Will there be a battle between Chinese and foreign battery companies as they move towards globalization?

"It is an established fact this year that Europe's new energy vehicle sales have surpassed China's." Not long ago, Zeng Yuqun, chairman of Contemporary Amperex Technology Co., Ltd., made this statement, which attracted great attention from the industry. The competition between the Chinese and foreign new energy vehicle industries has thus begun.

Entering 2020, the global new energy vehicle and power battery industries have entered a new turning point. China's "New Energy Vehicle Industry Development Plan" has been completed, foreign investment in the new energy vehicle industry has been fully liberalized, and the "white list" of power batteries has been completely cancelled; global mainstream automobile markets such as Europe and North America have increased their investment in the new energy vehicle industry... In this new stage where all countries attach great importance to it, market competition is fully open, and technological innovation emerges in an endless stream, will there be a war between the Chinese and foreign new energy and power battery industries? On October 16, the "Fifth Power Battery Application International Summit (CBIS2020) and the First China New Energy and New Materials (Ningde) Summit" were held in Ningde, Fujian, and we may find the answer here.

◆Is it a fact that Europe’s new energy vehicles have surpassed China?

Zeng Yuqun, Chairman of Contemporary Amperex Technology Co., Ltd.

"China's electric vehicle sales will be surpassed by Europe this year, and we are in great pain." Zeng Yuqun once publicly stated that in the first half of this year, the production and sales of new energy vehicles in China and Europe have "advanced and retreated". Foreign media also reported that in the first six months of this year, a total of 414,000 electric vehicles were sold in the European market, a year-on-year increase of 57%, surpassing the sales in the Chinese market for the first time in five years.

As of September, sales of new energy vehicles in Europe continued to grow. The latest data shows that sales of new energy vehicles in eight major European countries reached 138,000, setting a historical record. Industry analysts believe that the market share of new energy vehicles in Europe is expected to triple, and sales may exceed 1 million.

Zhou Bo, director of the research department of the Standardization Working Group of the Power Battery Application Branch of the China Chemical and Physical Power Sources Industry Association, analyzed that due to the impact of the epidemic, my country's new energy vehicles declined year-on-year from January to May, began to gradually recover in June, and returned to the previous growth rate in July and August. However, my country's global share of the new energy vehicle market has declined. "From 2017 to 2019, China's market sales accounted for more than 50% of the world. From January to August this year, this figure was only 37%."

Zhou Bo believes that in addition to the carbon emission policies, European consumers' acceptance of new energy vehicles is continuously increasing. In addition, the European government also provides large subsidies for new energy vehicles. "European subsidies for a car are 7,000 euros, while China's subsidies for new energy vehicles are only more than 10,000 yuan. The gap between the two is still quite large," Zhou Bo said.

The EU also proposed a 750 billion euro European recovery plan, focusing on cultivating a low-carbon economy. European countries, represented by Germany and France, have significantly increased subsidies for the purchase of new energy vehicles. Zeng Yuqun predicted that the sales of electric vehicles in Europe will exceed that of China in 2020, and China's world's largest electric vehicle market will be taken away by Europe this year. He called for "we must not get up so early and catch up late."

◆The concentration of China's power battery industry has further increased

On the other hand, China's new energy vehicle market is facing a situation of intensified internal competition and deepening penetration of external forces. This market situation is particularly evident in the field of power batteries.

"Affected by the epidemic, the installed capacity of new energy vehicle power batteries in the Chinese market from January to September this year was 34.2GWh, a year-on-year decrease of 18.9%." Liu Yanlong, Secretary-General of the China Chemical and Physical Power Sources Industry Association, introduced that in the first three quarters of this year, among the companies with installed power battery capacity in the Chinese market, 32 companies had a total installed capacity of less than 10MWh.

『Liu Yanlong, Secretary General of China Chemical and Physical Power Industry Association』

"From January to September 2019, there were 67 battery companies in China with installed capacity in new energy vehicles. But this year, 11 companies have no installed capacity," said Liu Yanlong.

It is worth mentioning that the market concentration of my country's power battery companies is getting higher and higher. According to the data from the Power Battery Application Branch, from January to September 2020, the total installed capacity of China's top 10 power battery companies accounted for 91.71% of the total, compared with only 88.01% in the same period last year. The market concentration of China's power battery industry is further increasing.

In June last year, my country's power battery "white list" was abolished, and China's power battery market was officially opened to foreign investment. Domestic battery companies with representative names such as CATL, BYD, and Guoxuan High-tech officially faced the challenge of foreign battery companies entering China. At the end of 2019, the Ministry of Industry and Information Technology announced the "Recommended Model Catalog for the Promotion and Application of New Energy Vehicles (11th Batch in 2019)", and new energy vehicles equipped with foreign batteries received subsidies in China for the first time.

Liu Yanlong pointed out that foreign-funded battery manufacturers have gradually participated in the competition in the Chinese market. "From January to September last year, the share of foreign-funded enterprises such as LG Chem and Panasonic Battery in China's power battery market was only 0.35%. From January to September this year, the share of foreign-funded enterprises such as LG Chem and Panasonic Battery in China's market has reached 15%, and the market competition has become more intense."

『The Fifth International Summit on Power Battery Applications』

◆Power battery companies still have opportunities to go global

Facing fierce internal competition and the "invasion" of foreign-funded enterprises, do my country's power battery companies still have a chance? Experts unanimously stated that "going global" is an important way to resolve the crisis and win a new life.

Major companies have also seen the broad opportunities and chosen to take the initiative and actively participate in the competition in the global market: Tesla signed a cooperation agreement with CATL, Yiwei Lithium Energy was designated by BMW, Volkswagen invested in Guoxuan High-tech, Daimler invested in Farasis Energy, Wanxiang 123 won a 10 billion order from Volkswagen... In recent years, the participation and influence of Chinese local battery manufacturers in the international market have continued to increase.

The motivation for Chinese power battery companies to "go global" comes from the considerable market space. Zhou Bo estimated the global new energy vehicle market and predicted that global new energy vehicle sales will exceed 15 million by 2025 and may reach 30 million by 2030. The global power battery vehicle battery demand will reach 975GWh in 2025 and 2100GWh in 2030.

Wu Zhengping, director of the Foreign Trade Development Affairs Bureau of the Ministry of Commerce, said that companies in the power battery industry chain should enhance their competitiveness in "going global". my country's power battery industry has been upgraded to the world's first echelon, and some companies are in a leading position in battery technology and market share. This has laid a solid foundation for my country's electric vehicle industry to open up a new pattern in the global market.

Ma Junze, Minister Counselor of the EU Delegation to China, revealed that in the field of power batteries, China's BYD company has entered the European market. "I am very happy that European citizens can also buy new energy vehicles produced by Chinese companies." Ma Junze said.

Wu Zhengping believes that although some Chinese industrial chain enterprises have begun to actively expand overseas in recent years, compared with the huge total volume of my country's industrial chain, the breadth and depth of "going out" are far from enough. Especially for power battery manufacturers, the proportion of overseas installed capacity in total shipments is still very low.

At present, many countries are accelerating the layout of the electric vehicle industry, which also puts higher demands on Chinese companies. Major companies must have more outstanding industrial, technological, product and other advantages, fully participate in global operations in the fields of market, technology, capital, brand, etc., and serve international mainstream car companies and markets.

◆Editor’s summary:

The fact that the production and sales of new energy vehicles in Europe have surpassed those in China is a question worth pondering. This shows that China's first-mover advantage in the new energy vehicle industry is gradually shrinking, which reminds China's new energy vehicle industry that we need to work harder to strengthen our own advantages. We don't have to worry too much. Since the third quarter, my country's new energy vehicle market has clearly rebounded. In addition, the State Council's executive meeting reviewed and approved the "New Energy Vehicle Industry Development Plan (2021-2035)", which further clarified the industry development goals and safeguards. This is an important program to lead the industry development in the next 15 years.