How did Tesla “play around” with the domestic lithium battery market throughout February?

For China's new energy vehicle and lithium battery market, Tesla, which is far away on the other side of the ocean, is simply a god-like existence. Any movement of Tesla can set off a storm in the domestic A-share market. In the past month, the A-share lithium battery sector has experienced a bloody storm. Tesla's continuous "uncertain news" has tormented the nerves of most participants in the power battery and capital markets.

At the beginning of the month: Lithium battery sectors collectively strengthened, and the trend of electrification seems to have arrived

On January 29, Tesla revealed in its 2019 fourth-quarter earnings call that the company had added two new power battery suppliers, LG Chem and CATL; on February 3, CATL also issued an announcement confirming that the company had become Tesla's China supplier.

Influenced by this news, on the first trading day after the Spring Festival, when thousands of A-shares hit the daily limit, CATL remained strong. In the following trading days, influenced by this news, the lithium battery sector performed strongly, among which CATL and Ganfeng Lithium, which have direct cooperation with Tesla, even welcomed several daily limit ups, and CATL's market value once exceeded 360 billion yuan.

For Tesla, cooperation with CATL, a domestic power battery giant, can not only further reduce costs and improve efficiency, but also increase battery supply channels and ensure that the Shanghai factory is not restricted by battery bottlenecks, which can be said to kill three birds with one stone. For CATL, entering Tesla's supply chain and adding the "endorsement" of an international luxury electric car company further enhances the company's competitiveness in the field of power batteries.

For China's new energy vehicle market, the cooperation between Tesla and CATL may further reduce the manufacturing cost of domestically produced Teslas, and then continue to lower the price space of domestically produced Teslas, further activating China's electric vehicle market, and ushering in a strong cycle for the domestic lithium battery sector.

However, at that time, neither Tesla nor CATL disclosed technical details such as battery cell or module specifications, so the situation of the entire lithium battery sector was "very good."

Mid-month: "Cobalt-free" batteries are lithium iron phosphate, and the "cobalt market" was accidentally hurt

On February 18, Reuters quoted a person familiar with the matter as saying that Tesla is in in-depth negotiations with CATL to discuss the use of "cobalt-free" batteries in electric vehicles in its Shanghai Super Factory. The cobalt-free batteries it refers to are lithium iron phosphate batteries that have been used in the Chinese market for many years.

"If the Reuters news about Tesla was not called 'cobalt-free battery' but directly called it lithium iron phosphate battery, it is estimated that A-share cobalt stocks would not be so miserable." An industry insider sighed. In fact, the Reuters report hit Chinese cobalt-related listed companies hard, such as Huayou Cobalt and Hanrui Cobalt, which directly hit several limit-downs, and Luoyang Molybdenum's stock was also unbearable to look at. Among them, Hanrui Cobalt's high of 94 yuan per share this month has fallen to the current 70.29 yuan per share, and Huayou Cobalt has also fallen from 58 yuan per share to 42.92 yuan per share.

The accidental damage caused by Tesla's "cobalt-free battery" is still ongoing, and it is still unknown when Huayou Cobalt, Hanrui Cobalt and Luoyang Molybdenum will be able to get out of the "shadow" of the news.

Cobalt was accidentally hurt, but lithium iron phosphate benefited directly from the news. A-share companies involved in lithium iron phosphate batteries and lithium iron phosphate cathode materials were "all happy". As soon as the news that Tesla would use Ningde Times' lithium iron phosphate batteries came out, the A-share market moved. On February 19, A-share companies involved in lithium iron phosphate batteries included CATL, BYD, EVE Energy, Guoxuan High-tech, etc.; companies involved in the production of lithium iron phosphate battery cathode materials included: Defang Nano, China Baoan, Xiangtan Electric, Fengyuan Shares, Guanghua Technology, etc., all rose sharply, and some stocks had reached the daily limit for several consecutive trading days.

In addition, some listed companies are also actively rubbing their hands on the "lithium iron phosphate battery concept". For example, Shida Shenghua, a supplier of lithium battery carbonate solvents, said that compared with ternary batteries, the production of lithium iron phosphate batteries with the same electrical power requires more DMC solvents. After the announcement of this reply to investors' questions, Shida Shenghua's stock price rose to the daily limit on February 21. Hezong Technology also stated that the company's wholly-owned subsidiary Hunan Yacheng mainly produces lithium iron phosphate battery cathode precursor products, which are mainly used in the manufacturing and processing of lithium iron phosphate cathode materials; in addition, this year the company is developing a new generation of high compaction density iron phosphate and low-cost iron phosphate research and development. Subsequently, Hezong Technology also rose to the daily limit on the 19th. In addition, Xiongtao Co., Ltd., which has been keen on hydrogen fuel cells in recent years , also revealed that it has been conducting research and production of lithium iron phosphate batteries for many years. At present, the company's lithium battery products are mainly based on lithium iron phosphate systems.

The news from Reuters about Tesla's use of lithium iron phosphate batteries has caused a stir again in the lithium iron phosphate battery sector, which had been calm for a long time.

At the end of the month: Lithium iron phosphate "empty joy" lithium battery sector plummeted

Lithium iron phosphate suddenly became popular, but was soon "refuted" by Tesla. On the evening of February 21, Tesla replied to a user on its official social account: Please pay attention to Tesla's battery conference in April. Cobalt-free does not mean it must be lithium iron phosphate. However, Tesla later deleted the reply.

According to media reports, people close to Tesla learned that Tesla's "cobalt-free battery" and the "cobalt-free battery" purchased from CATL are completely different things: the cobalt-free battery purchased from CATL is a lithium iron phosphate battery; Tesla's "cobalt-free battery" is more like its independently developed and produced cobalt-free battery. This news needs to wait until Tesla's battery conference in April to be confirmed.

Subsequently, some media combined Tesla’s operations in the battery field in the past year and analyzed that Tesla’s so-called "cobalt-free battery" is a "dry electrode technology + supercapacitor combination" technology.

In May 2019, Tesla acquired Maxwell, a supercapacitor and battery manufacturer. According to information disclosed by Tesla, the company can significantly improve the energy density of battery cells based on Maxwell's core technology "dry electrode technology";

In October 2019, Tesla acquired Hibar, a Canadian battery manufacturing equipment and engineering technology company known for its precision metering pumps, injection systems and battery manufacturing systems.

In December of the same year, Tesla applied for a battery technology patent. The patent showed that by using new chemical materials, batteries with larger capacity, longer life and lower cost can be obtained.

In February this year, according to foreign media reports, Tesla is likely to have acquired another lithium-ion battery startup, SilLion. Its core technology uses high-load silicon anodes, nickel-rich NMC cathodes and non-flammable ionic liquid electrolytes to improve battery energy density and safety while reducing costs.

Tesla's series of investments in the battery field may be brewing bigger moves, and Tesla will announce all of this at the battery conference in April.

As soon as the news came out, it instantly caused a thousand waves in the capital market and the lithium battery market. When the A-share market opened on February 24, the lithium battery sector fell in unison. Some lithium iron phosphate battery concept stocks that had reached their daily limit last week fell sharply, and Xiangtan Electric and Defang Nano fell directly to their daily limit. According to Wind data, the lithium battery index fell by more than 1.4% on February 24, and the market value of 95 stocks in the sector evaporated by nearly 70 billion yuan. The cobalt mine index, which was "accidentally injured" last week, continued to fall by 3.9%, and the market value of 13 stocks in the sector evaporated by nearly 24.3 billion yuan.

It can be seen that in the past month, Tesla's successive announcements of confirmed or uncertain news have set off huge waves in the capital market. The capital market is always like this, hearing the wind is rain, coming quickly and going quickly. But whether it is new energy vehicles or the power battery industry, they are all industries that need to be cultivated carefully, and doing industry often requires calming down and focusing on products and technologies themselves. In fact, from our current perspective, what really makes lithium iron phosphate battery technology promising is the result of battery companies' quiet research and efforts, such as CATL's CTP technology and BYD's "blade battery" technology. The storms in the capital market will continue to blow, and the real direction of the industry is still in the hands of battery people, and they need to work harder.