The "capacity expansion competition" of power batteries is accelerating, and new projects are mainly lithium iron phosphate

The demand for TWh scale has become a consensus, and the competition in the next few years will be about industrialization capabilities and reliability of production capacity supply. At the same time, local governments are also seizing the "opportunity", hoping to take high-quality power battery projects into their pockets as soon as possible in the few years of opportunity, and build them into a new engine of economic growth.

At a critical period when demand is determined and opportunities are critical, companies with the ability to manage customers, markets, technology, capital and supply chains are launching a new round of power battery production expansion competition with some local governments to prepare for global competition in power batteries.

According to statistics from Battery China, although less than four months have passed this year, the production capacity of new power battery projects signed and started by power battery companies in the Chinese market has exceeded 400GWh, and the scale of signing and starting construction has far exceeded the "boom period" of the past few years.

It is worth noting that the expansion of power battery production capacity since the beginning of this year has several obvious characteristics: First, it is dominated by leading enterprises, such as CATL, BYD, EVE Energy, AVIC Lithium Battery, Farasis Energy, Honeycomb Energy, Guoxuan High-tech, Envision AESC and Ruipu Energy; Second, the scale of power battery expansion starts at 20GWh, and some projects reach 50GWh or even 100GWh; Third, the proportion of lithium iron phosphate projects is gradually increasing; Fourth, new power battery bases are gathered in some provinces and cities such as Sichuan, Guangdong and Jiangsu, and a national power battery geographical pattern is gradually taking shape.

Leading enterprises take the lead in promoting the development of power batteries

On April 22, AVIC Lithium announced that it had signed a project cooperation framework agreement with Chengdu Economic Development Zone, and the two parties reached a consensus on the cooperation of AVIC Lithium's 50GWh power battery and energy storage battery Chengdu base project. Three months ago, AVIC Lithium just announced an investment of 10 billion yuan to expand a new 25GWh power battery project in Changzhou, Jiangsu.

In addition to the signing of these two projects, AVIC Lithium Battery's Phase II and Phase III projects in Changzhou, Jiangsu, and Phase II projects in Xiamen have been started or capped one after another this year. In 2020, AVIC Lithium Battery successfully entered and stood firm in the TOP4 camp of China's new energy vehicle power batteries, becoming a leading power battery company.

On the basis of steady growth in installed capacity and continuous deepening of cooperation with core customers, AVIC Lithium Battery has also accelerated the pace of capacity layout. According to its plan, the company's power battery production capacity will exceed 200GWh by 2025, and this year alone, the company's mass production, under construction and commenced capacity will reach 100GWh.

In fact, the expansion of AVIC Lithium Battery is not very "radical". Since the beginning of this year, leading battery companies have been expanding their production capacity. In the first quarter, the production capacity of CATL's new, expanded, and started power battery projects reached 216GWh, and the project layout was respectively in Ningde, Fujian, Liyang, Jiangsu, Yibin, Sichuan, Zhaoqing, Guangdong and other places; in the first quarter, EVE Energy's new power battery investment was close to 8 billion yuan; Honeycomb Energy signed 20GWh power battery projects in Suining, Sichuan and Huzhou, Zhejiang in the first quarter; Envision AESC invested 10 billion yuan in Inner Mongolia to build a 20GWh power battery project base; Ruipu Energy signed a contract with the Foshan government of Guangdong to invest 10.3 billion yuan to build a 30GWh power battery base in Nanhai District, Foshan. In addition, BYD also started construction or expansion of multiple power battery projects in the first quarter of this year.

From the perspective of investment companies, almost all of the top 10 companies in China's power battery installed capacity in 2020 (Envision AESC has not yet been installed in the Chinese market, but its global installed capacity ranks relatively high) are competing to expand new production capacity.

Regarding the successive investments in large power battery projects, Yang Hongxin, Chairman and CEO of Honeycomb Energy, told Battery China Network that new energy vehicles have now passed the exploratory stage and entered a stage of rapid development, and it is a relatively mature stage. What everyone will compete on next is no longer just a matter of pure technical route, but a competition of industrialization capabilities and production capacity.

Yang Hongxin believes that the competition among power battery companies in the next five years will mainly include production capacity, quality control and capital strength. Now is the time to leverage the power of capital and firmly expand competitive products rapidly.

It is worth noting that many battery companies have made large-scale expansions, which is also a firm decision made when the demand is already very clear. This demand is mainly reflected in two aspects: First, from a global perspective, under the grand strategy of "carbon peak and carbon neutrality", transportation electrification has become a consensus and the main way. Global mainstream automakers have shortened the timetable for electrification targets and accelerated the pace of electrification. China has proposed that by 2025, the proportion of new energy vehicle sales will increase to 20%, and the annual sales of new energy vehicles are expected to exceed 6 million. From a global perspective, by 2025, the demand for power batteries will exceed 1,000GWh. Whoever has insufficient production capacity may "fall behind"; second, the companies that have put into production have basically tied up with many mainstream automakers. In the future, orders are guaranteed, and the huge new production capacity is supported by orders.

The power battery agglomeration effect is prominent, Sichuan, Jiangsu and Guangdong become key investment areas

Judging from the implementation of large-scale power battery projects this year, they are mainly concentrated in Yibin, Suining, Chengdu in Sichuan, Huizhou, Foshan, Zhaoqing in Guangdong, Changzhou, Liyang in Jiangsu, Ningde in Fujian, Hefei, Bengbu in Anhui, etc. On the one hand, this is in line with the overall layout of the leading battery companies in the East China, South China, and Southwest China markets in China; on the other hand, this is also closely related to the "competition" of local governments for the power battery outlet.

According to insiders, the new energy vehicle and power battery industries have large investment scales, strong employment and tax incentives, and are also new drivers of industrial economic growth. At the same time, the long industrial chain can drive the coordinated development of many upstream and downstream industrial chains. "In recent years, it has been a hot period for the expansion of power battery production capacity. If local enterprises attract investment, they will catch up; if they fail to attract investment, the high-quality production capacity of battery companies will have been laid out, and local governments will miss this opportunity." Therefore, we can also see that since the beginning of this year, the newly landed large-scale power battery projects are mainly concentrated in the above-mentioned provinces and cities with high enthusiasm for new energy vehicles and power battery industries.

It is worth noting that the implementation of dozens or even hundreds of GWh of power battery projects has also led to the agglomeration effect of supporting industrial chains. Upstream lithium battery positive and negative electrode materials, diaphragms, equipment and other industrial chain companies have also recently invested and landed frequently in the above-mentioned major cities.

Iron-lithium accounts for a large proportion of the new projects, and the proportion of iron-lithium will continue to increase

Among the big power battery investment projects this year, lithium iron phosphate was even singled out by the company. In February and March this year, Yiwei Lithium Energy invested 1 billion yuan and 3.9 billion yuan respectively in a separate lithium iron phosphate battery project, and the products will be mainly used in the passenger car market.

Due to its economy, safety and cycle performance, lithium iron phosphate batteries continue to gain increasing recognition and popularity in domestic and international markets, and their installed capacity data also continues to grow.

In addition, BYD's power battery projects in many places across the country since last year are almost all lithium iron phosphate "blade battery" projects. According to Battery China, BYD's newly planned production capacity in Chongqing, Ningxiang, Bengbu, Guiyang, Hefei and other places is mainly lithium iron phosphate battery projects. As of now, BYD's lithium iron phosphate blade battery production capacity that has been built, under construction and planned has reached nearly 135GWh.

In addition to Yiwei Lithium Energy and BYD, which have clearly invested in lithium iron phosphate projects, CATL, Ruipu Energy, Honeycomb Energy, and AVIC Lithium Battery are also actively increasing their lithium iron phosphate production capacity layout.

Recently, Zeng Yuqun, chairman of CATL, said at an event that in the power battery market, the market share of lithium iron phosphate will gradually increase, and the share of ternary batteries will decrease. Zeng Yuqun believes that with the increasing number of charging pile facilities for new energy vehicles, the growth rate of lithium iron phosphate power batteries will be very fast, "because lithium iron phosphate is relatively cheap, and with the increase in charging pile facilities, the range of new energy vehicles does not need to be that long." An informed source revealed to Battery China that CATL is increasing its layout of lithium iron phosphate production capacity and will continue to increase the company's share of lithium iron phosphate battery production capacity in the future. Yang Hongxin also revealed to Battery China that Honeycomb Energy will mass-produce lithium iron phosphate batteries in June this year.