Domestic cylindrical battery installed capacity may rebound in 2020

Data from the Power Battery Application Branch show that from January to October this year, the installed capacity of power batteries for new energy vehicles in China reached 46.18GWh. Among them, square batteries accounted for 38.87GWh, soft-pack batteries accounted for 4.02GWh, and cylindrical batteries accounted for 3.27GWh, accounting for 84.17%, 8.71% and 7.08% respectively. Compared with the same period last year, the market share of square batteries continued to increase, while that of soft-pack and cylindrical batteries declined. However, the situation in which square batteries are far ahead of others may change in 2020, and the counterattack of cylindrical batteries next year will be a high probability event.

Power batteries can be divided into square, soft pack and cylindrical according to different packaging forms. Each of the three forms has its own advantages and disadvantages and is used in new energy vehicles . From the data of the past two years, it can be seen that square batteries are still the most preferred battery structure by vehicle manufacturers. However, Tesla, the world's most well-known electric car brand, has always used cylindrical batteries. From the existing information, it can be seen that domestic Tesla will still use cylindrical batteries.

Cylindrical batteries have been commercialized for more than 30 years, and the technology is very mature. At the same time, due to their own structural characteristics and standardization, the automation level of cylindrical battery production is also very high. Compared with square and soft-pack batteries, the higher level of automation of cylindrical batteries also makes them have higher product consistency and reliability, which is one of the important reasons why Tesla chose cylindrical batteries in the first place. It is understood that the yield rate of cylindrical batteries like Panasonic has exceeded 98%. Some domestic manufacturers have also achieved world-class cylindrical battery yield rates by introducing advanced production equipment from Japan and South Korea.

Higher yield also means lower costs

Secondly, cylindrical batteries are more mature and easier to achieve in terms of high energy density of single cells than square batteries. The latest cylindrical 21700 NCA ternary battery currently used in Tesla Model 3 has a single cell energy density of 300Wh/kg, which is also the battery product with the highest mass production. Domestically, companies such as BAK Battery and Lishen Battery have also taken the lead in mass production of high energy density cylindrical 21700 batteries.

It is worth mentioning that the application of NCM811 in cylindrical batteries has also entered the stage of large-scale installation, but there are still many problems to be solved in square and soft-pack batteries NCM811. For example, BYD Battery began to install the first batch of high-nickel NCM811/18650-3.0Ah power battery cells in May 2018; in November of the same year, BYD Battery also mass-produced 21700-4.8Ah cylindrical cells made of high-nickel NCM811 materials. So far, BYD Battery's high-nickel 811 has been installed in more than 10,000 vehicles. However, domestic square and soft-pack battery companies will only launch a small number of NCM811 applications in the second half of this year.

In addition, cylindrical batteries also perform well in terms of cycle performance, fast charge and discharge, charging rate, output power, etc. At the same time, because battery technology is more mature, the overall stability of the battery pack is also better after PACK is assembled.

Despite the above advantages, cylindrical batteries are not without shortcomings. Since cylindrical batteries are relatively small in size, the energy of a single cell is relatively smaller than that of a square or soft pack. In order to meet the high power consumption of electric vehicles, it can only be compensated by increasing the number. For example, the battery pack of Tesla's earlier models is composed of more than 7,000 18650 batteries. After upgrading to 21700 batteries, although the number has been reduced to a certain extent, a powerful BMS system is still required to control so many battery cells, which also tests the vehicle manufacturer's ability to control the battery system and the vehicle design capabilities.

Since cylindrical battery cells have relatively small energy, they release less energy when they fail, and are safer than square and soft-pack batteries. This is another important reason why Tesla chose cylindrical batteries. As of now, Tesla has produced nearly 1 million electric vehicles . Among the electric vehicles that have been mass-produced in the world, Tesla has become the world's best-selling electric vehicle with its excellent safety performance.

"As a battery cell manufacturer, we should always adhere to the concept of safety first, from material selection, ratio, battery cell design to engineering process improvement," said Li Dan, vice president of BYD Battery. He believes that safety is the lifeline of the sustainable development of the new energy vehicle industry, and cylindrical batteries will continue to provide support for the automotive power market based on mature technology accumulation and production and manufacturing system.

Data shows that in 2018, the total installed capacity of domestic cylindrical batteries was 7.11GWh, accounting for 12.09% of the three battery forms. Since the beginning of this year, square batteries have continued to grow strongly, but the market share of cylindrical batteries has been narrowing. Under the circumstances of both shrinking installed capacity and market share, the concentration of cylindrical battery companies is also increasing rapidly. According to statistics from Battery China, from January to October this year, a total of 28 battery companies had cylindrical batteries installed, while the number was 40 in 2018. It is worth noting that from January to October this year, the total market share of the top 5 companies with the largest installed capacity of cylindrical batteries, including Guoxuan High-tech, Lishen Battery, BYD Battery, Liandong Tianyi, and Yinlong New Energy , reached 83.22%. In terms of cylindrical ternary, the installed capacity of Lishen Battery, BYD Battery and Liandong Tianyi were 622.41MWh, 557.23MWh and 333.27MWh respectively. The three companies divided 73.87% of the market share, with a higher concentration.

The increase in concentration will reduce low-quality competition in this field, and low-end production capacity and enterprises will be eliminated one after another. For cylindrical battery companies, the industry reshuffle has entered the final stage. "At present, the turning point of the power battery market has emerged, and the further increase in the concentration of the cylindrical battery market share, as well as the unique technical advantages and application advantages of the cylindrical battery technology route will eventually be maximized in product rate," said Lin Jian, director of the BYD Battery Cell Research Institute. Companies with high-level technical research and development capabilities and high-quality battery cell production capabilities will also benefit from this.

Cylindrical battery installations may surge in 2020

In October this year, Tesla's Shanghai Lingang factory officially started mass production. According to the plan, Tesla's Shanghai factory is expected to produce 1,000 Model 3s per week by the end of the year, and subsequent production capacity will be gradually increased. From the current point of view, the batteries used in Tesla's Shanghai factory are still cylindrical 21700 batteries. CITIC Securities analysis believes that the battery demand brought by Tesla's Shanghai factory in 2020-2023 will be 6.6GWh, 20GWh and 27GWh respectively, which will undoubtedly drive the increase in domestic cylindrical battery installations. On the other hand, with the continuous improvement of the concentration of the domestic cylindrical battery market, leading companies will use their product and technological advantages to further expand the application channels and boundaries of cylindrical batteries and increase the scale of installation in the field of electric vehicles .

In addition, due to the decline in subsidies, the growth rate of domestic power battery installation has begun to slow down, and even declined. Square batteries are the most affected due to the large number of manufacturers. It remains to be seen whether the installation of square batteries can continue to grow rapidly in 2020. Overall, due to the localization of Tesla, the reshuffle of cylindrical battery companies entering the final stage, and the continued efforts of leading companies, cylindrical batteries will usher in a new round of installation growth.