China Lithium Battery
- China Battery Industry
About this article
This is written by a battery worker who has been in the industry for more than 10 years. It comprehensively introduces the general situation of China’s lithium battery industry from a simple perspective.
Some information, especially the data source, is confidential. If you need data sources, please contact us.
Lithium battery, as the ultimate carrier of lithium battery, this huge industrial chain, the battery has always been widely concerned.
This article generally covers the following content:
Section 1: Brief introduction of the battery industry.
Section 2: Packaging technology, mainly about the advantages and disadvantages of the three major technologies of cylinder, square shell and soft package.
Section 3: The integration technology of batteries, mainly about CATL‘s CTP and BYD‘s blade battery.
Section 4: Structural parts, in which the aluminum-plastic film is highlighted for explanation.
Section 5: Battery factory.
Introduction of the Battery Industry
Many people know that it is hard to get power batteries in 2021. So how it is, we will use data to tell you here.
It can be seen from this table that, except for copper foil and diaphragm, the power pool materials have almost doubled in 2021 (January-September), and the binder PVDF has even tripled.
As a result, the cost has risen in a straight line. The theoretical cost of the cheapest square iron-lithium battery has risen from 0.35 yuan/Wh at the beginning of the year to 0.5 yuan/Wh, an increase of 30%.
Changes in battery material prices
Material | Unit | Prices in early 2021 | Prices in mid-September 2021 | Prices at the end of September 2021 |
Lithium iron phosphate material | 10000 yuan / ton | 3.5-4 | 6-6.5 | 7.6-8.2 |
Ternary 523 power single crystal | 10000 yuan / ton | 11-13 | 18-20 | 22.2-22.7 |
Electrolyte | 10000 yuan / ton | 3.5-5 | 9-11 | 9.75-10.55(Ternary） 8.83-11.05（LFP） |
Artificial graphite negative electrode | 10000 yuan / ton | 3.2-4.5 | 4.0-6.0 | 6-7.5（Domestic high-end） 3.5-4.8 （Domestic low-end） |
Wet diaphragm 9+3um | Yuan/m^2 | 1.6-2 | 1.8-2.6 | 1.6-2.3 |
8um copper foil | 10000 yuan / ton | 8-8.5 | 10.7-11 | 10.5-10.9 |
12um aluminum foil | 10000 yuan / ton | 2.6-3 | 3.4-3.8 | 3.15-3.25 |
PVDF | 10000 yuan / ton | 10.5-13 | 28-32 | 30-40（LFP） 45-55（Ternary） |
The rapid rise in raw material prices shows strong demand in the industry. However, for battery factories, they are not simply transmitting prices or absorbing price increases. Long orders, turnover, process improvement, etc. will all affect the profit margin of the battery factory.
Therefore, our research on power batteries is not simply to disassemble and reweight the various costs, but to see clearly the essence behind the process and what room for technological advancement in the future.
You may ask, there are so many car companies, and there are even more models. If electrification, how to ensure the shape of the battery?
The Germans who know the most about cars gave the answer to this question. They found that the positions that each car can use are actually common.
We can look at the picture below. It is precisely because of this commonality that power batteries can be produced in a standardized manner, and standardized production is the basis for mass production.
Since batteries can be mass-produced by finding commonalities, we also have to see what most of the commonalities are like.
This picture is an anatomical diagram of a tram. You can see that the battery pack is located in the back seat of the car. This is the focus of this series of lessons. Then the front wheel part is the motor and DC-DC.
It is not only necessary to find commonality on the chassis in order to install standardized batteries, but also involves commonality at the level of battery design.
Let’s look back at the development path of power batteries: In the early years, power batteries mainly relied on optimizing midstream materials and the way of arrangement and combination to find the most cost-effective lithium batteries. However, as the combinations were found out one by one, the transformation of the material system fell into a staged stagnation.
But the demand of the market will not stop, so the battery cell manufacturers have started other solution, in exchange for the time to develop basic materials with structural innovation.
The most typical representatives are the top two in China. In September 2019, CATL launched the CTP platform. Half a year later, in March 2020, the blade battery came out.
Although the names are very different, the core of the two technologies is to improve the size of the battery cells so that as much capacity as possible can be placed in a limited space. We will share the more core content with you in the third part.
In addition to looking for common ground, we have to pay attention to the differences between enterprises and enterprises. The most typical is the difference in technology.
Before talking about the differences, let’s take a look at a global battery factory production capacity map produced by Morgan Stanley.
According to Morgan Stanley’s forecast, by 2025, CATL will have the largest production capacity in the world, although it may be South Korea’s LG Chem, and Japan’s veteran battery pioneer Panasonic.
Morgan Stanley’s prediction obviously underestimated the ambition of Chinese companies in terms of production expansion. We will share this content with you in the last class. Here we mainly look at a few overseas companies. We will first talk about the characteristics of several companies in general, and then in detail.
First of all, Morgan Stanley believes that CATL’s biggest rival is LG Chem. LG Chem is most famous for its soft package + ternary + lamination, these three technologies.
Japan’s Panasonic has always been a firm supporter of the cylindrical route because it was bound to Tesla in the early years. While Samsung’s route is a bit like that of domestic manufacturers, betting on squares.
The soft packs, cylinders, and squares mentioned here are mainly the packaging forms of batteries, which we will share with you in the second part.
Why does LG have an advantage in ternary or even high nickel?
The main reason is that it produces its own positive electrode and has technical reserves of precursors and positive electrode materials. Therefore, battery manufacturers are not just assembling. Their KNOW-HOW on many mid-stream materials is even greater than that of mid-stream manufacturers themselves.
And LG’s soft pack technology has a long history. In 2009, Hyundai Kia’s hybrid car was equipped with LG’s soft pack battery.
The lamination technology is matched with the soft bag, which is also a structural innovation, in order to maximize the capacity per unit volume.
It is worth noting that BYD’s blade battery also uses lamination technology.
The cooperation between Panasonic and Tesla once made itself very popular, 18650 to 21700, and even the future 46800 will be operated by Panasonic.
But Panasonic’s problem is that it succeeds and loses Tesla. After owning Tesla, it pursues comfort and is not active in developing customer sources.
Finally, let’s take a look at Samsung. In fact, Samsung’s route is the same as that of many domestic manufacturers, which are all square.
However, Samsung mainly relies on the joint venture power company with Bosch to enter the German supply chain. However, because the technical route is relatively similar to that of Chinese companies, Samsung will face great competition in the future.
After roughly talking about the three companies, let’s make a summary of this part.
Since the beginning of 2021, power batteries have fallen into great demand. Also, the strong downstream demand has driven the price of upstream materials to continue to rise.
Faced with such a situation, the midstream battery factories do not simply transmit the price to the downstream, but absorb the price increase as much as possible through long orders and improved the production processes.
But each company has its own differences. Our main focus here is on the technical route. The differences in these routes also determine the future of the company.
In this part, we mainly introduce overseas companies. Among them, LG Chem is the one we talk about more. Its biggest feature is ternary, especially high nickel, plus soft bag, plus laminated film. As for Panasonic, its pronouns are cylindrical batteries and Tesla. Samsung is the most similar to the domestic enterprise route, all of which are square routes.
Package: Square Shell, Cylindrical or Soft Case
Battery Package
In this part, we will officially enter the industry. First, let’s start with packaging.
The naming of batteries is often based on the midstream cathode material. Of course, in addition to this naming method, there is another naming method for lithium batteries, which is the packaging process.
The so-called packaging, in simple terms, is to integrate the battery cells into a standardized module to facilitate subsequent use. Then according to the characteristics of the module, the power battery can be divided into two categories, namely “hard case” and “soft case“.
As the name implies, the hard case is to wrap the battery with a hard case such as a steel case or an aluminum case. While the soft case is made of aluminum-plastic film, and the aluminum-plastic film feels more like a mask, which is naturally soft, so it is also called a soft bag.
The hard shell is divided into cylindrical and square, which refers to the shape of the shell. For the specific appearance, you can refer to the figure below:
Common power battery types and packaging materials
Power Battery packaging
↗
↘
Hard shell
Soft case
↗
↘
→
(1) Cylindrical
① Steel shell
② Aluminum case
- Adopt steel shell (18650/21700/4680), also have aluminum shell (32100 of A123)
- Small size is flexible in groups, but large size is not easy to design for heat dissipation.
- Low cost
(2) Square
① Steel shell
② Aluminum case
- In the early days, there were many steel shells, but now most of them are aluminum shells.
- Good heat dissipation, easy to design in groups, and good reliability.
- Dimensional changes require mold opening, which is costly.
- With explosion-proof valve, it is safer.
Aluminum-plastic film
Advantages：
- Aluminum-plastic film is used as the outer packaging, the size can be changed flexibly, and the cost is low.
- High cell weight ratio.
Disadvantages:
- The mechanical strength is poor, and the sealing process is difficult.
- The group structure is complex (the specific energy of the system may not be high), and the heat dissipation design is not easy.
- No explosion-proof device, more suitable for solid-state batteries.
In addition to the different things on the outside, these kinds of processes also have great differences in performance. Generally speaking, the hard case has more mature technology and better safety, but it is not as good as the soft case in terms of energy density. For more specific information, you can refer to the table below.
Advantages and disadvantages of batteries with different packaging technologies
Item | Square battery | Cylindrical battery | Soft pack battery |
Advantages | l High package reliability l High security l High system energy efficiency l Higher energy density l The structure is relatively simple, and the expansion is relatively convenient l Large monomer capacity, relatively simple system composition, and good stability l Excellent battery life | l Flexible grouping and low cost l Mature technology | l Flexible size change l High energy density l Light weight l Small internal resistance l Good security |
Disadvantages | l There are many models, and the process is difficult to unify. l The level of production automation is not high, and the differences between monomers are large. l In large-scale applications, there is a problem that the lifetime of the system is much lower than that of the monomer. | l Thermal design is difficult. l Low energy density | l Poor mechanical strength l Sealing process is difficult l Complex group structure l Difficult to design l High cost l Poor consistency |
After a brief introduction, let’s take a closer look at these three processes.
Cylindrical battery
The shape of the cylindrical battery is somewhat similar to the dry battery. It was applied in the 3C field in the early stage, and was then introduced into the power battery category by Tesla.
It is characterized by the small capacity of a single battery and requires more batteries to be used together. Therefore, overall, its material cost is relatively expensive. What’s more, it has higher requirements for the BMS system, that is, the electronic control system.
The most common cylindrical battery is the 18650 battery used by Tesla. Among them, 18 represents the diameter (mm) of the battery, 65 represents the height (mm), and 0 represents the same column.
The capacity of an 18650 battery is usually around 3000 milliampere hours (mAh), as the picture below. This is the 18650 battery produced by Panasonic, which is the most common cylindrical battery.
As mentioned earlier, the disadvantage of cylindrical batteries is that the capacity of a single cell is too small, requiring many cells to be used together. So in order to improve this shortcoming, a cylindrical battery called 21700 was born.
The battery of 21700 is larger than that of 18650. So it brings the whole battery system, with the energy density increasing by 20% compared with 18650, and the system cost reducing by 9%.
For more detailed data, you can see the figure below.
18650 VS 21700
Battery model | Specification（mm*mm） | Battery capacity（mAh） | Battery cell mass（g） | Energy Density of Battery System（Wh/kg） | Cost of Battery system （$/wh） | Price of Battery System （$/wh） |
18650 | 18*65 | 2200-3600 | 45-48 | 250 | 171 | 185 |
21700 | 21*70 | 3000-4800 | 60-65 | 300 | 166 | 170 |
Tesla power battery parameters | 20% | -9% | -8% | |||
From these data, it can be clearly seen that the advantages of “big” cylinders. And Musk said a few years ago that 18650 is just a historical accident of Tesla, and 21700 can represent Tesla’s future.
But the adjective “big” is always relative. 21700 is bigger than 18650, but there will be a battery bigger than 21700 behind it, that is 46800.
As a leader in the electric vehicle industry, Elon Musk also admitted that Tesla’s Texas (Texas) factory may skip 2170 and develop 4680 in the future.
Here we will also show you what Tesla’s 4680 looks like. From the picture, we can see that 4680 has been separated from the module, forming the CTC that Tesla is proud of. We will share this part with you in the next part.
In addition to the above advantages, the large single battery also has some disadvantages:
# The first is the cycle life of the battery cell and the decline in the charge and discharge rate. But these shortcomings are actually linked to the energy density. A higher energy density will inevitably affect the cycle life and charge-discharge rate.
Therefore, these disadvantages themselves need to be traded off with energy density. In addition to these trade-off factors, large cylinders are a more customized technology (compared to square shells), so they are weaker in reuse and will not bring too much excess to battery manufacturers.
After talking about the technology, let’s talk about the companies that are currently focusing on large cylinders, namely EVE (Lithium Energy), CATL and LG.
Among them, the relatively ambitious one is EVE (lithium energy). The company plans to double its production capacity in the next year on the basis of the production capacity of 600 million units in 2021.
Square battery
Unlike cylindrical battery that need to be customized, the biggest advantage of square shells is generalization. As we can see from the below picture, it integrates the battery into the square housing.
Because the squares can be seamlessly connected, it saves more space than the cylinder. At the same time, its single battery has a larger capacity. So it needs fewer batteries than cylinders, and the whole system is simpler.
The system is simple, which means that it is easy to expand production for battery factories. The two domestic giants CATL and BYD, relying on the ease of production expansion, occupy a large market share.
From the data in this picture, we can see that the production of prismatic batteries by these two companies accounts for 60% of the China domestic production. It is conceivable that prismatic batteries dominate the country.
Similarly, the simplicity of the system also means greater versatility for car companies. Thus, many car companies have also chosen square batteries, such as BMW, Weilai, SAIC and so on.
After talking about the two hard shell packages, let’s take a look at the soft package. First of all, we look at the loved degree for these three packaging forms at home and abroad.
From this picture, it can be clearly seen that the domestic market prefers the square shape (more than 70% of the market share). While abroad, due to Tesla’s push for cylinders and European automakers’ push for soft packages, the market share of these two packaging forms is significantly higher than that in China.
Why is there such a big difference in the market share of soft cases in China and abroad?
This is because the core structural parts of the soft package ( the layer of aluminum-plastic film on the outside) , is very dependent on imports. At present, Chinese aluminum-plastic films are mostly used in low-end 3C, without breakthrough achieved in the field of power batteries.
The cost of aluminum-plastic film accounts for a relatively large proportion (18%) in soft-pack batteries, second only to positive electrodes and electrolytes. Therefore, the lack of industrial chains has caused soft-pack batteries to remain tepid in China.
However, the pouch battery has its own advantages: high energy density and light weight.
Under the same capacity, the pouch battery is 20% lighter than the aluminum shell battery (square, cylindrical). And under the same size, the pouch battery has 50% more capacity than the aluminum shell battery.
Therefore, once the Chinese substitution of aluminum-plastic film is completed, the market share of soft-pack batteries will also increase significantly. As for the detailed content of aluminum-plastic film, we will share it with you in the following parts.
Finally, let’s know about several Chinese battery factories in the soft package industry.
The first is Funeng, which was jointly developed with Daimler. And the second is AESC, which was originally owned by Nissan and is now acquired by Envision and renamed Envision Power.
This part is over here. In this section, we mainly introduce the packaging technology in the battery.
View from the route, the packaging route of the battery is mainly divided into three types, namely cylindrical, square shell, and soft pack. Among them, the cylindrical technology is advocated by Tesla, and its future trend is the large cylindrical route.
Battery Integration: CTP or Blade
In the last part, we mainly introduced the three forms of packaging. In this part, we will go to two technical routes to explore the mystery of the rise of the two Chinese domestic giants.
As we know before, there are six main paths to reduce the cost of power batteries. With the development of the entire industry today, the space for optimization at the chemical level has become smaller and smaller. So today’s cost reduction is more reflected in the simplification of the design.
Simplification of battery system design
When it comes to simplifying the design, we have to talk about the battery system.
First of all, the smallest unit in a battery system is a “cell”. Multiple cells form a module, and then multiple modules form a battery system (battery pack).
The simplification of the design is to cut off the traditional process of “cell to module and then to the battery system”, cut off the module part in the middle, and directly form the battery system from the battery cell.
The advantage of doing this is not only to save the hardware cost of the module, but also to install more batteries, which greatly improves the space utilization of the battery pack.
Regardless of whether it is ternary or lithium iron phosphate, the hardware cost of the module often accounts for 15% of the total battery cost, so this 15% is the upper limit of the simplified design.
CTP technology
After talking about the general idea of design simplification, let’s look at the simplification ideas given by the two major battery manufacturers, namely BYD’s blade battery and CATL’s CTP.
From the perspective of battery structure splitting and future trends, we will analyze the origin of the design simplification, which is the CTP technology of the CATL’s era.
Look at the abbreviation CTP, you may be confused. But put its full name in front of you, you will immediately get this technology. CTP, the full English name is Cell to Pack, which translates from cell to battery, that is, no module architecture.
CTP is actually a technology platform, not CATL’s patent. For example, BYD, Honeycomb and other companies have used the idea of CTP.
And we now equate CATL with CTP, more because CATL is the leader of this technology.
Of course, in order to achieve Cell to Pack, CATL did not directly cancel the module hardware. It first made the battery cells bigger, and then stacked them into a battery system.
CATL expands the thickness from the original 26.5 millimeters (mm) to 50 to 70 millimeters (mm) while keeping the width of the battery cell unchanged (148mm). This forms a relatively “short and fat” battery. Then use glue and sleeves to fix the cells on the tray.
The so-called sleeve is the part circled in the figure, relying on the structural strength of the pallet to reduce the demand for structural parts. The battery formed in this way has fewer internal structural parts, and the space utilization rate is naturally higher.
The battery formed in this way has great advantages in terms of space utilization, production efficiency and cost. We will not elaborate on the specific values here.
Disadvantages of Simplified Design
We mainly talk about the “disadvantages” here. First of all, it is difficult to maintain.
Let’s take mobile phones as an example. In the Nokia era, the battery of the mobile phone was separated from the body itself. If its battery is broken, we can just replace a battery board. But in the iPhone era, the battery is highly integrated with the body, and we can only send it back to a professional repair point for repairs.
This is true for mobile phones, and so is for cars. In the past, if a certain battery cell was broken, the car factory only needed to replace the module. Now it is necessary to repair the entire battery pack. The difficulty must increase geometrically.
The increase in maintenance difficulty also leads to the second problem, the consistency of the battery needs to be further improved. Because the maintenance cost of CTP batteries is much higher than that of traditional batteries with modules, for car manufacturers, unless they see the success of mass production, they will not be motivated enough to implement CTP.
But for CATL, CTP is a move that must be taken. It is not only to reduce costs and increase efficiency, but also to vertically integrate the industrial chain through CTP. In the past, the situation in which OEMs purchased batteries and assembled them into battery packs by themselves will disappear forever.
And due to the increasing difficulty of maintenance, the after-sales, maintenance, and replacement of batteries also need to be bound to themselves. In this way, battery factories will get more say in the dialogue with OEMs.
Blade battery
Now, let’s take a look at the “blade battery“.
Above, we also mentioned that the essence of the power chip battery is also CTP2. Compared with CATL, the width is unchanged, the thickness is increased, and the expansion method of the chunky shape is adopted. BYD elongates the width. Usually, the width of conventional batteries is mostly 148 mm, but the width of the blade battery reaches 900 mm.
The width of nearly 1 meter makes the blade battery flatter. And that is why it is called as “blade”. In addition, BYD adopts the “stacking” process instead of the traditional winding, inserting the “cell” into the battery vertically inside the bag.
A more intuitive example is the following display picture of BYD’s blade battery. Of course, the battery cell in the picture is arc-shaped, mainly for visual effect.
Why use flat blade cells and add stacking technology?
Because this maximizes space utilization. A very simple example: the same box, one filled with rulers and the other with cylindrical objects, which one has the highest space utilization rate? For a more detailed disassembly diagram, you can take a look at this BYD patent diagram, which is actually similar to the physical diagram above.
Whether it is CTP, or blade, or the one-stop battery launched by AVIC Lithium Battery, though with different names, they all reflect the same design concept: increase energy density in a limited space.
Optimizing the size of the battery cell, choosing an integration method with higher space utilization, etc., are all to solve the above method. Therefore, we should not look at these batteries in isolation, but should regard them as a unified design idea.
Now that material progress has become more difficult, structural progress has become more important.
Of course, regardless of the industrial chain, just look at the battery factory, the difficulty of the process has also increased exponentially from with modules to large modules to without modules, which has invisibly increased the threshold of the industry. Thus, the battery factory can become the existence with the highest barriers in the entire industrial chain.
Summary
Before making a summary, let’s contact the previous part. From the previous figure, we can see that the structure without modules is mostly suitable for square shells. Can soft bags adopt such an idea?
The answer is no, because the shell of the soft case lacks support. If the module link is omitted, the overall process will be too difficult.
Well, in this section we mainly learn about the integration of batteries, that is, how to integrate batteries with larger capacity in a limited space.
CATL’s answer is CTP, while BYD’s answer is blade battery.
In fact, the ideas of the two batteries are similar. Utilize the support of the battery pack itself, reduce the module part, and then put in more capacity batteries as much as possible. Of course, CATL uses short and fat batteries, while BYD uses tall and thin batteries.
In addition, the improvement of the integration process is also a reflection of the battery factory’s own moat. On the one hand, it can increase the right to speak with the main engine factory. On the other hand, it can also widen the distance with the second-tier manufacturers.
Congratulations on completing the study of this part. In the next part, we will enter the structural parts of the battery to see what hidden champions there are.
Battery Structural Parts: Invisible Champion & Domestic Substitution
Before starting this section, let’s take a look at the “battery structure diagram” under different packaging technology routes. This diagram is actually a more detailed disassembly of the schematic diagram in our previous course.
It can be seen from this picture that the structural parts mainly support the battery core. They can be divided into the cover plate and the shell in the hard shell, and the aluminum-plastic film in the soft pack.
Now, let’s start the structural parts.
Hard shell
The structural parts of the hard shell are mainly divided into a cover plate and a shell. In fact, the functions of each can be understood from the names.
But we still found the dismantling diagram of the power battery of the Audi Q7e-tron here. You can see that the top housing cover is the cover plate, and the shell is the layer of aluminum plate that wraps the battery cell.
After reading what the structural parts look like, let’s take a look at the protagonist of this section: the products and customers of the structural parts players.
Major Players in the Structural Parts Industry
Participant | Main products | Typical customers |
South Korea Sangsin EDP | Battery structure | Korean local companies, such as Samsung SDI |
Japan FUJI SPRINGS | Precision stamping, precision molds, power battery structural parts | Local Japanese companies, such as Panasonic |
Shenzhen KDL | Lithium battery precision structural parts, automotive structural parts | CATL, LG, Panasonic, BYD, AVIC Lithium Battery, EVE Lithium Energy, Sunwoda, Lishen |
Changzhou RED FAIRY | Top cover assembly, battery case, PACK connection, soft connection inside the battery cell | Panasonic, AVIC Lithium Battery, CATL, EVE Lithium Energy |
Wuxi JINYANG | Cylindrical steel shell, cylindrical cap, square aluminum shell, battery negative tab, connecting piece, etc. | Panasonic/Sanyo, LG, CATL, BYD, Lishen, BAK, EVE Lithium Energy |
Ningbo ZHENYU | Motor core mold, lithium battery case, lithium battery structural parts | CATL |
Suzhou SLAC | Can equipment, cylindrical structural parts | GOTION HIGH-TECH, Xinxiang Shengda |
Shenzhen SHENZHI | Aluminum case, cover plate, metal precision parts, resin precision parts | — |
Dongguan ALI | Power battery equipment, consumer battery equipment, lithium battery structural parts | CATL |
Association of raw materials and structural parts
Now, let’s start the industrial chain. In general, whether it is a soft pack or a hard case, these companies are essentially metal material processing businesses. So for them, profits are directly tied to the price of the commodity.
This point can also be verified by dismantling the costs of several companies.
Whether it is the aluminum-plastic film cover or the shell, the material cost accounts for about 60%. Therefore, their high correlation with commodities has become their first characteristic.
When it comes to high correlation, let’s take a look, which kinds of raw materials have a greater correlation with these structural parts?
Let’s first look at the consumption of raw and auxiliary materials for the cover plate and the shell. And then the aluminum plastic film.
Raw and auxiliary materials and consumption of power battery cover plates and shells (annual output of 140 million covers and 1 billion shells)
NO. | Name | Annual usage | Packing method/specification | Use |
1 | Custom Aluminum Alloy Coil | 25000 tons | 2-3 tons/roll | Aluminum shell, aluminum cover stamping |
2 | Copper | 3300 tons | 1-2 tons/roll | Battery positive and negative |
3 | Steel | 50t | / | Mold processing |
4 | Pole | 20t | 25kg/box | Spare parts |
5 | Rivets, screws | 20t | 25kg/box | Spare parts |
6 | PP plastic | 90t | 100kg/bag | Plastic parts raw materials |
7 | Hydrocarbon cleaner | 5 barrels | 200L/barrel | Product cleaning |
8 | Alkaline environmental cleaning agent | 600t | 25kg/drum | Product cleaning |
9 | Lubricant | 85 barrels | 18L/barrel | Devices care |
10 | Stretching oil | 500 barrels | 200L/barrel | Mold rust |
Raw and auxiliary materials and consumption of aluminum-plastic film for lithium batteries (annual output: 120 million square meters)
NO. | Name | Annual usage t/a | Packing method/specification | Use |
1 | Aluminum foil | 2200 | 4000m2/roll | Aluminum plastic film production raw materials |
2 | Nylon membrane | 2000 | 4000m2/roll | Aluminum plastic film production raw materials |
3 | Modified PP particles | 2000 | 25kg/bag | Cast film raw material |
4 | Aluminum foil treatment solution | 150 | 20kg/plastic bucket | Auxiliary materials for aluminum plastic film production |
5 | Two-component polyurethane glue | |||
In fact, there are many kinds of materials, but the most relevant one is aluminum. Because now aluminum shells have gradually replaced steel shells and become the mainstream in shells. Therefore, when we look at these companies, the trend of aluminum prices also needs to be paid attention to.
But it should be noted that the pricing model adopted by these companies is often a cost-plus method. Let’s take Kodali as an example. The price sold to the downstream is the price of aluminum ingots plus processing fees. So to a certain extent, it can reflect the price of aluminum.
However, if the aluminum price rises too fast and the company’s inventory strategy deviates, it will affect the company’s profits.
CTP is to integrate the battery cells into the PACK box. In addition to CTP, Tesla also has a technology called CTC, which integrates the battery cells directly into the chassis of the car. In fact, the idea is almost the same.
So what impact does this design of skipping modules have on structural parts?
In fact, such a design idea is beneficial to the structural parts of the battery cell. Because there are no modules, and there are higher requirements for the support of the battery shell.
At the end of the hard shell structure part, the display of the cover and shell manufacturing process is more about popular science. And it may not be so helpful for specific investment.
Aluminum-plastic film of the soft shell
After understanding the structural parts of the hard shell, let’s take a look at the aluminum-plastic film of the soft shell.
As for many structural parts, I personally think that aluminum-plastic film is relatively notable. Because aluminum-plastic film may be the link with the lowest localization in the power battery industry chain, and no company has achieved batch-level shipments.
This situation reminds me of diaphragms before 2018, when most diaphragms were imported.
Before talking about the industry, let’s look at the needs of the industry. The downstream of aluminum-plastic film is mainly used in three directions, consumer electronics, power batteries and energy storage.
It can be seen from the demand calculation chart that the annualized demand for aluminum-plastic film will remain above 25% in the next five years. And the fastest growing among the three major demands is the power battery business. Therefore, in the next few years on the aluminum-plastic film battlefield, those who win the power battery will win the world.
Forecast of global demand for aluminum-plastic film in the next five years
2020 | 2020E | 2022E | 2023E | 2024E | 2025E | |
Power Battery | ||||||
Installed capacity (GWh) | 190.5 | 265.6 | 377.2 | 521.0 | 684.2 | 873.6 |
Soft pack permeability | 12.0% | 15.0% | 18.0% | 20.0% | 22.0% | 25.0% |
Soft pack battery demand (GWh) | 22.9 | 39.8 | 67.9 | 104.2 | 150.5 | 218.4 |
Unit consumption of aluminum-plastic film (million square meters/GWh) | 1.5 | 1.5 | 1.5 | 1.5 | 1.5 | 1.5 |
Aluminum-plastic film demand (million square meters) | 34 | 60 | 102 | 156 | 226 | 328 |
Energy Storage Battery | ||||||
Installed capacity (GWh) | 19.0 | 32.8 | 55.5 | 78.7 | 108.1 | 167.5 |
Soft pack permeability | 10.0% | 11.0% | 12.0% | 13.0% | 14.0% | 15.0% |
The demand in the industry is advancing by leaps and bounds, but the supply may not be able to keep up at all. At present, the global aluminum-plastic film industry is mainly controlled by Japanese and Korean manufacturers, while the enthusiasm of overseas manufacturers to expand production is very low.
Facing the inflated demand, their efforts are mainly to shift the 3C products with lower profits to power battery products with higher profits. Such a turn has also promoted the domestic manufacturers’ siege in the 3C field over the past few years.
Of course, the above discussion is biased. Let’s turn to the specific data. According to the statistics, the annualized production capacity of the two leading Japanese companies is only about 200 million square meters.
But as we have seen in the previous table, the global demand for aluminum-plastic film will be close to 400 million square meters by 2022 (conservative). So a large part of the incremental space must be reserved for Chinese domestic companies that are more willing to expand production Manufacturer’s.
But the biggest highlight of the industry is still power batteries. At present, Chinese domestic brands are very willing to expand production. However, only two companies have entered the verification stage of downstream battery factories, namely Selen Technology and Zijiang Enterprise.
Selen mainly acquired Japan’s T&T in 2016, and its technology is relatively stable. Then in 2021, there was news of supply talks with the soft bag giant LG, and of course it stopped at the news.
As for Zijiang, according to industry research, the quality of power battery products is even higher than that of Selen. It is mainly supplied to Funeng, a traditional domestic soft package company, and is being verified by BYD. So for Zijiang, it is necessary to pay attention to the progress between the company and BYD.
The making process of aluminum-plastic film
Now, let’s look at the making process of aluminum-plastic film, which is more important than the hard shell above. Because for Chinese domestic aluminum-plastic film, there is a lack of materials rather than equipment. In contrast, the battery separator industry is a typical lack of equipment and materials.
The bottleneck for the material is the adhesive. This material can be simply compared to glue, which is to glue the various parts of the aluminum-plastic film together. This glue is prepared by each manufacturer, so the formula has become the core technology.
Aluminum plastic film production process
Send coated substrate
(aluminum foil or aluminum foil already laminated with first side material)
↓
Surface Treatment & Self-Dispensing Adhesives
↓
Coating
↓
Baking
↓
Heat Treatment
(nylon film, polypropylene film or PET)
↓
Send lamination film
↘
↙
Lamination
Rolling
Curing
Slitting
Inspection
But for the industry, the material is currently the bottleneck. Because most of the domestic battery factories specialize in the production of hard shells, with less effort on soft packs. With the increase in investment in the soft package industry chain in the future, we believe that the problem of lacking materials can be solved.
Summary
The structural part is mainly the layer of material around the battery core, which acts as a support.
Most of structural parts are in the business of processing metal materials. Although many companies use the cost-plus method for pricing, if the bulk commodities fluctuate violently, it will also have an impact on the company’s profitability.
In addition, the trend of no modules definitely requires higher strength structural parts, which is good for existing structural parts manufacturers.
In the structural parts, we focused on the aluminum-plastic film in the soft case, because this product has not yet been localized. The products of most domestic manufacturers only stay at the 3C level, and have not yet reached the level of mass shipments in power batteries.
On the one hand, the soft case technology is neglected in China. On the other hand, there is a large gap in technology, which has not yet reached the level of Japanese counterparts. Therefore, we pay more attention to the “sampling” situation of the aluminum-plastic film companies, and the progress between Zijiang and BYD is particularly worth tracking.
In the next section, we will explore if the battery with large-scale expansion can make up for the price.
Expansion of Production: Make Up the Price by Quantity
This section is the last one of our series. Let’s discuss the expansion of the battery factory.
For all manufacturing industries, there may be a mismatch between supply and demand in the short term due to the different cycles of each link. But if the time is extended, the production capacity must be relatively surplus, so “surprising the price with quantity” has become the eternal theme of the manufacturing industry.
At the beginning of the part, let’s took a look at the expansion plans of battery manufacturers.
Industry concentration has increased significantly since 2008
NO. | Company | Capacity at the end of 2020/GWh | Capacity after expansion/GWh |
1 | CATL | 65 | 650 |
2 | LG new energy | 120 | 260 |
3 | AVIC lithium battery | 20 | 300 |
4 | EVE Lithium Energy | 20 | 212 |
5 | SKI | 29.7 | 100 |
6 | BYD | 65 | 195 |
7 | REPT | 8 | 164 |
8 | Panasonic | 50 | 160 |
9 | Farasis Technology | 13 | 160 |
10 | Envision AESC | 7.5 | 141 |
11 | SVOLT | 8 | 200 |
12 | Northvolt | 6 | 126 |
13 | GOTION HIGH-Tech | 18 | 100 |
14 | Sunwoda | 10 | 96 |
15 | Juchuang Energy | / | 56 |
We can see that CATL, which tops the expansion list, only has a production capacity of 65GWh at the end of 2020. But after the planning is realized, the “10 times” was completed directly after the existing production capacity. Similarly, there are also domestic manufacturers such as AVIC Lithium Battery and Yiwei Lithium Energy who have called out the 10-fold production capacity plan. Then why do so many battery manufacturers choose to start their 10-fold production expansion journey at this point in time?
The main reasons for that are:
Battery manufacturers believe that there is less uncertainty in expanding production at this time. Because the cost of battery cells has dropped significantly in the past ten years, and has gradually entered the bottleneck, there is not much room for decline. In addition, the energy density of batteries has also stagnated at the chemical level.
It is also the stagnation at the chemical level, so the integration technology at the physical level is particularly important.
Except for the period of technological stagnation. In the face of the tide of production expansion, every company has fallen into a “prisoner’s dilemma”. At this time, expansion has become the optimal solution for each company. As for why it has fallen into a “prisoner’s dilemma”, you can see this picture.
Nash Equilibrium of Battery Industry Expansion
A No Expansion | A Expansion | |
B No Expansion | A earns 50 B earns 50 | A earns 100 B earns 0 |
B Expansion | A earns 0 B earns 100 | A earns 40 B earns 40 |
Therefore, we can know the reason why the industry leaders have repeatedly thrown out huge production expansion plans:
On the one hand, it is optimistic about the industry itself. And on the other hand, it also deters competitors.
After discussing the industry with a 10-fold expansion and why expanding production at this time, we selected the industry leader, CATL to explore what his road to expansion is like.
Starting from 2020, CATL’s production capacity has almost doubled a year, and in addition to the old production areas of CATL, new production areas have been established in Chinese province: Jiangsu, Sichuan, Guangdong, and even overseas. The model of the production area is convenient for further expansion of production in the future.
CATL’s output in 2020 is only 50GWh, by 2021 there would be more than 140 GWh, and in 2022, there would be more than 200 GWh.
It can be seen that in the face of the release of production capacity, the manufacturing industry with heavy asset expenditure has great flexibility.
In addition to paying attention to output, we also need to focus on the gross profit margin of the battery factory.
Why do you think CATL’s second quarter report exceeded expectations?
Because CATL’s gross profit margin remains stable despite the sharp rise in raw material (lithium) prices, this proves to the market that battery factories have strong bargaining power and can go through cycles.
Of course, the current market value of CATL is already very large. What’s more, a large part of the valuation of energy storage has been included. What deserves more attention may be the few battery factories left in the head. As for how to choose, let’s take our first two indicators, one is the expansion plan, and the other is the stability of the gross profit margin.
Now, let’s take a look at the changes in CATL’s downstream users in the past two years. The most obvious difference is that Tesla has been introduced, and the top two Chinese domestic players (Nio and Xiaopeng) have continued to exert their strength.
Of course, when CATL continued to expand its customers, there were also negative cases, that is Panasonic.
Panasonic has been single-pressing Tesla for a long time, so after Tesla introduced LG Chem and CATL in 2020, Panasonic’s share has been continuously diluted. And because it has been bound to Tesla for a long time, Panasonic has no desire to expand its technology and has been “sticking to “Cylinder route, which also brings certain risks to the operation.
Therefore, the examples of CATL and Panasonic also prove to us that it is very necessary to broaden customer channels. The richer the customer structure, the more resistant to cycles.
Unlike components in photovoltaics, the pack link in batteries is very technically difficult. The difficulty lies in that it needs to coordinate a lot of processes.
After the battery factory accepts the midstream materials, they need to mix the ingredients. This process is very complicated, because in addition to the correct ratio, the materials need to be stirred into a slurry by a vacuum mixer to facilitate subsequent coating. Coating is actually coating the slurry on the copper foil, and then cold pressing and slicing. The focus of this step is to control the burr and prevent the separator from being pierced. Then it is wound or laminated (blade battery) to form the most primitive battery. Next, it is baked, and the electrolyte is injected to activate the cell. And finally it is packaged into a module.
It can be seen from the above description that it is indeed not an easy task to prepare a battery with high consistency and cost performance. This is the core of the valuation of battery factories that is significantly higher than that of other manufacturing industries.
Well, this series of China Lithium Battery is over here, and here is a brief summary :
In this series, we are studying battery factories. From the perspective of production capacity, most domestic manufacturers have launched huge expansion plans, often tenfold. And why do they all choose to expand production at this time:
(1)The power battery has fallen into a bottleneck at the chemical level, and it is more likely to focus on integration in the future
(2)After years of cost reduction, the power battery has already achieved economic benefits without relying on the goverment’s subsidies.
The most representative company in the industry is “CATL”. CATL’s valuation already includes a part of energy storage, so the logic is different from ordinary power battery factories. Here, we draw more from Ningwang to analyze what is a good battery factory:
- First of all, the production capacity must be increased quickly.
- Secondly, the gross profit margin is stable. The extreme rise in lithium prices can be regarded as a rare stress test.
- Thirdly, have the ability to go through the cycle.
The preparation process of a battery is precisely because of the complexity of the process, so the battery factory is not able to do what it wants, and the natural valuation is higher.