Some thoughts on monthly data of power batteries

Before the August battery data comes out in early September, I think it is necessary to review the July data from the Battery Innovation Alliance and SNE.

PART 1: Where did the remaining power battery go?

From January to July this year, the total power battery production has reached 92.13GWh, exceeding the annual power battery production of 83.42GWh. The installed capacity has also reached 63.9GWh, exceeding last year's 63.65GWh. In other words, from January to July, there are still 28.23GWh (92.13GWh-63.9GWh) of batteries that don't know where they went? The corresponding data for last year was 19.77GWh. There are several possible destinations:

a) Power export: According to SNE data, CATL currently delivers 41.2GWh globally, and its domestic installed capacity is 31.42GWh, with approximately 10GWh exported. According to estimates, there may be an estimation error of 20%-30%, so there may be an export volume of 12-14GWh.

Figure 1 Production and installed capacity from January to July 2021

b) Inventory: Due to the special chip problem this year, the gap currently accounts for more than 50% of the installed capacity. From this estimate, it is a real situation that car companies are currently short of chips. As for batteries, according to the plan, there is also a shortage. So it is estimated that there is about a month's worth of inventory, which is about 10GWh.

c) Temporary storage: There may be some temporary storage links in the delivery process, which is estimated to be 50% of the monthly demand, or around 5GWh.

The following figure clearly shows the current degree of deviation:

Figure 2: The difference between output and installed capacity in 2021 compared with 2020

It is worth noting that the penetration of lithium iron phosphate batteries is accelerating in China. As most entry-level models use lithium iron phosphate, the demand and supply are also rising rapidly. The installed capacity of ternary lithium batteries began to decline month-on-month, which is also a very important turning point.

Figure 3 Comparison of production and installed capacity of ternary lithium and lithium iron phosphate

Here we need to add a picture, which shows the proportion of China's power batteries in the world. Since half of Europe's new energy vehicles are PHEVs, China's installed capacity accounts for about 50% of the world's total. The total installed capacity in the first seven months of 2021 is about 137.1GWh.

Figure 4: Proportion of installed capacity of power batteries in China and the world

PART 2: Analysis from the supplier's perspective

The chart below is from SNE's research. This year, the installed capacity of CATL and LG is rapidly widening the gap with other battery companies, especially Panasonic, which is still very typical.

Figure 5 Global installed capacity from January to July according to SNE statistics

The next wave of domestic second-tier companies will mainly focus on the expansion of iron-lithium batteries. If they are determined to move towards iron-lithium, the potential of other second-tier battery companies can be seen from BYD's figures.

Figure 6 Trends of domestic battery companies from January to July

Finally, let's disassemble CATL. According to the data from the semi-annual report, CATL's output in the first half of 2021 was 60.34GWh. According to the ratio of energy storage (4.69 billion) and power battery (30.4 billion) sales, the energy storage was 8GWh and the power battery was 52.5GWh. The output of power batteries from January to June in the same period was 74.73GWh, which means that CATL accounted for 70%. During the same period, Ningde's domestic installed capacity was 25.76GWh, and the total installed capacity was 52.6GWh, accounting for 48.9%. It can be seen that the current market concentration, the proportion of installed capacity concentration lags behind the proportion of output concentration. Since the layout of production capacity has a sequence, the concentration in the market will continue to go up from September to December 2021.

summary:

The August power battery data that will be released next week will probably reflect some of the changes. What is mainly worth paying attention to is whether the gap between production and installed capacity will continue to widen, and whether the difference in market share will continue to widen.