Overview of global power battery installation data in July

SNE Research has updated the global ranking of installed capacity of  power batteries in July. LG Chem, which is betting on the demand for Europe and Tesla  , continues to advance rapidly. The installed capacity of power batteries in July was 2.8GWh, a year-on-year increase of 171.5%; the installed capacity from January to July was 13.4GWh, an increase of 97.4%, jumping from fourth place last year to first place. Combined with the previous Korean research report on LG Chem's Q2 financial report and QA, we will sort out the important information. In a few days, the data on new energy vehicles in Europe and China in August will also be released, and we will look at them together then.

Global rankings for January, July and January-July

From January to July 2020, the global installed capacity of power batteries was 53.3 GWh, down 16.8% from the same period last year. Due to the epidemic, the demand for electric vehicles in the two major markets, China and the United States, has declined. Europe has adopted special incentives for electric vehicles and is currently the only one in this field. The highlight of this year is that Korean batteries have made great gains from January to July under the demand launched in Europe: 

LG Chem jumped from fourth place in the same period last year to first place, with installations reaching 13.4GWh, an increase of 97.4%. 

Samsung SDI's installed capacity of 3.4GWh surpassed BYD to rank fourth, an increase of 52.6%.

SK Innovation also increased its production by 86.5% to 2.2GWh, moving up three places in the ranking and only 1GWh behind BYD.

The three South Korean companies' combined share doubled to 35.6% from 15.9% a year earlier.

Figure 1 Situation of major global power battery companies from January to July 2020 

The main models of these three Korean companies include:

LG Chem: Model 3 Chinese version, Renault ZOE, Porsche Taycan.

SDI: Among BEVs, the Golf and Audi E-tron EV (71kWh) are popular. Among PHEVs, Ford Kuga PHEV and BMW 330e are in great demand.

SK: It was mainly driven by Hyundai and Kia, including Porter 2 Electric, Niro EV and Soul Booster.
I arranged the monthly installed capacity growth rates of major companies according to the figure below. We can see that the three Korean companies stagnated in April of Q2, and completely returned to the rapid growth range in June-July of Q2.
 

Figure 2: Growth in installed capacity of major battery companies from January to July 2020

China's battery companies Guoxuan and AVIC Lithium Battery are also within the scope of the study. The two companies have accumulated 1GWh respectively, a decrease of -46%, and the latter has 0.9GWh, a year-on-year increase of 73.7%. We need to analyze this separately later. From the trend point of view, the global power battery installation capacity in July 2020 was 10.5GWh, a year-on-year increase of 20.9%, and finally resumed growth after 4 months of negative growth. 

02. LG Chem’s performance

From the performance point of view, we can also review the performance of these companies:

1) LG Chem's Q2 financial report shows that sales revenue in the second quarter was 6.935 trillion won (RMB 40.73 billion); net profit was 419.1 billion won (RMB 2.46 billion), an increase of nearly 5 times. The battery business department achieved revenue of 2.82 trillion won (about RMB 16.56 billion) and operating profit of 155.5 billion won (about RMB 910 million) in Q2, which was mainly attributed to the increase in the production of electric vehicles in Europe and the increase in the production of cylindrical batteries. The production of cylindrical batteries expanded by 60%, with a profit of 107.1 billion won.

Figure 3 LG's Q2 battery performance

2) Samsung SDI's revenue increased by 6.4% to 2.559 trillion won, but its operating profit fell by 34% to 103.81 billion won, and its Q2 net profit fell by 70% year-on-year to 47.7 billion won, which was not particularly good overall.

Figure 4 SDI's Q2 battery performance

Judging from this year's business, the small batteries of several companies are doing well, and the demand for 18650 and 21700 for electric bicycles and scooters is decent.

3) SK's battery business had an operating loss of 113.8 billion won and is still in the investment stage. When each factory is completed, it will have a large strategic production capacity reserve to join the competition.

Figure 5 SK's Q2 battery performance

Some interesting questions and answers from LG Chem, I have excerpted: 

Q3 的电池业务销售预计通过比增长 25%，今年的销售额有望达到 13 万亿韩元（RMB 763 亿），有意思的是 LG Chem 在消费电子的需求停滞了，今年圆柱电芯的业务特别好，一方面是特斯拉的需求，一方面市东南亚的 LEV 市场不断增长。波兰和中国工厂都在上半年达到了生产的内部目标，新扩产的产线稳定性和产量已经显著提高，从 5 月份已经改善了产能利用率，现在已经恢复到正常的开工率水平。从 10 月开始的 ID 系列在欧洲的交付，之前会有比较大的需求，这波大众拉起来的需求会对业绩有很大的改善。

Summary: It is expected that the volume of new energy vehicles in China will increase in August. On the one hand, all companies are preparing for Q4, and Wuling’s level of volume is really good. We can wait for the data to be released before taking a closer look.