The elimination round for power battery companies has officially begun.
Recently, a notice from JEVE Power titled “Company Production Halt, Employee Leave, and Training Notice” quickly circulated, sparking discussions within the power battery industry. According to the notice, influenced by objective factors such as the market and the upstream and downstream industrial chain, and to ensure the sustainable development of the company’s business, the management has decided to suspend production in Tianjin JEVE Power from December 1, 2023.
To further understand the situation, a reporter from “Daily Economic News” called the official phone number of JEVE Power provided by Qichacha, but the phone prompt stated, “This phone is suspended due to unpaid fees.” The reporter attempted to verify the specific situation with an internal contact at JEVE Power, but as of the time of reporting, there was no clear response, only a statement that “there is nothing to confirm about this matter.” According to media reports, JEVE Power’s production halt is not across the board, and there may be an introduction of strategic investment by the end of the year.
In fact, the slowing demand for new energy vehicles this year has made the “Matthew Effect” in the power battery industry more pronounced. An insider from a power battery company told “Daily Economic News” that based on current trends, the market share of the top five power battery companies in China will be over 90% in the future, leaving many small and medium-sized power battery companies destined for restructuring. This also means that for companies, “cost reduction and efficiency improvement” is urgent.
JEVE Power’s Sudden Production Halt
According to the notice circulating on JEVE Power’s website, during the production halt period, non-grassroots employees at JEVE Power headquarters in Tianjin (including the T6 product line of the Technology Center, the Early Engineering Department of the Engineering Center, and the Energy Business Department of the Sales and Market Expansion Center) will take unified leave, and grassroots employees will undergo organized off-job training.
JEVE Power is not an unknown company. According to its official website, the company was established in 2009, headquartered in Tianjin, with two large production bases in Yancheng and Changxing, and an effective capacity of 10 GWh, with over 2400 employees. The company’s products focus on two major business segments: new energy vehicles and energy storage. Tianjin serves as the power business center, and Jiaxing serves as its energy storage business center, covering three-element, lithium iron phosphate, soft pack, and square batteries.
According to media reports, JEVE Power’s production halt is a business adjustment made by the company based on strategic and business needs. It is reported that Tianjin JEVE Power’s main functions are management and research and development, and the Yancheng and Changxing bases are operating normally. Insiders say that Tianjin JEVE Power may introduce strategic investment by the end of the year.
However, an industry insider in the lithium battery field, who declined to be named, frankly told the reporter that even if JEVE Power introduces strategic investment later, the effect may not be ideal. “Given the current situation, JEVE Power’s annual vehicle sales volume may not exceed 1 GWh, while the global production of power batteries in 2023 exceeds 1000 GWh, making JEVE Power’s market share very limited,” the insider said.
According to the China Power Battery Industry Innovation Alliance’s “October 2023 Monthly Data on Power and Energy Storage Batteries,” JEVE Power’s power battery installed vehicles in October were only 0.06 GWh, accounting for 0.16%, ranking 14th; from January to October, JEVE Power’s power battery installed vehicles were 0.88 GWh, accounting for 0.3%, ranking 13th.
“Supply Exceeds Demand” in the Power Battery Industry
In fact, JEVE Power’s sudden production halt is a microcosm of the turbulence in the power battery industry chain.
According to statistics from the China Automotive Power Battery Industry Innovation Alliance, as of the end of 2022, China’s power battery capacity was 1260 GWh. By the end of June 2023, China’s power battery capacity had increased to 1860 GWh. From the above data, it can be seen that China’s power battery capacity has significantly increased in 2023.
The rapid expansion of capacity has directly led to a decline in the capacity utilization rate of power battery enterprises. Dong Yang, Chairman of the China Automotive Power Battery Industry Innovation Alliance, recently expressed the view that the capacity utilization rate of China’s power battery in 2022 was 51.6%, and it may drop to 41% in 2023.
Zhang Jinhui, a senior analyst at Xinda Information, told reporters that the capacity utilization rate of leading power battery companies is currently around 70%, but the utilization rate of second and third-tier power battery companies has declined, and the entire power battery supply chain is in a state of oversupply.
The oversupply situation is particularly evident in the prices of key raw materials for power batteries, such as lithium carbonate products.
Taking lithium carbonate futures prices as an example, since 2023, lithium carbonate futures prices have experienced a roller coaster ride, rising from around 180,000 yuan/ton at the end of April to over 300,000 yuan/ton in June. The prices then fell steadily, and recently, lithium carbonate prices fell below 120,000 yuan/ton. On November 28th, the closing price of lithium carbonate 2401 main contract fell again by 4.91%, quoting 113,200 yuan/ton, hitting a new low since its listing.
Gu Jing, a researcher at Yinde Nonferrous, told reporters that based on the supply and demand situation of lithium resources in the past two years, the surplus of lithium resources in 2024 is expected to continue to expand.
Zhang Jinhui analyzed for reporters that price performance is closely related to supply and demand. Judging from the supply and demand situation in the terminal market, lithium carbonate may still be in oversupply in 2024. As the struggle for pricing power in the futures market is still ongoing, prices are expected to fluctuate significantly next year, with an average annual price of about 130,000 to 140,000 yuan/ton.
Power Battery Companies Seek “Second Growth Point”
It is evident that with the rapid expansion of power battery capacity, the industry has entered a phase of elimination and reshuffling. When communicating with an insider from a leading power battery company recently, the reporter learned that due to the cost and price pressure brought about by the oversupply of power battery capacity, it has spread throughout the entire industry chain, including battery cells, electrode materials, and raw materials.
In the increasingly competitive situation, seeking a “second growth point” has become the choice of many power battery companies. Sodium-ion battery products have become one of the key focuses for many power battery companies. Recently, Fudi Battery, a subsidiary of BYD, jointly invested in a sodium battery project with Huaihai Holdings Group, with a total planned investment of 10 billion yuan. Contemporary Amperex Technology Co. Ltd (CATL) also stated on its investor interaction platform that the company’s sodium batteries will be first used in Chery models.
However, Zhang Jinhui analyzed for reporters that “sodium-ion batteries are a backup plan for lithium-ion batteries, and their technical performance can meet the requirements of A0/A00-level vehicles. However, the bottleneck of sodium-ion batteries lies in the construction of the sodium supply chain and product iteration.” Zhang Jinhui told reporters that in the same dimension, the cost and experience of PHEVs are generally superior to traditional fuel vehicles. In the short term, PHEVs and EV models are still the main focus, according to future trends, which is also the main direction for companies.
Ling Shengbin, Director of the Volkswagen Project Center at Guoxuan High-tech, also told “Daily Economic News” that the advantage of sodium-ion batteries lies in cost, but the disadvantage lies in energy density. Therefore, sodium-ion batteries have space in the field of energy storage, but their significance in C-end cars is not significant. In Ling Shengbin’s view, under the high prices of lithium carbonate raw materials, sodium-ion batteries have market competitiveness. Still, when the price of lithium carbonate is below 200,000 yuan/ton, even if sodium-ion batteries are used in the field of energy storage, their competitiveness is not significant.
In fact, for the competition in power batteries, many industry insiders unanimously told reporters, “In the end, the competition for power battery companies is the sales volume of installed vehicle products.”
The aforementioned insider from a power battery company told reporters that the overall change in the power battery brand carried by different C-end cars is not significant. The reshuffle of power battery companies is undeniable, and the elimination and reshuffling of the second-tier will be particularly significant.
The aforementioned insider in the lithium battery industry also told reporters that the market shipment volume of power battery companies ultimately depends on the product competitiveness of C-end cars. The positioning of a car’s product, generally speaking, is three years. Three years later, the pricing and positioning of the car in the market, how to compete with peers, will directly determine the market competitiveness of a power battery company, which are complementary. Market data shows that using batteries from leading power battery companies makes cars sell better. To some extent, this ensures that C-end car brands will not easily change battery manufacturers, indirectly determining that power battery companies will show a trend of polarization.