The battle between China, Japan and South Korea in the lithium battery industry chain

Looking back at China's lithium battery industry, there is still a gap in technology with Japan and South Korea, but the advantage over Japan and South Korea in market share is gradually expanding. In fact, domestic lithium batteries are not completely in the mid-range, but are already capable of competing head-on in the high-end.

For example, the batteries for Apple phones are mainly produced by Chinese companies such as Xinwoda, Desay Battery, and ATL. The battery explosion incident of Samsung's Note7 in 2016 was caused by the fact that it used its own Samsung SDI battery, while Samsung phones using lithium batteries from China's ATL company did not have any problems.

The power batteries used in China's electric vehicle industry are also mainly purchased from domestic batteries. Except for BYD which uses its own batteries, other car manufacturers buy the most from CATL. Due to the large capacity of car batteries, the battery of a car is equivalent to

The power of more than 1,000 mobile phone batteries can be equivalent to 5,000 mobile phone batteries if it is a pure electric car. If it is the battery of an electric bus, it will be tens of thousands of mobile phone batteries.

Therefore, CATL is developing very rapidly and is likely to become the world's largest lithium battery supplier in the next two to three years. BYD is also likely to become the world's second largest supplier, second only to CATL.

Panasonic, Japan's largest battery company, is now clinging to Tesla of the United States, and the two companies are working closely together. However, this also poses hidden concerns for Panasonic. If Tesla's supply chain is breached by Chinese companies one day, Panasonic batteries will be in danger because it will be difficult to find alternative customers.

In 2016, Sony's lithium battery sales amounted to RMB 8 billion, and Panasonic's lithium battery sales amounted to RMB 23 billion, which totaled RMB 31 billion. Tesla sold 76,000 electric vehicles in 2016, spending an average of $35,000 per car on Panasonic batteries, which means that Tesla spent as much as $2.66 billion on Panasonic batteries in 2016. Let's round it up to $2.5 billion, which is about RMB 17 billion.

Tesla's purchase of Panasonic batteries exceeds half of Japan's lithium battery industry orders. This is the result of the overall shrinkage of Japan's downstream electronic brands and the loss of the market to Chinese, American and Korean brands. We can say that if Musk had not chosen Panasonic as a supplier, Japan's lithium battery industry would have been in full decline.

South Korea's Samsung SDI and LG don't have to worry, as they have their own brands to pay the bills, so survival is not a problem.

As the global share of Chinese electronic brands continues to rise, China's lithium battery share continues to rise.

Of course, another major trend is the advent of the electric car era. In 2016, China's electric car brand production accounted for about 50% of the world's total, and is still soaring, which means that China's lithium battery industry will continue to usher in continued rapid growth.

The arrival of the electric car era will open up a very broad space for lithium batteries. 1.5 billion smartphones are sold worldwide each year, corresponding to 1.5 billion batteries. 90 million cars are sold worldwide each year. If all of them use lithium batteries one day, the battery capacity of a car will be equal to 5,000 mobile phone batteries. From mobile phones to cars, this means that the market space for lithium batteries will expand 300 times.

We can see that CATL only produces automotive power batteries, but in just a few years its revenue has easily surpassed that of well-known domestic mobile phone lithium battery manufacturers such as Xinwoda, Desay, and ATL that supply Apple, Samsung, and Huawei, and its revenue growth rate is also very amazing. It should be noted that the domestic electric vehicle industry has just started.

Domestic lithium battery manufacturers have seen the strategic opportunity window of electric vehicles and have been frantically increasing their production capacity this year. There may be a risk of overcapacity in the short term, but in the long run, it is only a matter of time before Chinese battery manufacturers surpass Japan and South Korea.

You know, unlike fuel-powered cars, 50% of electric car production currently comes from Chinese brands. Korean electric cars have not yet taken off, but Samsung and LG can provide space for Korean battery manufacturers. Japanese car companies do not take the pure electric route. From laptops, tablets, to smartphones, Japanese electronic brands have a smaller and smaller market share, which is also squeezing the living space of Japanese batteries.

Tesla's choice to cooperate with Panasonic has helped the Japanese battery industry to a great extent. If Chinese battery companies take down Tesla, they will basically have completed the situation after the three major battles of the Liberation War. Unless Japanese auto companies start to follow the electrification route like China and the United States, Japanese battery companies still have strategic opportunities.