies and developed countries in the number of patents in the power battery industry, the market competitiveness of related companies is relatively weak, and the patent barriers for the development of my country's power battery industry have not yet been formed.

Third, the power battery industry faces serious overcapacity. In recent years, the rapid growth of production and sales of new energy vehicles has driven the development of the power battery industry. From 2014 to 2016, the average annual growth rate of the domestic power battery industry was as high as 368%, 324% and 78.6% respectively. Data shows that China's power battery output in 2017 was 44.5GWh, 8.1GWh higher than the total installed capacity in the same year. The overall inventory accounted for about 18.2% of the total output, and the national power battery capacity utilization rate was only 40%. Although the current production capacity of power batteries is huge, it still has the hard flaw of "low technical level". The structural overcapacity of "oversupply of low-end products and insufficient high-end products" is a prominent problem that currently plagues the development of my country's power battery industry.

Fourth, the pressure on power battery recycling is increasing. Generally speaking, the scrapping cycle of power batteries for operating new energy vehicles is 3 to 5 years, and the scrapping cycle of private passenger cars is 5 to 8 years. my country has been promoting the development of new energy vehicles since 2010, which means that starting from 2018, a large number of power batteries in my country will enter the scrapping period, and will enter the peak period of power battery retirement in the following years. It is estimated that by 2020, the cumulative scrapping volume of power batteries in my country will reach 120,000 to 170,000 tons, and the retired new energy vehicle lithium batteries will be about 50GWh. And accompanied by this is the current low domestic power battery recycling rate. According to statistics, in 2015, the total amount of scrapped power batteries in my country was 20,000 to 40,000 tons, and the corresponding recycling rate was only 2%. In 2016, the total amount of waste power batteries recycled was less than 10,000 tons, and the recycling rate was less than 20%. In the future, if these increasing amounts of waste power batteries cannot be effectively handled, it will cause serious waste of resources, environmental pollution, and may trigger a new energy crisis. It is urgent to improve the processing capacity of waste power batteries and build a complete power battery recycling system.

Three factors affect the healthy development of my country's power battery industry

First, the two-way clamping of the upstream and downstream of the industrial chain. From the upstream, the price of raw materials has risen. From the downstream, affected by the sudden reduction in subsidies, many vehicle manufacturers are facing financial pressure. While significantly lowering the price of power batteries, they continue to extend the debt period and default on remittances, directly transferring the cost pressure to upstream battery manufacturers, resulting in a sharp drop in profits for a large number of power battery companies and an intensified industry reshuffle.

Second, the weak R&D strength of enterprises leads to the lack of core technologies and patents in the industry. Power batteries are capital- and technology-intensive industries. At present, the overall R&D strength of my country's power battery-related enterprises is relatively weak, lacking core technologies and patents with significant industrial influence. In terms of high-end and sophisticated technologies, there is still a large gap with developed countries. At the same time, the lack of high-end talents and high talent mobility lead to a lack of sustainability in R&D.

Third, the rapid expansion of new energy vehicle production capacity has led to a large amount of excess capacity in the power battery industry. The development of the new energy vehicle industry has the characteristics of great market potential, high government subsidies, and lucrative profits. In recent years, it has attracted a lot of capital investment, which has promoted the amazing development speed of new energy vehicles in the short term. The rapid growth of new energy vehicle production capacity has led to an explosive growth in demand for power batteries and other related supporting products, while also directly leading to an overcapacity situation in the power battery industry.

Take multiple measures to solve the development problems of the power battery industry

First, strengthen top-level design and guide the healthy and orderly development of the industry.

First, study and formulate a medium- and long-term development strategy plan for the power battery industry, further clarify the technical level and standardization of the power battery industry, and avoid the overcapacity of low-end products caused by blind development. Second, optimize the government subsidy method, raise the technical threshold of subsidies, and change from general subsidies to rewards and support for the best, and encourage leading power battery companies to grow bigger and stronger through mergers and reorganizations, and extend the industrial chain, so as to avoid the homogenization and low-end development of the power battery industry. Third, seize the major development opportunities brought by the national "Belt and Road" initiative, encourage domestic power battery leading enterprises to develop overseas markets, especially to do a good job in tracking and studying the new energy vehicle market in countries along the "Belt and Road", choose the right market and the right time to "go out", so as to resolve the overcapacity crisis in the domestic market.

Second, enhance the R&D strength of enterprises and enhance the competitiveness of core technologies in the industry.

First, continue to rely on the industry-university-research alliance to develop breakthroughs in the core common technologies of power batteries. Make full use of scientific and technological innovation platforms such as the National Power Battery Innovation Center and the China Automotive Power Battery Industry Innovation Alliance to strengthen the development and industrialization of new material systems for power batteries, rely on independent innovation to improve the patent layout of Chinese enterprises in the field of core technologies for power batteries, and get rid of the current situation of core technology dependence on imports. Second, speed up the introduction of incentives for the industrialization of power batteries, improve the performance and life of power batteries after grouping, and accelerate the industrialization technology research and development of high-performance and high-safety power batteries. Third, encourage domestic power battery leading enterprises to strengthen technical R&D cooperation with internationally renowned vehicle and power battery companies, absorb foreign advanced battery technology, and form a complementary business cooperation model; promote domestic advantageous enterprises to actively participate in the competition in the international market, and enhance the technical level and international vision of my country's power battery companies.

Third, reduce the production costs of power battery companies and improve their economic benefits.

First, encourage companies to promote the lightweight and standardized development of power batteries, and improve the energy density of battery modules of the same volume on the premise of ensuring the safety factor of the battery, so as to directly reduce the battery cost. Second, promote the integration and development of technologies such as big data, the Internet of Things, and the Internet with the manufacturing of power batteries and their production equipment, encourage companies to build a smart production and manufacturing system for power batteries, and realize the platformization, intelligence, and service-oriented production process and management control through smart manufacturing upgrades to reduce manufacturing costs. Third, encourage companies to implement the "quality project" of power batteries, strictly control product quality, and improve the efficiency of product final inspection; encourage strong companies to implement "machine replacement" to effectively reduce the labor costs of enterprises by reducing the number of employees on the production line, so as to improve the economic benefits of power battery companies.

Fourth, create a complete recycling system to improve the efficiency and level of power battery recycling. First, strengthen the construction of recycling information platform and network. Coordinate the establishment of a national automotive power battery management information system to achieve unified management of new energy vehicle manufacturers, power battery manufacturers, after-sales maintenance companies and recycling and reuse companies, and lay a data foundation for the next step of building a fund and deposit recovery system; at the same time, encourage new energy vehicle manufacturers, power battery manufacturers and battery leasing companies to transform their existing business networks into recycling networks to improve the recycling efficiency of power batteries. Second, encourage the research and development and use of key technologies and new technologies. Provide financial support for the research and development of key common technologies such as power battery retirement judgment standards and detection technologies, automated disassembly and material sorting technologies for single cells, and provide tax reduction and exemption benefits to power battery recycling companies that actively adopt new technologies, new processes and new equipment. Third, actively carry out the cascade utilization of power batteries. In response to the rapid growth of a large number of retired power batteries, promote relevant companies to strengthen cooperation with companies related to energy storage fields such as emergency power supplies, photovoltaic power generation, low-speed electric vehicles, and electric bicycles, and promote the cascade utilization of power batteries.

Fifth, strengthen cooperation and talent training to improve the level of healthy development of the industry.

First, promote the cooperative development of domestic vehicle and power battery companies, and build an ecological system of the entire industrial chain with complementary advantages and cooperative symbiosis. Guide large-scale new energy vehicle companies to gather in industrial parks to form the coordinated development of vehicle manufacturing and supporting links such as power batteries; encourage domestic power battery companies with advantages to expand their business into the field of vehicle manufacturing, and also encourage large vehicle companies to lay out power batteries and other industrial chain links in advance. Second, promote cross-field collaboration in the industry. Encourage power battery companies to strengthen contact and cooperation with domestic and foreign raw material production companies such as lithium, nickel, and cobalt to improve the level of resource security; in response to the rapid growth of a large number of retired power batteries, promote relevant companies to strengthen cooperation with companies related to energy storage such as emergency power supplies, photovoltaic power generation, low-speed electric vehicles, and electric bicycles, and promote the cascade utilization of power batteries. Third, strengthen the training of high-end professional and technical personnel. In core technical fields such as battery materials and system integration, accelerate the training of a group of professional and technical personnel, build a local R&D talent team, and provide talent guarantee for industrial development.

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