Special Report on China's Power Battery Industry

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Special Report on China's Power Battery Industry

Article Source：Future think tanks | Author：Future think tanks | Issuing Time：2024.03.26

Chinese batteries breaking through overseas and accelerating global restructuring

(1) Ningde Times benefits from the first round of restructuring and clarifies the pattern before 2025

Benefiting from the first round of restructuring, China's battery supply chain has gradually achieved performance in the platform based projects of automotive companies. After experiencing a designated peak from 2017 to 2022, China's supply chain has gradually realized its performance by entering European automotive platform projects. European car companies have relatively open supply chains, and Chinese companies have entered mainstream car companies' pure electric platform projects. Long term cooperative orders help maintain stable market share growth. Such as CATL (Volkswagen MEB platform, PSA eCMP platform, Volvo CMA, MEP2 platform, etc.) and Funeng Technology (Daimler EVA2 platform). According to the May 2023 battery fixed-point announcement by Guoxuan High tech, the company has obtained dual fixed-point positions for domestic and overseas UC (standard cell) projects after obtaining a stake from Volkswagen. According to the official website of Volkswagen Group, the Volkswagen SSP platform is a new and scalable mechatronics platform architecture that integrates three fuel vehicle platforms, MQB, MSB, MLB, and two pure electric vehicle platforms, MEB and PPE, and is applicable to all brands and models at all levels under the group.

Traditional American car companies are intensively launching platform based fixed-point projects, while Korean battery companies are taking the lead in occupying the main supporting facilities. Such as LG New Energy (Universal Ultium Platform) and SK On (Volkswagen MEB Platform). The supply chain of new American power enterprises is more open. Taking Tesla as an example, it has laid out a diversified supply system and has been included in Panasonic, LG New Energy, CATL, and Freddy Battery, with the hope of continuing to introduce high-quality Chinese suppliers. According to Xinhua News Agency, in September 2021, General Motors officially launched the Ultium platform (Autotronic) on Ultium Day. Thanks to the high flexibility of the Autotronic platform, the platform will comprehensively cover all levels of vehicle models, including Cadillac LYRIQ, Cruise Origin, GMC HUMMER super electric pickup trucks and pure electric SUVs, as well as BrightDrop logistics vehicles. According to China Securities Network, the first pure electric vehicle model LYRIQ on Ultium platform was put into production in North America in March 2022, and in October of the same year, the Jinqiao Ultrapower Super Factory in Pudong, China was put into operation.

The joint venture model permeates Japanese and Korean car companies, while Chinese car companies focus on supply guarantee. The supply system of Japanese and Korean car companies used to be mainly based on local suppliers, such as LG New Energy and SK On, which jointly entered the Hyundai Kia E-GMP platform. Chinese battery companies are gradually penetrating through various forms. BYD entered the Toyota supply system by forming a joint venture with Toyota for joint vehicle development. Based on the North Star Energy Storage Network and OFweek, the first collaborative model bZ3 was built on the e-TNGA platform and equipped with BYD blade batteries. It was launched in April 2023; Yiwei Lithium Energy has entered the modern Kia E-GMP platform by establishing a joint venture factory with SK On in Huizhou and Yancheng. Domestic independent brand construction joint venture factories are deeply bound to ensure battery supply. According to the official websites of CATL and AVITA, CATL has established joint venture battery enterprises with SAIC Group, GAC Group, FAW Group, and Geely Automobile from 2017 to 2022, and jointly created AVITA high-end brands with Changan Automobile and Huawei. Autonomous car companies are more sensitive to procurement costs, emphasizing supplier cost control and production guarantee capabilities.

Chinese battery companies are gradually entering the global new energy vehicle supply chain based on battery structure and material system innovation. Since 2020, Chinese power battery companies have accelerated their overseas expansion and achieved breakthroughs from scratch. Enterprises such as Guoxuan High tech, Yiwei Lithium Energy, Funeng Technology, and Honeycomb Energy have successively won overseas orders. Among them, Guoxuan High tech launched deep cooperation after receiving a stake from Volkswagen. According to the North Star Energy Storage Network, Volkswagen Group's official website, and the company's announcement on December 20, 2021, Guoxuan High tech has been awarded the dual designation of Volkswagen's standard battery cell iron lithium ternary, participating in the industrial production project of Volkswagen's Salzgit factory's battery, and signing a long-term strategic agreement with a leading new energy vehicle company in the United States for a 6-year 200GWh lithium iron phosphate battery.

Ningde Times fully benefited from the first round of global restructuring of power batteries, and achieved the first overseas penetration rate. According to SNE data, the global installed capacity of power batteries exceeded 707.5GWh in 2023, with Ningde Times City accounting for 36.8%,+0.6pct year-on-year, and LG New Energy City accounting for 13.6%, -0.5% year-on-year. LG New Energy was officially listed and traded on the Korean Stock Exchange in January 2022. It originated from LG Chemical Battery Business Unit and has accumulated rich experience in basic material research and development. Currently, its global customer structure is stable. Samsung SDI is gradually transitioning from a consumer battery supplier to a power battery supplier, achieving 32.6GWh of installed capacity in 2023, a year-on-year increase of 36.1%, a market share of 4.6%, and a year-on-year increase of 0.2pct. SK On benefited from stable demand from major European customers, and its global installed capacity increased by 14.4% year-on-year to 34.4 GWh in 2023, with a market share of 4.9% and a year-on-year increase of -1 pct.

According to SNE data, the market share of battery installed capacity in overseas markets of CATL, excluding China, reached 27.5% in 2023, with a year-on-year increase of+4.7pcs. In 2020, the growth rate of Ningde Times' overseas revenue accelerated, mainly due to the expansion of exports from European customers such as Stellantis. Tesla's Shanghai factory began mass production at the end of 2019 and will serve as its main global export base to meet the demands of the European and North American markets, in addition to meeting domestic demand. In 2023, the overseas market share of CATL has steadily increased. In addition to supplying local car companies, CATL has also benefited from the acceleration of overseas exports of models such as BMW, SAIC MG, and Volvo.

By 2025, CATL is expected to achieve a continuous increase in unilateral market share in overseas markets. After 2024, a new round of targeted peak will begin, and Chinese manufacturers are expected to enter the global automotive supply chain through battery technology innovation. CATL has laid out M3P and Kirin batteries and continuously iterated through CTP/CTC to build higher voice. Authorized factories in Germany, Hungary, and North America are accelerating overseas production capacity expansion. In the mid-term of 2025, Ningde Times is expected to have a higher market share in Europe than expected, driving the steady improvement of the company's global landscape. We expect European and American car companies to intensively launch new long-term platform targeting by the end of 2024, accelerating the electrification process in overseas markets and opening up long-term global growth opportunities. With the gradual commissioning of authorized factories in Hungary and Michigan by CATL in 2025 and 2026, the company's market share in Europe and America is expected to expand beyond expectations.

The new paradigm of Sino foreign cooperation has entered a period of realization, determining the pattern after 2025

The new paradigm of Sino foreign cooperation in overseas markets will enter a period of realization, opening up long-term global growth space. Currently, North America (strong policy cycle+neutral vehicle cycle), Europe (neutral policy cycle+strong vehicle cycle), Southeast Asia (strong policy cycle+neutral vehicle cycle), and South America (neutral policy cycle+weak vehicle cycle) are expected to relay and promote the continuous increase of global electrification penetration under the shift of China's growth rate after 2024. According to IHS's global sales forecast for the light vehicle market, including passenger cars, microvans, light passenger cars, and light trucks, the annual sales scale of global light vehicles is expected to be between 830 million and 97 million units (69 million to 82 million passenger cars) from 2023 to 2030, and the annual sales scale of overseas light vehicles is expected to be between 58 million and 67 million units (47 million to 54 million passenger cars). We reported on July 5, 2023, "Promised Overseas Land, Welcoming the Resonance of Technology and Policy Cycles in 2024", proposing that the penetration rate of electric vehicles in the overseas passenger car market will be about 9% in 2022, and the overseas passenger car market is expected to have a scale of 52 million vehicles by 2026. The penetration rate of electric vehicles in the overseas passenger car market is expected to increase to 32% that year. In 2024, the new paradigm of Sino US cooperation will enter a period of realization. CATL will rely on the technology authorization mechanism to lock in major North American customers such as Ford and establish a sustainable cooperation model after 2025; Taking Volkswagen Guoxuan High Tech and BMW Yiwei Lithium Energy as examples, the innovative and far-reaching cooperation paradigm between China and Europe has gradually been established, and the Chinese industrial chain is expected to achieve long-term share expansion beyond expectations.

1.The pattern after 2025 depends on: technological innovation to build the competitiveness of Chinese battery enterprises

At the end of 2024, a new round of fixed-point cycle will begin, and the new battery structures (such as 46 series large cylindrical and Kirin batteries) and material systems (ultra-high nickel, lithium manganese iron phosphate, 4C fast charging system) in the second round of restructuring will become important innovations, enhancing the competitiveness of Chinese battery companies in obtaining global automotive orders. The first round of battery supply chain restructuring benefited from the rise of soft pack micro and square products, and with the addition of lithium iron phosphate, high-voltage ternary, CTP, etc., CATL quickly broke through the European market. The German Association of Automobile Manufacturers introduced the VDA standard cell size in 2015, and square batteries have gradually become the mainstream choice for automotive companies. Since 2012, CATL has entered BMW with square shaped battery cells and achieved breakthroughs in the original VDA size. The material system achieves NCM523-NCM622-NCM811 iteration; Expanding the cell structure to three times the thickness; In terms of battery pack structure, CTP was the first to be introduced in the industry and promoted to CTC. According to the official website of Volkswagen Group, Volkswagen will release UC standard battery cells on Power Day in March 2021, and will collaborate with Guoxuan High Tech to develop the first generation of standard battery cells. By 2030, the proportion of standard battery cells will reach 80%. The technology route of square shaped battery cells is expected to become the mainstream choice for the next round of designated CRRC companies. Tesla leads the 4680 battery application, and car companies such as BMW and Rivian are expected to follow suit, opening up market space after 2024.

(1) 46 Series Large Cylindrical Battery: Tesla's battery production capacity is accelerating, opening up space after 2024. According to People's Daily, GAC, and Economic Observer, Tesla's weekly production of 868000 battery cells at its Tremont factory in California by the end of 2022 can meet the electricity demand of approximately 1000 Model Y units (estimated production capacity of approximately 0.7GWh); In January 2023, Tesla announced an investment of $3.6 billion to expand the Nevada Superfactory, which includes approximately 100GWh of 4680 battery capacity; As of October 2023, the cumulative production of 4680 has exceeded 20 million units, with a daily production capacity exceeding 85000 yuan. Ningde Era cylindrical batteries use full pole ear cells, and the internal resistance of individual cells is significantly reduced compared to traditional single pole ear cells. According to Autohome, in September 2022, CATL reached a long-term agreement with BMW Group to supply new cylindrical batteries with a diameter of 46mm to its "new generation" models starting from 2025. The production areas are in Europe and China, and each factory can supply BMW with an annual production capacity of 20GWh. Yiwei Lithium Energy will designate the "new generation" model of BMW Group in September 2022, and complete the first production line by the end of 2022. It is expected that the 23H2 4680 battery will be officially mass-produced and taken off the production line, leading the way in matching domestic new power car companies.

(2) Chinese enterprises are leading material and structural innovation to continuously build cost advantages, and the battery pack and chassis industry chain is shifting towards battery factories. In the first round of restructuring, lithium iron phosphate+CTP has opened up technology parity, benefiting from positive feedback from the Chinese market, which is expected to accelerate the expansion of overseas supply chains and increase the global market share of Chinese enterprises. Chinese battery companies are leading material and structural innovation, and the current Ningde Times led lithium manganese phosphate, M3P, and Kirin batteries will gradually achieve industrialization and landing. According to the official website of Ningde Times, the energy density of Qilin Battery (third-generation CTP) is expected to reach 160Wh/kg in the iron lithium system, and can reach up to 255Wh/kg in the ternary system when adjusted with the electrochemical system. It also supports 4C fast charging. According to Autohome, CATL plans to launch the fourth generation highly integrated CTC battery system around 2025, and is expected to upgrade to the fifth generation intelligent CTC electric chassis system around 2028. Ningde Times has fully equipped Japanese and Korean car companies with models in China, and CTP technology is expected to lead structural innovation and accelerate global penetration. According to China Securities Network, in October 2021, Ningde Times signed a contract with Hyundai Mobis. Ningde Times will authorize Mobis to use CTP technology and support Mobis in supplying CTP related battery products in South Korea and even globally.

(3) In 2024, Ningde Times Shenxing Battery will lead the affordable fast charging technology cycle. Ningde Times leads the upgrade of lithium battery materials, driving the expansion of fast charging models from mid to high end to affordable models. The penetration and improvement slope of fast charging models is steep. According to our calculations, the sales elasticity is expected to contribute more than 7pcs in 2024. According to the official WeChat account of Ningde Times, on August 16, 2023, the company released the world's first 4C lithium iron phosphate Shenxing overcharged battery, which uses lithium iron phosphate+pure high-end conductive carbon black+negative electrode material coating agent improvement+LiFSI electrolyte formula, with excellent fast charging performance. According to official WeChat accounts of various companies, starting from October 2023, CATL has successively reached strategic cooperation with multiple domestic car companies, including partners such as Nezha, Chery, and BAIC New Energy. The relevant new models will be equipped with Shenxing Supercharged Battery, which will be mass-produced in the 23rd quarter and gradually launched in the 24th quarter.

2.The pattern after 2025 depends on the evolution of regional market policies, reshaping the supply chain

The shift and acceleration of European policies are driving a restructuring of the landscape. The pressure to meet European regulations is weakening, coupled with the decline of subsidies from core countries, which is dragging down the short-term growth rate of new energy vehicle sales. Starting from 2019, benefiting from the introduction of subsidy policies and tax incentives in various countries, the European new energy vehicle market has entered a phase of accelerated volume expansion. In 2020, Europe launched the world's strictest carbon emission regulations, led by Germany and France. Countries generally increased subsidy policies to help push the new energy vehicle market into a fast upward path. In 2021, the European new energy vehicle market ushered in a high momentum. Analogous to the shift in the growth rate of the Chinese market, according to the China Association of Automobile Manufacturers (CAAM), the sales of new energy vehicles in China in 2020 were 1.367 million units, with a year-on-year growth rate of only 10.9%. This is mainly due to the relatively low pressure of double point assessment, a significant reduction in subsidies, and the scarcity of affordable products. As a result, the Chinese new energy vehicle market has entered a period of adjustment. In 2022, the pressure on European regulations to meet standards is weakening, while the Russia Ukraine conflict has put pressure on the supply chain, coupled with high inflation caused by the energy crisis, which is dragging down car consumption. In 2022, the total sales of new energy vehicles in Europe were 2.513 million, a year-on-year increase of 14.8%. The penetration rate of new energy vehicles was 18.5%, with a year-on-year increase of 3.2 pct. The growth rate of new energy vehicle sales slowed down. According to ACEA, the total sales of new energy vehicles in Europe in 2023 were approximately 3 million units, representing a year-on-year increase of 19.8%.

The cooperation between China and Europe in the industrial chain is deepening, and the new platform developed by enterprises for carbon emission assessment in the next stage starting from 2025 is expected to introduce more supplier choices. In contrast to the increasing localization requirements in Europe and America, the United States has issued an IRA bill to build a local lithium battery industry chain. According to People's Daily, in March 2023, the European Commission officially announced a proposal for a green industry plan to achieve the 30-year climate target and strengthen energy independence. The aim is to build a local flexible supply chain and break free from the centralized supply dependence of rare earths in China (98%) and platinum in South Africa (71%). According to the action plan, strategic raw materials cover key materials in the lithium battery industry chain, such as lithium, manganese, natural graphite, and nickel. Minimum local production capacity targets of refining 10%, processing 40%, and recycling 15% are set, and by 2030, Europe should have at least 40% clean manufacturing capacity domestically. According to European legislative rules, from the proposal by the European Commission to the decision of the European Council and the European Parliament, it is expected that the bill will be officially implemented early. In the long run, this bill is expected to help EU member states accelerate the layout and expansion of their domestic new energy vehicle industry chain, while China's lithium battery industry has already begun to hold capacity in Europe. Ningde Times has successively laid out factories in Germany and Hungary. According to the official WeChat account of CATL, the German factory was officially put into operation in December 2022. The investment in the Debrecen factory in Hungary is approximately 7.34 billion euros, with a planned production capacity of 100GWh.

The new policy cycle in the United States has begun, and the turning point of electrification is approaching. The penetration potential of new energy vehicles in the US market is enormous, welcoming the turning point of electrification. According to Marklines, the penetration rate of new energy vehicles in the United States reached 6.9% in 2022, far lower than China (25.7%) and Europe (19.6%) during the same period. In 2013, Tesla Model 3 achieved large-scale delivery, driving the start of electrification in the United States. Before 2018, the new energy vehicle market in the United States was led by electric luxury cars, achieving a cumulative sales volume of 1 million new energy vehicles. During the Trump administration from 2017 to 2021, the assessment of automotive fuel economy was relatively loose, and the penetration rate of new energy vehicles slowed down. Based on the experience of the China Europe market, under the strong regulatory policy cycle, the turning point of electrification will be reached in 2018 and 2020, respectively. The US market will also be constrained by the next stage of fuel economy standards (CAFE standards), CAFE civil penalties, GHG carbon emissions assessments, and other regulations. Coupled with the 2023 IRA policy to stimulate the launch of the electrification cycle, it will drive the development of the electric vehicle industry.

Under strict policy restrictions, Japanese and Korean battery companies are the first to bind, and the three export paths for Chinese batteries are gradually becoming clear. According to the IRA Act, battery companies can receive a manufacturing subsidy of $35/KWh for local production. Tesla Panasonic, General Motors LG New Energy, Ford SK On, Stellantis Samsung SDI North American local capacity expansion is accelerating. In December 2023, FEOC (Foreign Entity of Concern) proposed to impose restrictions on the origin of batteries and key minerals from 2024 and 2025, respectively. If the vehicle contains FEOC products, it cannot obtain tax credits under the IRA Act. Specifically, (1) the direct export model is clearly regarded as FEOC. The US Treasury Department has issued guidance documents for new clean vehicle manufacturers, establishing toolchains and reporting procedures for traceability of key minerals, battery components, and FEOC entities, and regulating them from a judicial process and practical operational level. (2) The overseas joint venture model depends on specific cases. Focus on defining the jurisdiction of overseas entities beyond the 25% equity restriction. It is expected that the registration, main business premises, and residence of overseas operating entities are not in China, so it is necessary to identify whether specific overseas entities have the following three types of activities within China: ① mining, processing, or recycling of applicable key minerals contained in batteries; ② Manufacturing or assembling battery components; ③ Processing battery materials. The overseas subsidiaries of private enterprises are not related to the shareholding ratio of the parent company, and it is necessary to determine whether they are foreign entities and under Chinese jurisdiction. Therefore, a US registered subsidiary is not considered a FEOC and jurisdiction will not be assessed. It is expected that overseas subsidiaries of private enterprises can rely on the Chinese industrial chain for production and manufacturing, including key mineral extraction, raw material processing, etc., but obtaining subsidies still requires assessment of the localization ratio of key minerals and battery components. Overseas subsidiaries not registered in the United States are subject to assessment of Chinese jurisdiction. If they have independent overseas production capacity, they are not considered as FEOC. (3) The technology authorization model needs to define whether there is an effective control relationship. It is expected that avoidance can be achieved through evidence provided by partners and legal teams, depending on the contract signing status. The Chinese battery authorization model is expected to contribute incremental flexibility after 2026.

Resonance between vehicle models and policy cycles to welcome the turning point of replenishment

1. Resonance between vehicle models and policy cycles, the turning point of electric vehicle sector replenishment is approaching

High quality pure electric vehicle models are densely listed, and the penetration rate of 4C fast charging technology is steep. In the past, fast charging technology was only enjoyed by a small number of high-end models. In 2018, Porsche Taycan led the way, and overseas car companies intensively launched high-voltage platform layouts; In 2022, with Xiaopeng G9, Avita 11, and Jihu α Represented by S, domestic fast charging models are gradually being mass-produced; Starting from 2023, mid to high end vehicle models that meet the fast charging requirements of 3C or above will be intensively launched; On March 1, 2024, Ideal released its first pure electric MPV model, MEGA, with a starting price of 559800 yuan. It is equipped with the Ningde Times Kirin 5C battery pack, with a total power of 102.7 kWh and a CLTC range of 710 kilometers. The average charging power of 800V high-voltage fast charging can reach 300 kW, and it can be recharged for 500 kilometers in 12 minutes. At present, Shenxing Supercharged Battery has been launched in brands such as Avita, Nezha, Chery, and BAIC New Energy. In the 24Q2, it is expected to usher in the installation of 4C fast charging iron lithium batteries, driving the expansion of fast charging models to affordable models. In the future, fast charging technology will become a standard equipment for pure electric vehicles, reshaping the secondary demand curve of pure electric vehicles.

The short-term decline in market share of leading companies may lead to a stabilization of market share due to changes in customer sales structure. According to data from the China Automotive Power Battery Industry Innovation Alliance, the domestic battery installed capacity of CATL in 2023 was 167.1 GWh, a year-on-year increase of 17.66%, with a market share of 43.1% and a year-on-year decrease of 5.1 pct. The decline in market share is mainly due to the expansion of BYD's domestic installed capacity share and the impact of second tier manufacturers vying for market share. If BYD's self supplied installation is excluded, the market share of Ningde Times, Zhongchuangxin Aviation, Yiwei Lithium Energy, and Guoxuan High tech in 2023 is 59.21%/11.66%/6.12%/5.64%, respectively, with a year-on-year increase of -3.75/+3.13/+2.93/-0.27pct. In December 2023, due to year-end promotions by major domestic car companies, the sales of Ningde Times' main supporting car companies increased, leading to a stable and rebounding market share. In December, Ningde Times had a domestic installed capacity of 21.32 GWh, a year-on-year increase of 19.17%, a month on month increase of 8.22%, accounting for 44.51%, and a market share of+0.63 pct. In 2024, car companies such as Ideal, Sailis, Changan Avita, and Geely Jike are expected to continue to increase their sales volume. The changes in the sales structure of the main supporting car companies, combined with the more active competitive strategies of the leading companies, may bring about a stable market share.

The domestic passenger car market share of CATL has declined rapidly, while the commercial vehicle market share has maintained growth. Specifically, at the passenger car level, according to GGII data, the installed capacity of new energy passenger cars in Ningde Times in China in 2023 was 140.5GWh, a year-on-year increase of 26.77%, with a market share of 42.61% and a year-on-year increase of 5.63pct. This is mainly due to the impact of BYD's self supplied installation, China Innovation Airlines, and other second tier manufacturers vying for market share. In 2023, BYD/China Innovation Airlines achieved a passenger car installed capacity of 99.73/26.92 GWh, a year-on-year increase of+59.81%/+97.41%, with market share of 30.25%/8.16%, a year-on-year increase of+3.28 pct/2.03 pct; (2) At the commercial vehicle level, in 2023, Ningde Times in China achieved an installed capacity of 5.02/16.59GWh for new energy passenger cars/special vehicles, a year-on-year increase of -44.94%/+23.82%, and a market share of 82.76%/69.5%, a year-on-year increase of 1.85pct/1.9pct, respectively. The deep binding with core customers such as Yutong Bus, BAIC Foton, and Sany Automobile has boosted its market share.

The changes in sales of the main supporting customers in 2024 may lead to the stabilization of Ningde Times share. In 2024, the core supporting vehicle enterprises of Ningde Times will enter a new cycle of vehicle models, and the expansion of the vehicle model matrix may catalyze a boost in sales, thereby opening up space for the growth of leading market share. Calculate the domestic battery matching situation based on data from advanced lithium-ion batteries. Specifically, (1) Geely: In 2023, the installed capacity of Ningde Times was 16.03 GWh, a year-on-year increase of 24.64%, accounting for 68.34% and a year-on-year decrease of -14.6 pct. In 2024, the all-new Extreme Krypton 007, facelifted 001, Galaxy E8 and other heavyweight models are expected to become popular models. (2) Ideal: The installed capacity of Ningde Times in 2023 is 15.23 GWh, a year-on-year increase of 181.41%, accounting for 97.6% and a year-on-year decrease of -2.4 pct. In 2024, the all-new Ideal L6 and MEGA, as well as the upgraded Ideal L7/L8/L9, are expected to boost sales with four new pure electric SUVs. The pure electric models have higher charging capacity and are expected to be equipped with CATL Kirin batteries, which will contribute significantly to CATL's installation. (3) Selis: The installed capacity of Ningde Times in 2023 is 4.22 GWh, accounting for 99.94%. Huawei's intelligent driving ADS 2.0 continues to empower the Wenjie New M7, laying the foundation for sales, and further expanding the model matrix of the all-new M9 and M8.

The central government's "trade in" policy is expected to exceed expectations, and sectors will fully benefit from the policy dividend. On February 23, the fourth meeting of the Central Committee of Finance and Economics was held to study the issue of large-scale equipment updates and the trade in of consumer goods, and to study the effective reduction of logistics costs for the whole society. The meeting pointed out the need to promote the updating and technological transformation of various production and service equipment, encourage traditional consumer goods such as automobiles and household appliances to trade in old for new, and promote durable consumer goods to trade in old for new. In 2009, the Ministry of Finance, the Ministry of Commerce, the Ministry of Industry and Information Technology, and other 10 departments jointly issued the "Implementation Measures for Replacing Old with New Cars". Vehicles that meet the requirements can enjoy a replacement subsidy ranging from 3000 to 6000 yuan; From 2009 to 2023, many regions have successively introduced the policy of exchanging old cars for new ones used in their respective regions. In 2023, 13 departments including the National Development and Reform Commission, the Ministry of Industry and Information Technology, and the Ministry of Commerce jointly issued the "Several Measures to Promote Automobile Consumption", once again proposing support for the renewal and consumption of old cars. According to the China Automotive Center, there are currently 16 million passenger cars of Class III and below, and over 7.5 million vehicles with a vehicle age of 15 years or more. If calculated based on an average 15 year scrap cycle, assuming an average selling price of 170000 yuan, the renewal of old passenger cars is expected to bring a consumption scale of 1.3 trillion yuan. The active replacement policy is expected to promote consumer vehicle replacement, and the high-quality electric vehicle model cycle will fully benefit from the policy dividend.

2. The supply and demand situation is steadily recovering, and the inventory of the battery industry narrowed to 1.9 months in the 23Q4 period

The turning point of power battery replenishment is approaching, and the supply and demand situation of the industry chain is expected to further repair in 2024. According to data from the China Automotive Power Battery Industry Innovation Alliance, the inventory coefficient of domestic power batteries has gradually decreased after reaching its peak at the beginning of 2023. The inventory level of the power battery industry from Q1 to Q4 is about 2.24/2.07/2.01/1.95 months. If the shipment volume of energy storage batteries is deducted and 70% of energy storage batteries are installed, the new inventory of power batteries in the entire industry/CATL in 2023 is 88.5/20.8GWh, which is -43.09%/-80.39% respectively compared to 2022. The industry's destocking phase is coming to an end. In terms of channel inventory, the newly added inventory of BEV/PHEV in 2023 was 274700/331100 units, which is -40.81%/+73.53% compared to 2022. With the joint launch of heavyweight new car models in China in March, coupled with continuous breakthroughs in overseas sales, the expectation of replenishing inventory in the midstream battery segment of electric vehicles is expected to increase significantly under intensive catalysis.

In March, the production of power batteries by domestic enterprises rebounded, and the short-term supply and demand pattern showed marginal improvement. According to data from Xinlun Lithium Battery, in March, Ningde Times/BYD/Yiwei Lithium Energy/Guoxuan High tech/Funeng Technology respectively scheduled production of 32.3/15.4/4.58/2.8/0.7GWh, with a month on month ratio of+58.33%/+55.56%/+38.37%/+21.74%/+40%, and a year-on-year ratio of+29.2%/+32.76%/+92.44%/+24.44%/-15.66%. Domestic battery companies have shown a strong recovery trend in production guidance, mainly benefiting from the concentrated launch of heavyweight new models in China in March, such as the Ideal MEGA and upgraded L7/L8/L9, the Zero Run C10, and BYD Yuan UP9. New models such as the Wuling Binguo PLUS are expected to become popular models, coupled with continuous price wars among car companies to stimulate sales, leading to a positive monthly production schedule and a trend of industry chain recovery.

3. There is still room for a downward trend in battery prices, so pay attention to the bargaining power of leading companies

The price decline of lithium carbonate and midstream materials in 2023 has driven the cost of battery materials to decline by over 30%, and there is still room for a downward trend in battery prices in 2024. According to the price data of SMM lithium battery materials, the manufacturing cost of domestic power batteries in 2023 has shown a decline compared to the high point in 2022. The overall material cost of ternary 523/lithium iron phosphate batteries has decreased by 33.33%/35.46% respectively, and the prices have decreased by 50.22%/53.3% respectively. Three scenarios are used to calculate the impact of lithium prices on battery material costs, only considering changes in material prices, without considering changes in manufacturing costs, labor costs, and module manufacturing costs. ① Optimistic expectations: Assuming that the average prices of lithium carbonate/lithium hydroxide in 2024 are 10/98000 yuan/ton respectively (a decrease of about 16.3/171000 yuan/ton compared to the average price in 2023), it is expected that the overall material costs of ternary 523, ternary 811, and lithium iron phosphate batteries will have a downward space of 26.31%, 26.45%, and 29.83% respectively in 2024; In the long run, assuming that the price of lithium carbonate is 80000 yuan/ton in 2026, and the prices of other lithium battery materials decrease by 10% annually, the overall material costs of ternary 523, ternary 811, and lithium iron phosphate batteries in 2026 are 284.8/300.5/212.9 yuan/kWh, respectively Neutral expectation: Assuming that the average price of lithium carbonate/lithium hydroxide in 2024 is 1.2/11.8 million yuan/ton, it is expected that the overall material costs of ternary 523, ternary 811, and lithium iron phosphate batteries will have a downward space of 20.49%, 20.74%, and 23.83% respectively in 2024; In the long run, assuming that the price of lithium carbonate in 2026 is 100000 yuan/ton, and assuming that the prices of other lithium battery materials decrease by 5% annually, the overall material costs of ternary 523, ternary 811, and lithium iron phosphate batteries in 2026 are 338.3/356.8/253.6 yuan/kWh, respectively Pessimistic expectations: Assuming that the average prices of lithium carbonate/lithium hydroxide in 2024 are 150000/147000 yuan/ton respectively, it is expected that the overall material costs of ternary 523, ternary 811, and lithium iron phosphate batteries will have a downward space of 14.85%, 15.29%, and 17.62% respectively in 2024; In the long run, assuming that the price of lithium carbonate is 120000 yuan/ton in 2026, and the prices of other lithium battery materials decrease by 2% annually, the overall material costs of ternary 523, ternary 811, and lithium iron phosphate batteries in 2026 are 377.3/397.5/284 yuan/kWh, respectively.

Differentiation of scale, profitability, and efficiency, deepening key resource barriers for battery leaders

1. Profitability: Leading companies are resilient in profitability, with high unit depreciation and sales rebates giving profit elasticity

The price of batteries has declined, and the revenue growth rate of Chinese and Korean enterprises has slowed down. In H1 2023, the revenue of Ningde Times Power Battery and Energy Storage business was 167.403 billion yuan, a year-on-year increase of+82.2%, of which the energy storage business contributed 27.985 billion yuan, a year-on-year increase of+119.73%. According to the financial reports of various companies, calculated at the spot exchange rate, the revenue of LG New Energy, Samsung SDI, and SK On battery business in 2023 was RMB 186.08 billion, RMB 112.478 billion, and RMB 71.89 billion, respectively, with year-on-year growth of 30.45%, 14.96%, and 67.54%. The slowdown in demand growth in Europe and the decline in battery prices due to material linkage have put pressure on the sales performance of Korean batteries in both quantity and price in the 23Q4 period. It is expected that the revenue growth rate will slow down in 2024. In Q4 23, the revenue of LG New Energy, Samsung SDI, and SK On battery businesses was 44.102 billion yuan, 27.551 billion yuan, and 15.01 billion yuan, respectively, a year-on-year decrease of 2.71%, 6.4%, and 14.17%. According to LG New Energy's Q4 financial report, the 2024 revenue guidance growth rate is about 5%, corresponding to a revenue of 35433.3 billion Korean won (equivalent to 195.308 billion yuan).

In 2023, domestic battery companies will benefit from going abroad and repairing their gross profit margin through metal linkage. Affected by the rising prices of core battery grade lithium carbonate from 2021 to 2022, the prices of positive electrode materials and electrolyte materials have rapidly increased, driving up the manufacturing costs of battery cells and squeezing the profits of domestic battery companies; In 2023, domestic battery companies will expand their overseas business and generally adopt a metal price linkage strategy, resulting in a recovery in gross profit margin. From Q1 to Q3 2023, the gross profit margins of Ningde Times, Guoxuan High tech, and Yiwei Lithium Energy were 21.92%, 16.99%, and 16.78%, respectively, with a year-on-year increase of+2.97 pct,+2.87 pct, and+0.92 pct. In 2023, the gross profit margins of Samsung SDI and LG New Energy were 17.53% and 14.65%, respectively, with a year-on-year increase of -3.44 pct and -2.11 pct.

Ningde Times demonstrates its leading bargaining power and industry-leading net profit margin. Ningde Times has reduced the impact of metal price fluctuations on costs to a certain extent by signing a metal price linkage agreement with downstream host manufacturers. With its leading advantage, the unit price is significantly higher than other manufacturers, coupled with the continuous expansion of economies of scale, it has brought a leading net profit margin in the industry. From Q1 to Q3 of 2023, the net profit margins of Ningde Times, Yiwei Lithium Energy, and Guoxuan High tech were 11.03%, 10.92%, and 1.66%, respectively, with a year-on-year increase of+1.7pct,+0.34pct, and -0.03pct. In 2023, the net profit margins of Samsung SDI and LG New Energy were 9.1% and 4.85%, respectively, with a year-on-year increase of -1.04pct and+1.81pct.

Ningde Times leads its peers in unit profitability, while Yiwei Lithium Energy and Guoxuan High tech steadily increase their economies of scale. Ningde Times is ahead of other domestic manufacturers in terms of overseas development, with a high proportion of export revenue and better profitability than domestic sales. Relying on the strong bargaining power of leading companies, it has achieved a far leading unit profit level; Domestic battery companies such as Guoxuan High tech and Yiwei Lithium Energy are gradually expanding their economies of scale, and their unit profitability has been restored since 2021. According to our calculations, the profits of Ningde Times, Yiwei Lithium Energy, and Guoxuan High tech units in 2023 are approximately 0.11, 0.03, and 0.02 yuan/Wh, respectively.

Ningde Times and overseas battery companies have similar depreciation policies, with Samsung SDI having the highest single GWh depreciation compared horizontally. Starting from 2021, Ningde Times has entered an accelerated production period with new production capacity. According to the annual report, the production capacity by the end of 2022 was about 390GWh, far higher than other domestic battery companies. The replacement of battery technology drives the acceleration of equipment obsolescence. According to the company's accounting policy change announcement, Ningde Times will change the depreciation period of early power battery production equipment from 5 years to 4 years starting from 2019, and set the depreciation period of machinery and equipment to 3-10 years, with an annual depreciation rate between 9.50% and 33.00%. Considering that the depreciation period of early equipment is at the lower limit of the design period, it is expected that the annual depreciation rate of equipment will be in the upper range of the design period; According to the company's financial report, the depreciation period of LG New Energy and Samsung SDI equipment is 5-15 years. We expect the actual depreciation to be at the lower limit of the design period, and the equipment depreciation policies of major battery companies at home and abroad are similar. According to the spot exchange rate calculation, the depreciation of Samsung SDI in 2022 was a total of 7.842 billion yuan, with a single GWh depreciation of about 106 million yuan, which is higher than comparable companies at home and abroad in horizontal comparison. In 2022, the single GWh depreciation of LG New Energy, Ningde Times, Yiwei Lithium Energy, and Guoxuan High tech were 50 million yuan, 31 million yuan, 14 million yuan, and 14 million yuan, respectively.

High unit depreciation gives Ningde Times more profit flexibility. According to the annual financial reports of Ningde Times, the added value of machinery and equipment assets from 2020 to 2023 is disclosed. Corresponding fixed asset depreciation policies are adopted, and the depreciation period of machinery and equipment is calculated based on a 4-year depreciation period. At the same time, the depreciation situation is calculated based on the company's expansion of production in the next few years and considering the demand for new equipment (according to the company's new investment announcement from 2022 to 2023). According to calculations, the unit depreciation amount of Ningde Times is expected to be about 0.05 yuan/Wh from 2023 to 2024, an increase of about 0.02 yuan/Wh compared to 2021 to 2022. This is mainly due to the peak capital expenditure caused by the company's capacity expansion and acceleration in 2022. It is expected that this part of the expenditure amount will be depreciated by 2027. Coupled with the slowing down of the company's production expansion speed in the future, the unit depreciation amount is expected to decrease to about 0.025 yuan/Wh in 2027, a decrease of 50% compared to 2023 to 2024, and there is significant room for improvement in profitability on the reporting end. By comparison, domestic battery manufacturers such as Guoxuan High tech and Yiwei Lithium Energy have a unit depreciation amount of approximately 0.015-0.02 yuan/Wh from 2023 to 2024.

Ningde Times has launched a sales rebate policy to deeply bind strategic customers. In order to strengthen customer cooperation and promote product sales, Ningde Times has negotiated with some strategic customers to agree on a certain period as the settlement period for sales rebates, and set sales targets. After achieving the sales targets, corresponding discounts will be given according to the agreement to increase customer stickiness. At the level of accounting methods, Ningde Times recognizes revenue from product sales based on the expected rebate situation, recognizes revenue based on the net amount after deducting rebates, and sets aside estimated liabilities; Cash rebates are processed according to the principle of variable consideration, and when rebates are redeemed, they are offset against accounts receivable. According to the company's financial report, the expected liabilities include two parts: warranty deposits and sales rebates. The semi annual report discloses the amounts of each part of the expected liabilities, while the quarterly report only discloses the overall amount of the expected liabilities. The corresponding rebate provision amount for each quarter is calculated based on the proportion of changes in sales rebates in the semi annual report. Assuming that the proportion of changes in sales rebates in Q3 2023 is the same as H1 2023, it is expected that sales rebates in Q3 2023 will be provisioned at 1.67 billion yuan.

The layout of key resource ends in Ningde Times has taken shape, and the production and supply capacity of batteries is excellent. According to the company's official WeChat account, external investment announcement, and OFweek: (1) Lithium Resources: The supply guarantee strategy is shifting towards domestic, and the Jiangxi lithium mica project is strengthening its scale effect. Before 2020, CATL acquired and increased its capital by controlling North American Lithium, subscribing to Pilbara's additional shares, and locking in some lithium concentrates through Canadian Neo Lithium shares. Since 2021, the increase in upstream raw material costs has put pressure on the costs of battery companies. Ningde Times actively shifts its upstream resource layout towards domestic development through cooperation with local governments, enhancing its ability to combat rising costs. The company plans to layout key lithium resource projects in the Tianhua series, such as Jiangxi Yichun Lithium Mica, Sichuan Snowy Project, and Tianyi Lithium Industry, through direct investment and equity participation. While ensuring resource supply, it is expected to increase profits through investment returns. On April 20, 2022, Yichun Times New Energy Mining Co., Ltd., a subsidiary of Ningde Times Holdings, successfully won the exploration right for ceramic soil (including lithium) in the Zhenkouli Fengxin County Jianxiawo mining area of Yifeng County, Jiangxi Province, with a bid of 865 million yuan. The LCE reserves are abundant. In terms of the progress of the Jiangxi lithium mica project, the beneficiation end: the company completed the exploration rights auction in April 2022, and the Fengxin Era 33 million tons/year beneficiation capacity project was approved by the Yichun Ecological Environment Bureau in July 2022. The beneficiation plant has a construction period of three years, divided into three phases, and is expected to complete the first phase of production capacity construction from the end of 2023 to the beginning of 2024. Smelting end: The 70000 ton production capacity of Yifeng Times will be constructed in two phases, expected to be completed within 2023. The planned smelting capacity for the first and second phases of the project is 30000 to 40000 tons respectively; The construction of the Yifeng Era Zhicun 110000 tons will be divided into three phases, expected to be completed within 2024, with each phase planning 2/3/60000 tons respectively; The construction of 100000 tons in Fengxin Era will be divided into two phases and completed within 2023, with each phase producing 50000 tons.

2.Nickel and Cobalt Resources: Focusing on overseas, Puqin Era is accelerating the progress of nickel smelting projects in Indonesia. According to the company's external investment announcement, Ningde Times has established overseas nickel and cobalt resources and smelting capacity through its subsidiaries Guangdong Bangpu, Ningbo Bangpu Times, and Canada Times. Among them, the Puqin Era project in Indonesia is a subsidiary established by the company through cooperation with Guangdong Bangpu, Ningbo Bangpu, and Liqin Era. It is jointly constructed with ANTAM and IBI companies in Indonesia. The joint venture construction projects include nickel ore development projects, pyrometallurgical smelting projects, wet smelting projects, battery recycling projects, battery material projects, and battery manufacturing projects. Fire smelting: The total investment of the project is 1.812 billion US dollars, and the planned construction period is 5 years (2022-2027). The project is located in the FHT Industrial Park in East Hamahira County, North Maluku Province, Indonesia. The project adopts the rotary kiln electric furnace smelting process (RKEF process) to construct a nickel iron production line, processing laterite nickel ore in the project area to form a downstream product supply chain. Wet smelting: The total investment of the project is 1.531 billion US dollars, with a planned construction period of 5 years (2022-2026). After the project is completed, MHP products will be produced to provide raw materials for the industrial chain battery material project, covering the wet smelting production line of laterite nickel ore, and supporting the construction of sulfuric acid, water production, wastewater treatment, public auxiliary systems, etc.

Guoxuan High tech has a vertically integrated layout throughout the entire industry chain, with obvious advantages in cost reduction and efficiency improvement. According to the official website of Guoxuan High tech, the Ecological Environment Bureau of Yichun City, and the company's financial report: (1) Upstream mineral resources: actively layout the entire process of mining, beneficiation, and smelting, and create a long-term competitive advantage. Guoxuan High tech has been laying out upstream materials since 2021. Specifically, at the mining level, the company owns Baishuidong Mine, Shuinan Section Mine, and Huayou Mine in Yichun, Jiangxi. Among them, Baishuidong Mine has been put into mining and production. In May 2023, the mining scale expanded to 1.5 million tons per year, and the designed mining scale for Shuinan Section Mine is 1.8 million tons per year. Huayou Mine is still in the stage of mineral resource exploration, and mining and production are imminent At the ore dressing level, two ore dressing plants, Huaqiao and Weihong, have been established with an annual ore dressing capacity of 3 million/125 million tons respectively On the smelting level, Kefeng and Yifeng respectively achieved 1/5000 tons of lithium carbonate shipments in 2023. The upstream mining resource layout of the company can reduce the cost of raw material procurement through self supply, prevent the impact of raw material price fluctuations, ensure supply chain stability, and bring long-term competitive advantages.

Mid stream material link: Widely covering core links, the results of cost reduction and efficiency increase are gradually becoming apparent. The layout of Guoxuan High tech's midstream materials covers core links such as positive and negative electrode materials, separators, and electrolytes. Specifically,: ① Positive electrode materials: Anhui Lujiang plans to produce 30000 tons of high nickel ternary positive electrode materials+200000 tons of iron lithium positive electrode materials per year, and Michigan plans to produce 150000 tons of battery positive electrode materials per year; ② Negative electrode materials: Annual production capacity of 30/40/100000 tons of negative electrode materials will be laid out in Anhui/Inner Mongolia/Michigan, USA; ③ Diaphragm: In 2015, a joint venture was established with Xingyuan Materials to establish Hefei Xingyuan and plan a wet diaphragm production line; ④ Electrolyte: A 100000 ton/year electrolyte production capacity is planned and constructed in Feidong, Anhui, and the Cleveland Research Institute is established to develop a new generation of electrolytes. The company has a wide layout in the midstream material sector, which can form a multi-dimensional competitive advantage in terms of cost, supply, and technology.

Overseas battery companies are focusing on long-term lithium salt procurement, and LG's new energy resource layout is accelerating. Overseas battery companies led by LG New Energy will prioritize signing long-term agreements for material procurement and ensure upstream resource supply through equity investments, joint ventures, and other means. LG New Energy and SQM have signed an 8-year procurement long-term agreement since 2020, which will supply a total of 55000 tons of battery grade lithium carbonate and lithium hydroxide. The annual agreement is expected to continue to expand the supply share. According to the SQM announcement, in May 2022, both parties signed a memorandum of understanding to strengthen their business relationship, jointly investing in electric vehicle industry chain projects, covering the production of positive electrode materials and lithium hydroxide, as well as lithium battery material recycling projects. LG's upstream mineral resource layout for new energy has accelerated, including signing a long-term agreement for lithium concentrate procurement with Australian lithium miner LionResource, investing in Queensland Pacific Metals (QPM) and Shanghai Gepai Nickel Cobalt, while partnering with LG Chemical and Huayou Cobalt to invest in Indonesian nickel mines. According to South Korean Economic News and company announcements, Samsung SDI has signed a long-term procurement agreement with Glencore and GEM to establish a joint venture with EcoPro EM to ensure the supply of nickel cobalt materials and focus on self-produced cathode materials.

Debt paying ability: Ningde Times has abundant cash flow, and Korean batteries are under short-term pressure due to borrowing to expand production

The high demand for battery business has driven a significant inflow of operating net cash flow, and Ningde Times is leading the world in net cash flow, putting short-term pressure on Japanese and Korean companies. From Q1 to Q3 2023, the net cash flow from operating activities of Ningde Times increased by 102.76% year-on-year to 52.654 billion yuan, providing sufficient cash flow to ensure capacity expansion, resource layout, and R&D funding needs; LG New Energy was 9.62 billion yuan, a year-on-year increase of 232.78%, with a significant improvement in operating cash flow. In terms of net cash flow, from Q1 to Q3 2023, Ningde Times, LG New Energy, and Samsung SDI were 49.496 billion yuan, -6.591 billion yuan, and -6.934 billion yuan, respectively. Ningde Times maintains a global leading net cash flow position, while Korean battery companies in North America incurred significant capital expenditures, resulting in short-term pressure on net cash flow.

South Korean companies are borrowing to expand production in North America, with expected capital expenditures remaining unchanged in 2024. The rapid growth of the global power and energy storage market has driven a surge in downstream demand. Battery companies have undergone multiple rounds of policy, capital, and technology reshuffles, intensifying differentiation. The market position of leading enterprises is prominent, and they continue to expand their production capacity. According to the financial reports of various companies, the capital expenditure of Ningde Times reached 26.917 billion yuan from Q1 to Q3 2023, leading other domestic manufacturers; Korean battery companies are accelerating their operations in the North American market. In 2023, Samsung SDI announced that they will jointly build American factories with General Motors and Stellantis, respectively. LG New Energy is actively expanding its North American production capacity, including the Ultium Cells, NextStar Energy, and Honda joint venture factories in Tennessee. This has led to a significant increase in capital expenditures for 2023. LG New Energy and Samsung SDI had annual capital expenditures of RMB 60.031 billion and RMB 23.948 billion, representing a year-on-year increase of+71.32% and+70.74%, respectively. According to the 23Q4 financial reports of various companies, LG New Energy's 2024 capital expenditure guidance is expected to remain unchanged from 2023, mainly used to continue expanding North American production capacity; SK On plans to invest 7.5 trillion Korean won (40.3 billion yuan) in 2024 to expand battery production capacity, and may continue to increase capital expenditures. The asset liability ratio of domestic battery companies remains at a relatively high level. From Q1 to Q3 of 2023, the asset liability ratios of Guoxuan High Tech, Ningde Times, and Yiwei Lithium Energy were 70.79%, 69.92%, and 60.15%, respectively. Compared to 2022, they were+4.52 pct, -0.64 pct, and -0.2 pct, respectively. In the first quarter of 2022, LG New Energy's IPO fundraising was completed, with a significant increase in cash and cash equivalents. As a result, the asset liability ratio decreased to a lower level. In 2023, LG New Energy and Samsung SDI had asset liability ratios of 46.36% and 41.52%, respectively, with a year-on-year increase of+0.13pcs and -1.58pcs.

Business efficiency: Ningde Era's outstanding payment collection ability creates excellent bargaining power

Compared horizontally with domestic and foreign battery companies, overall, overseas battery companies have higher operational efficiency, with Ningde Times showing significant improvement in recent years. In 2023, LG's inventory turnover rate for new energy reached 464.85%, a year-on-year increase of 73.58 pct, which is at the global leading level. The release of localized production capacity has boosted the inventory turnover rate; Due to the increase in export share and longer shipping cycles, coupled with intensified competition, the inventory turnover rate of domestic enterprises generally declined from Q1 to Q3 2023. The inventory turnover rates of Ningde Times, Yiwei Lithium Energy, and Guoxuan High tech in Q1 to Q3 2023 were 365.58%, 332.58%, and 235.54%, respectively, compared to -81.91 pct, -150.98 pct, and -78.39 pct in 2022. Ningde Times has a leading asset utilization efficiency and outstanding ability to collect payments. From Q1 to Q3 2023, the fixed asset turnover rate of Ningde Times reached 304.82%, leading the world in asset utilization efficiency. The accounts receivable turnover rate of leading domestic and foreign enterprises is generally maintained at a high level, and compared horizontally, Ningde Times is leading domestic manufacturers, reflecting its excellent bargaining power.

R&D investment: CATL leads the world and continues to build barriers

Ningde Times leads the world in research and development investment. From Q1 to Q3 2023, the R&D expenses of Ningde Times reached 14.876 billion yuan, a year-on-year increase of 40.65%. A total of five R&D centers were established, including Ningde in Fujian, Liyang in Jiangsu, Xiamen in Fujian, Lingang in Shanghai, and Munich in Germany. A 21C innovation laboratory was also established, leading the innovation of lithium-ion materials and structures, and continuously building barriers. Samsung SDI is backed by Samsung Group, building the SAIT Samsung SDI Development and Research Institute Business Unit Development Team of Samsung Comprehensive Technology Institute, improving the collaborative research and development institutional system, and creating the PRiMX battery brand.

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Special Report on China's Power Battery Industry