BYD's battery business was hit hard and was surpassed by LG Chem

Recently, SNE Research, an international power battery market research organization, released the global power battery shipment rankings for August 2019. The data showed that BYD, the third-ranked company, saw its power battery shipments plummet by 61.1% year-on-year, losing its third place in the world and being replaced by LG Chem. Boming Technology believes that this is mainly because the domestic new energy vehicle market has been affected by subsidy cuts, leading to a sharp decline in new energy vehicle sales.

BYD suffers from cold snap in new energy vehicle market

According to the sales data of new energy vehicles, the sales of new energy vehicles in the Chinese market have continued to grow rapidly in the past few years. In the first half of this year, the sales of new energy vehicles increased by 67.%, which was significantly slower than the growth rate of 88.5% last year. Subsequently, the state’s subsidies for new energy vehicles were halved and local government subsidies were gradually cancelled, and the new energy vehicle market quickly cooled down.

In July this year, China's new energy vehicle sales fell 4.7% year-on-year, and in August, the decline in new energy vehicle sales further expanded to 15.5%, showing that the market demand for new energy vehicles has rapidly decreased after the cancellation of subsidies. With the reduction of subsidies, new energy vehicle sales have quickly turned from rising to falling, showing that consumers' acceptance of new energy vehicles is lower than the expectations of automobile companies for market demand, which is related to the regrets of new energy vehicles themselves.

First, new energy vehicles are too expensive because they are equipped with large-capacity batteries; second, the current new energy vehicles have poor range. Although a large number of new energy vehicles claim to have a range of 600 kilometers, the actual range is about 30% lower, and the range is even worse in cold weather; fast charging technology is not as ideal. Although the fast charging speed of new energy vehicles has improved in recent years, it still takes about 1.5 hours to fully charge a car, which is much longer than the 10 minutes it takes to refuel a gasoline car. These reasons have led to the failure of ordinary consumers to quickly accept new energy vehicles, and sales have fallen rapidly after the subsidy reduction.

The new energy vehicle market has encountered a cold snap, and BYD, as a new energy vehicle company, has also suffered losses. The company's new energy vehicle sales data for August showed that its new energy vehicle sales in August were 16,719 units, a year-on-year decrease of 23.44%, while sales in the first eight months increased by 54.91% year-on-year. Obviously, the performance in August was far worse than the previous seven months.

BYD's power batteries are mainly used by itself. The decline in sales of its own new energy vehicles naturally led to a decline in its power battery sales. However, the decline in its power battery sales was much greater than the decline in new energy vehicle sales. This may be because the new energy vehicles sold in August had already been produced in August, and its pessimism about the next few months led to a sharp drop in its purchases of power batteries.

LG Chem surpasses BYD

According to the data of the global power battery market in 2018, BYD and LG Chem's market share were 5.2% and 4.0%, respectively, and their market share was quite close. According to the data of market research agency SNE Research, LG Chem's shipments in August increased by more than 80% year-on-year, while BYD's shipments fell by more than 60%. With one increase and one decrease, BYD's share in the power battery market fell behind LG Chem, resulting in the two swapping rankings.

The surge in LG Chem's power battery shipments is related to Tesla 's factory in Shanghai about to start production and its large-scale purchase of power batteries from LG Chem. It is also related to the fact that European companies such as BMW, Mercedes-Benz, and Volkswagen have successively launched new energy vehicles and purchased power batteries from LG Chem on a large scale, which has driven its power battery shipments to grow rapidly.

The decline in BYD's shipments is related to the decline in BYD's own automobile shipments. It seems that it has also realized that it is difficult to support the development and growth of its power battery business by relying solely on its own automobile business. Therefore, it intends to make the power battery business independent. However, due to the competitive relationship between its own automobile business and other companies, it is not easy to get other automobile companies to adopt its power batteries.

In contrast, CATL, the largest power battery company in China, has won the support of many domestic automobile companies due to its focus on the power battery market. It has also received orders from some foreign automobile companies. Therefore, its power battery shipments in August increased by 49.4%. At a time when new energy vehicles are not popular, its achievement undoubtedly highlights its strong competitiveness.

Among domestic power battery companies, in addition to BYD's power battery shipments, other power battery companies such as Guoxuan High-tech also saw a decline in shipments. The domestic power battery market shows a trend of the strong getting stronger. The market share of the leader CATL has been rising steadily, while the market share of small and medium-sized power battery companies has been continuously compressed. In the past two years, a large number of small and medium-sized power battery companies have even gone bankrupt. In the cold wave of the new energy vehicle market, the situation of small and medium-sized power battery companies is particularly difficult.

LG Chem's power battery shipments surpassed BYD, and domestic power battery companies should be alert, especially since it received an order from Tesla, which represents Tesla's high recognition of it. Previously, the industry believed that LG Chem's power battery technology was ahead of domestic power battery companies, and it was ahead of domestic companies in terms of energy density. It is also expanding its power battery production capacity in the domestic market. BYD's setback is naturally worrying, and the leader CATL also needs to be careful of it snatching the market.