Honda joins hands with CATL to kick off a new era of bundling batteries with car companies

At around four o'clock in the afternoon on December 8, a piece of news was like a thunder on the ground, instantly causing a sensation in the new energy industry. CATL and Honda China successively announced cooperation agreements, and the two parties reached a purchase order for 123GWh of ultra-large power batteries.

As of the close of trading on December 9, CATL’s A-share price was 424.6 yuan per share, with a total market value of 1.04 trillion yuan, returning to the trillion mark. In addition, iFinD data shows that on December 9, CATL appeared among the top ten most actively traded stocks in Shenzhen-Hong Kong Stock Connect, ranking third in Hong Kong-listed trading volume in Shenzhen-Hong Kong Stock Connect.

This order not only made Ningde Times' stocks slightly active, but also shattered many "rumors."

Since the beginning of this year, against the background of the aggressive deployment of second- and third-line power batteries, there is a voice in the industry: the rise of second- and third-line power batteries, and the era of dominance of the CATL era may become a thing of the past. It is still too early to draw conclusions on whether second- and third-tier power batteries will rise. Judging from the above orders, the resilience of the Ningde era has been fully demonstrated.

Perhaps because the layout of each power battery manufacturer is more aggressive than the other, voices about overcapacity of power batteries have begun to emerge in the industry. From Liu Jincheng, chairman of Yiwei Lithium Energy, to Wang Zidong, deputy secretary-general of the China Power Battery Industry Innovation Alliance, all expressed concerns about overcapacity of power batteries.

Only one Honda China has locked up a power battery supply of up to 123GWh, and CATL has many partners like Honda China. Obviously, the industry's concerns about overcapacity of power batteries do not belong to CATL, and its performance deviates from the industry's predictions. So, will there really be a surplus of power battery production capacity? Or is there another mystery?

A truly strong person will eventually prove himself with his strength

Faced with the radical production capacity planning of second- and third-tier battery manufacturers, some people in the industry have an illusion. Second- and third-tier batteries have emerged. They seem to have the ability to "replace" CATL? However, the signing of the CATL-Honda cooperation agreement cannot help but raise a question. If second- and third-tier battery manufacturers have emerged, why did Honda place a super order of 123GWh for CATL?

This doesn't seem to be "common sense".

Regarding this issue, some people in the Lithium Solution community speculated that it may be related to Honda being a shareholder of CATL? Whether the answer is what this person said, we cannot say for sure. We checked that Honda is a shareholder of CATL. Since participating in the private placement of CATL in 2020, Honda has been holding on to the 23 million shares that have not been sold. This also proves from the side that it is optimistic about the long-term development of CATL. .

As for the continued in-depth binding of CATL and advance booking of 123GWh battery orders, according to Honda China’s official statement, the purpose of this move is to “ensure long-term stable supply of power batteries.” In CATL’s official statement, we also saw something similar describe. Therefore, we can understand that this is the core element for both parties to achieve this cooperation.

Indeed, after experiencing the "battery shortage" in 2021, both battery manufacturers and car companies hope that power batteries can be stably supplied.

For this reason, as a battery factory, it has become the main theme to increase production capacity this year with high power; as a car company, we see more of the layout of powerful multinational car companies in battery raw materials; this time Honda signed an order of up to 123GWh with CATL , may point to another trend. If car companies want to obtain stable and high-quality battery supply in the future, it is not enough to just deploy upstream raw materials. They must also quickly identify midstream battery manufacturers.

Judging from Honda's choice, it is basically locked in the CATL era. Maybe other battery manufacturers will be finalized in the future, but I believe the volume will not be too large, at least in the domestic market. According to rough calculations, these 123GWh batteries will be able to install 2 million cars. So, how do you evaluate Honda's decision? Does Honda's decision have any reference significance for other car companies? The answer is yes.

In the power battery market, in terms of technology leadership, quality and safety, scale, and even terminal reputation, the comprehensive competitiveness of CATL batteries is still unique. Choosing CATL batteries is undoubtedly a plus point not only for Honda, but also for other car companies. It is also a kind of insurance at a time when the battery technology route is still uncertain.

Let’s look specifically. In terms of technology, on November 1, Jikrypton 009, the first global mass-produced model of CATL’s CTP 3.0 Kirin battery, was officially launched. According to Liu Changyan, CATL’s domestic passenger car executive president, “The Kirin battery installed in the Jikrypton 009ME version It adopts the world's first high-nickel-plus-silicon high-specific-energy battery cell, and the battery pack integration is currently the highest in the world. Without stacking batteries, the Jikrypton 009ME version has created a pure range of 822 kilometers for medium and large MPVs with 140 kilowatt hours of electricity. World record for battery life.”

CATL is also involved in future battery technology routes such as sodium batteries and solid-state batteries, and is in a leading position.

On November 29, at the sodium-ion battery industry chain and standards development forum, Huang Qisen, deputy director of CATL Research Institute, revealed, “In terms of passenger car applications, sodium-ion batteries can generally meet the needs of models with a range of less than 400 kilometers. CATL uses its pioneering AB battery system integration technology to achieve a mix of sodium and lithium, complement each other's advantages, and increase the energy density of the battery system, so that the application of sodium-ion batteries is expected to expand to 500-kilometer range models. This range model will target 65% of the market. , the application prospects are very broad.”

In terms of scale and reputation, according to data disclosed by the China Automotive Power Battery Industry Innovation Alliance, from January to November, CATL’s installed vehicle volume was 124.13GWh, with a market share of 48.02%. When a product's market share reaches 50%, its leadership in its market is unparalleled. At the end of last year, when hundreds of consumers realized that the battery cells of the Xpeng P5 they had ordered had been switched by Xpeng from CATL to a third-tier battery, a rights dispute broke out.

It can be seen how much impact CATL has on word-of-mouth among end users.

In terms of safety and quality, at the Jikrypton 009 launch conference, Liu Changyan also revealed the quality control of Kirin batteries, “In the industrial field, people often mention the defect rate of PPM (one part per million), and the limit of the Ningde era is Manufacturing can achieve a defect rate of one part per billion at the PPB level, which means that problems can only occur on the order of 10 million vehicles. CATL has set up 6,800 quality control points throughout the product manufacturing process and uploads data in real time. With the battery big data platform, battery data can be traced for 20 years, thereby ensuring the safety and security of the battery throughout its life cycle.”

So objectively speaking, continuing to be bound to CATL is still the priority of each car company. In other words, car companies have no reason to reject CATL, right? The reason why Honda is further bound to CATL this time is simply because it sees this trend and is determined to "achieve the vision of carbon neutrality by 2050."

As for why Honda has not established the so-called second and third supply, it may be related to the uncertain future of second- and third-tier battery manufacturers.

Regarding the later development trends of the industry, according to Wang Zidong’s analysis, “The most direct impact of excess power battery production capacity on the industry will be market consolidation. Second- and third-tier battery manufacturers with insufficient experience in large-scale supply may experience an imbalance between supply and demand. Low production capacity utilization may lead to mergers and reorganizations, and by then, battery companies will no longer compete for production capacity advantages. "

In March this year, the former power battery giant Waterma officially closed down. Its failure can be described as "emphasis on production capacity and light on product technology." Is this different from the current second- and third-tier power battery manufacturers that are running wild? Therefore, you undoubtedly need to be more cautious when choosing a battery partner.

Overcapacity of power batteries: a warning to the weak, a proof to the strong

In the face of the booming new energy vehicle industry, if we want to pin the label of overcapacity on the industry's most important power battery, this will undoubtedly require more rigorous research. When we really cleared up the fog of overcapacity in power batteries, we found that things are not that simple.

Recently, there have been a lot of voices in the industry about overcapacity of power batteries. There are three main starting points:

In November this year, at the 2022 Gaogong Lithium Battery Annual Conference, Liu Jincheng issued a prediction, "Next year, or the year after next at the latest, starting from lithium mines, the entire industry chain will be in surplus. The only thing that will not be in surplus is high quality and cost. Low battery products.”