New energy vehicles suffer from battery shortage

2021-06-16 10:14:08  News

The shortage of chips has not yet been alleviated, and new energy vehicles have encountered a new "growing pains" - the shortage of power battery supply. First, the head of a domestic independent brand of new energy vehicle enterprise confessed in a media interview that they were more worried about the power battery production capacity than the chip shortage. Then Ningde Times and cell maker Azure Lithium Core both mentioned the shortage of product supply and capacity bottlenecks in their announcements. Adding to this, Li Bin, Chairman and CEO of Azera, had previously mentioned battery supply problems in the second quarter, and He Xiaopeng, Chairman and CEO of Xiaopeng Auto, was also revealed to have personally squatted at Ningde Times for a week in order to get the goods smoothly. A battery supply crisis seems to be spreading quietly in the new energy vehicle industry.


The China Automotive News reporter found, after seeking confirmation from a number of domestic car companies, that battery shortages have indeed become a common problem for the industry, resulting in some car products being ordered but not supplied in time. "The main reason for the shortage of battery supply is that the new energy vehicle market is growing rapidly, but the production capacity of power batteries, especially high-quality batteries, has not been able to keep up in time, and is also affected by the price hike of raw materials as well as supply." In an interview with China Automotive News, Eddie Zheng, Senior Partner and Vice President of Roland Berger Global Greater China, said that on the one hand, the power battery industry is in urgent need of capacity optimization and adjustment; on the other hand, the general trend of new energy vehicle development has been set, and both vehicle manufacturers and suppliers need to stand on a longer-term level and pay strategic attention to the safety of the supply chain.


Inventory of vehicle manufacturers is "in a hurry" and suppliers are running at full capacity


Although the lack of battery supply has only recently come under scrutiny, in fact, as early as January this year, Tesla founder Musk mentioned during the Q4 2020 earnings call that Tesla's first all-electric truck, the Semi, would be delivered within the year and that the only factor limiting its production capacity was battery supply. At the time, Musk said that even if battery suppliers were to produce as fast as possible, it was estimated that there would still be a severe shortage of batteries by 2022 and beyond. Since then, sources close to the situation have revealed that GM is looking to build a second battery plant in the US with South Korea's LG Chem to boost production of its electric cars. GM CEO Mary Bolla has said that the battery shortage is one of the reasons why GM is investing in battery manufacturing.


Earlier this year, in March, Azera held its Q4 2020 earnings call, and when talking about the lack of supply of car chips, Li Bin admitted: "Battery supply will be the biggest bottleneck in the second quarter of this year compared to chips." His estimate at the time was that, overall, both batteries and chips would limit the number of products delivered by Azera each month in the second quarter of this year, affecting around 7,500 units.


On 18 May, Li-ion battery cell manufacturer Azure Lithium Core stated in an announcement that the company's lithium battery business is currently at full capacity and it is estimated that the bottleneck will remain in place for a longer period of time, so the most important thing for the company is to expand its capacity. In an interactive exchange with investors, Azure Lithium Core said that the company's existing annual production capacity of nearly 400 million lithium batteries, the production line is in full production; May 24, Huizhou Yiwei Lithium Energy Co., Ltd. also disclosed in the announcement that the company's existing sites and production lines have been operating at full capacity, but nearly a year will still be in short supply; May 25, Ningde Times released investor research minutes, in talking about the current urgent need to solve the problem proposed to do a good business against the backdrop of the changing international landscape, tight supply chain resources and insufficient local supply, which was interpreted by the industry that Ningde Times is also facing the problem of tight product supply.


"We are now also facing a severe shortage of power batteries, and the impact of this aspect has started since the beginning of this year." A person in charge of a domestic independent brand car company, who did not want to be named, told China Automotive News that the lack of battery supply has been a common phenomenon in the industry.


It is the "pot" of the market growth rate is too fast?


"The main reason for the mismatch between supply and demand of power batteries is the rapid growth in demand, while the corresponding product supply has not been able to keep up in time." Eddie Zheng told reporters that this year, the domestic new energy vehicle market production and sales overall showed a good development trend of continuous improvement, not only the existing car-making new forces to improve delivery, the arrival of a new round of car-making fever also allows the further growth in demand for power batteries. However, at the same time, the production capacity of power batteries has not been able to show the same growth in the short term, which has led to a tightening of battery supply at the moment.


Purely from the perspective of changes in supply and demand, the emergence of "battery shortage" and "chip shortage" have similarities, both of which are the result of unexpected changes in the market but the supply adjustment of components has failed to keep up in time. According to the China Association of Automobile Manufacturers (CAAM), in the past three years, domestic sales of new energy vehicles were 1.256 million, 1.206 million and 1.367 million units, up 61.7%, -4% and 10.9% year-on-year respectively. Obviously, after experiencing a decline in new energy vehicle sales in 2019, followed by the rampant global outbreak of the New Crown Pneumonia epidemic, which continues to spread globally, battery suppliers may not have had high expectations for this year's market sales, but no one expected China's new energy vehicle sales to exceed 2 million units this year, giving car companies and The suppliers were taken by surprise.


According to the China Association of Automobile Manufacturers, in the first four months of this year, domestic production and sales of new energy vehicles both exceeded 700,000 units, reaching 750,000 and 732,000 respectively, an increase of 2.6 times and 2.5 times year-on-year. Data from the China Automotive Power Battery Industry Alliance shows that in the first four months of this year, the cumulative installed capacity of power batteries in China was about 31.6 GWh, an increase of 241% year-on-year. It can be seen that, although the same are in the process of rapid growth, but the pace of power battery growth slightly slower, such a gap is likely to continue to widen with the rapid development of the new energy vehicle market.


It is worth mentioning that the growth in demand for batteries in the field of energy storage has also further exacerbated the tight supply of batteries at this stage. The industry pointed out that in recent years, the rapid development of the energy storage industry, statistics show that last year, global energy storage battery shipments of 20GWh, an increase of 82%, which will obviously occupy part of the battery production capacity. 2020 Ningde Times earnings data show that the company's 2020 energy storage system business revenue growth of up to 219%, which can be seen.


The price of raw materials rose sharply "to add insult to injury"


In an interview with China Automotive News, Zhang Lin (a pseudonym), an employee of a domestic new energy vehicle company, believes that the continued expansion of the new energy vehicle market scale is certainly an important reason for the tight supply of batteries, but there is another problem that cannot be ignored, which is the increase in the price of raw materials for batteries.


Public data shows that as an important material for battery electrolyte, the market price of lithium hexafluorophosphate has risen to 270,000-310,000 yuan/ton in late May. Since this year, the domestic lithium hexafluorophosphate offer from the earliest 110,000 yuan / ton has grown rapidly to 270,000 yuan / ton, an increase of more than 145%, a new high in four years. Analysts pointed out that, taking into account the enterprise expansion construction cycle is generally about 1.5 years, so the new production capacity in the short term less, so far, this year, lithium hexafluorophosphate new production capacity is mainly concentrated in the Tianzhi materials and more than two enterprises, its new production capacity is basically expected to focus on the release of the second half of the year. That is to say, the car companies are battery suppliers "stuck" at the same time, the battery companies are actually being raw material suppliers "stuck", and can not increase a large number of production capacity in a timely manner. Power battery in the price of far more than lithium hexafluorophosphate, western securities in a previously released research report pointed out that the battery grade lithium carbonate market price of 89,500 yuan / ton, up 66.30% compared to the beginning of this year; and lithium hydroxide market price of 79,800 yuan / ton, up 50.71% compared to the beginning of this year.


Zhang Lin believes that another important reason for constraining the supply of raw materials for power batteries lies in international transportation. It is understood that metals such as lithium and cobalt are becoming strategic resources for battery production, but the vast majority of these materials are stored in South America, Australia and Africa, with China accounting for only 2.4 per cent and 1.1 per cent of global lithium and cobalt reserves. Due to the impact of the epidemic, international shipping lanes have been blocked, which has not only led to a reduction in the speed of transport of this material, but also an increase in prices, further exacerbating the lack of supply of domestic automotive power battery materials.


"The biggest challenge for the power battery industry right now comes from the supply chain." Yang Hongxin, chairman and CEO of Honeycomb Energy, said that it is precisely to ensure the maximum degree of autonomy and control of the battery supply chain that battery companies have intended to remove cobalt from their raw materials, while embarking on developing sodium-ion batteries to replace lithium-ion batteries. Last year, Hive Energy also launched a cobalt-free battery using lithium nickel manganate as the cathode material.


"The fact that battery manufacturers are developing new products could also be one of the reasons for this shortage of battery supply." Zhang Lin also speculated that since battery orders were all signed and completed long ago, the possibility of power battery companies deliberately reducing part of their battery production to cope with the losses caused by raw material price increases cannot be ruled out.


Capacity optimization is the key


According to incomplete statistics, in the first quarter of 2021, domestic power battery enterprises have announced more than 20 new investment projects, involving a total of more than 160 billion yuan, construction capacity of more than 350 GWh. Among them, AVIC Lithium in Xiamen to expand the power battery project, divided into two phases of engineering, with a total investment of 10 billion yuan; honeycomb energy in Maanshan City, Anhui Province, 11 billion yuan investment in the construction of power battery The company has announced that it will expand its power battery production capacity in four provinces, namely Jiangsu, Guangdong, Sichuan and Fujian, with a total investment of approximately RMB 39.5 billion; Yiwei Lithium Energy will expand its second phase power battery project in Huizhou City, Guangdong Province, with an investment of no more than RMB 3.9 billion; BYD has invested RMB 10 billion in a new power battery production base in Changchun, becoming BYD's eighth production base in China.


It seems that the expansion may be the most direct way to deal with the "battery shortage", but in Eddie Zheng's view, the industry's capacity optimization is more important and urgent. Public statistics show that as of January this year, there were 18,000 power battery-related enterprises in China, and 5,253 new enterprises were registered in 2020, most of which are small and medium-sized enterprises. Some industry insiders point out relentlessly that some enterprises are backward in their products and some have outdated equipment, but with the continuous development of the new energy vehicle market, the requirements for battery products are becoming higher and higher, requiring products with high consistency, safety and stability, hence the extremely tight supply situation of battery head enterprises like Ningde Time and BYD. At the same time, many small battery manufacturers, despite their abundant production capacity, have no market for their products and their production lines are idle in large numbers. "In the domestic power battery enterprises, in addition to Ningde Time, BYD and other head enterprises and second-tier enterprises to ensure the quality of products, other power battery enterprises product quality is worrying. In addition, the new energy vehicle market is now gradually moving towards high-end, and the demand for quality production capacity of downstream vehicle enterprises has also increased at the same time, which has led to further growth in the market demand for high-end batteries." A battery enterprise responsible person said so.


"On one side, there is a serious shortage of high-end production capacity, while on the other side there is a large surplus of low-end production capacity." Eddie Zheng pointed out that in order to better alleviate the current problem of insufficient power battery supply, the battery industry must change the status quo of structural overcapacity, optimize production capacity, and transform and upgrade.


Some industry insiders suggested that, first of all, the relevant departments need to strengthen capacity warning, verification and timely release of information by government departments or third-party institutions, to put an end to "rotten" projects and "pit" behavior, focusing on capacity utilization and capacity changes, for product Secondly, encourage market-oriented mergers and acquisitions, as new production capacity is time-consuming and labor-intensive, it is better to promote mergers and acquisitions among enterprises, which can not only eliminate some enterprises with backward technology, too small scale and scattered forms in a timely manner, but also effectively improve the concentration of the industry and the competitiveness of superior enterprises; Thirdly, encourage technological breakthroughs. Encourage technological breakthroughs and give more support to some leading enterprises, especially in technological innovation and research and development, and consider providing some preferential policies appropriately to help the industry as a whole to achieve real high quality and high level development.


Ensure supply chain security from a strategic perspective


In order to occupy more dominance in the battery supply system, many OEMs with funds and independent R&D capabilities have already started to lay out their own battery business. Tesla announced its own battery research as early as last year's battery day; Daimler plans to lay out nine battery factories in seven cities on three continents; in March this year, VW also held a battery day and announced the splitting of its battery business; on May 12, SAIC Group deputy chief engineer Zhu Jun said that SAIC Group would soon launch a "battery bank" for the separation of vehicles and electricity ", which will launch a unified specification battery pack at the end of this year or early next year, covering 11 models and can support lithium iron phosphate, ternary lithium-ion, high nickel batteries and even solid state battery cells; on May 31, BMW Group officials said that its German Dingolfing plant has started producing fifth-generation power batteries for the upcoming Innovation BMW iX and Innovation BMW i4 and Battery modules.


In the face of this move, there are different views in the industry. Cui Dongshu, Secretary General of the National Passenger Car Market Information Association, believes that car companies building their own battery factories will face more problems, such as unfamiliarity with the relevant technology, which will lead to the same situation of insufficient high-end capacity and excess low-end capacity. In addition, the power battery research and development cycle is long, the investment is large, if the car enterprises can not form a large-scale effect, then it is likely to appear that the income does not cover the expenditure phenomenon. Ningde Time also said that the car companies and battery companies have different professional division of labor, car companies are better at mechanical and electronic, etc., the depth of understanding of electrochemistry is often less than professional battery companies. "The lithium industry is not easy to do well, from the global lithium industry, whether it is consumer batteries or power battery companies, not many companies with strong profitability." Ningde Times said.


For the vehicle enterprises, Eddie Zheng's advice is that a strategic cooperation or joint venture in the form of a certain capacity bundle, or will be a better choice to alleviate the "battery shortage", such as the Great Wall Motor signed a 10-year-long strategic cooperation framework agreement with Ningde Time not long ago. For some battery companies in the second or even third echelon, they need to communicate and communicate with vehicle companies with better business relations, conduct customer analysis and carry out product transformation and upgrading as soon as possible to ensure that customers are provided with better quality power batteries.


"From the current perspective, the battery shortage is likely to be resolved in about a year's time." But Eddie Zheng stressed that the development of new energy vehicles is already a major trend, and both vehicle manufacturers and battery suppliers should not just focus on the current supply shortage, but need to look at the longer term future and put the security of the new energy vehicle supply chain at the forefront of their short, medium and long-term strategies. From capacity layout to product planning, from product quality improvement to technological advancement, more and longer term planning is needed on both sides. Only in this way can the sustainable supply of new energy vehicle products be better maintained and the new energy vehicle market usher in a healthier long-term development.


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