November power battery industry chain scan

Structural excess capacity is being cleared at an accelerated pace.

In November, the peak sales season of the power battery industry chain remained strong.

Looking at downstream auto market data, according to data released by the China Automobile Association, the production and sales of new energy vehicles exceeded 1 million for the first time in November, a year-on-year increase of 39.2% and 30%. In November, the market share of new energy vehicles also reached 34.5%.

Compared with the market performance of the new energy vehicle market during the "Golden Nine and Silver Ten" periods, the new energy vehicle market in November has further grown. Feedback to the upstream of the industry chain has further led to an increase in the installed capacity of power batteries.

Market data shows that domestic power battery installed capacity reached 44.9GWh in November, a year-on-year increase of 31%.

Combined with the operation of the lithium battery industry in the fourth quarter:

In terms of raw material prices, the price of lithium carbonate has dropped by more than 30% since November, which has led to a decline in the prices of lithium iron hexafluorophosphate, lithium iron phosphate, ternary cathode and other materials. As of December 14, lithium carbonate spot prices closed at 110,000 yuan/ton, and lithium carbonate futures LC2401 closed at 100,000 yuan/ton.

In terms of inventory, since the beginning of this year, manufacturers from materials to battery cells have continued to destock from the second quarter, especially the leading lithium battery companies. The current inventory level is usually one month or even lower.

In the downstream auto market, according to the November "Auto Dealer Inventory" survey released by the China Automobile Dealers Association, the comprehensive inventory coefficient of auto dealers in November was 1.43, a month-on-month decrease of 15.9%, and a year-on-year decrease of 23.9%. The inventory level of the downstream auto market has dropped to Below the boom and bust line.

It can be said that in 2023, through the continuous destocking of the entire power battery industry chain and the continued recovery of market demand in the third and fourth quarters, industry inventory levels have gradually returned to healthy levels. In addition, companies in the power battery industry chain basically maintain cautious inventory and demand strategies, and the low inventory and high turnover model continues, laying the foundation for the stable operation of the power battery industry chain in the first quarter of 2024.

However, what is worthy of vigilance is the market impact caused by the industry's overcapacity and the capacity to be released.

According to incomplete statistics, the planned production capacity of major lithium battery main material and cell manufacturers has exceeded the market demand in 2025. In addition, some companies have accelerated the ramp-up and release of production capacity in order to improve their ability to reduce costs and adapt to market competition. At the 2023 Gaogong Lithium Battery Annual Conference, leaders of many leading lithium battery companies said that under the background of overcapacity, industry involution will continue in 2024, and the competition for orders and price wars in the industry will also continue.

According to Gaogong Lithium Battery, the current wave of price cuts in the industry has quietly spread. On the battery side, industry insiders revealed to Gaogong Lithium Battery that the price of Grade A batteries from some major battery cell manufacturers has dropped to 0.3 yuan/Wh. Judging from the price-cut products released by some major battery manufacturers, many of them are echelon-used batteries.

This also shows that price wars are sweeping across the industry. While the market is accelerating the structural clearance of production capacity, leading battery cell manufacturers are also accelerating the structural clearance of production capacity.