Economic Observation Network reporter Pu Zhenyu
Since the beginning of this year, power battery companies have generally fallen into the dilemma of revenue growth but profit decline. Recently, five A-share listed power battery companies have successively released their first-quarter financial reports. According to the financial report, the revenue of CATL, Guoxuan Hi-Tech, Xinwangda, Yiwei Lithium Energy, and Funeng Technology have all maintained growth momentum, and four of them have increased by more than 100% year-on-year.
The revenue growth is not surprising to the outside world, but behind it is the blowout of demand in the electric vehicle end market. While the revenue generally increased, the profits of the five companies in the first quarter all declined, and Funeng Technology was even at a loss.
In response to the decline in net profit, Jiang Li, deputy general manager and secretary of the board of directors of CATL, responded in an investor conference call that since 2021, the price of upstream raw materials in the new energy industry has increased rapidly, and the industry’s battery cost pressure has gradually increased. In order to maintain the healthy and sound development of the new energy vehicle and power battery industry, CATL was very cautious in price, and chose itself to bear the pressure of rising raw material prices in the early stage.
Yiwei Lithium Energy also mentioned in the financial report that “under the premise that the price of upstream materials has risen sharply and the operation is facing huge pressure, the company, as a backbone enterprise in the industry, has not adopted a radical price strategy.” At the recent Electric Vehicle 100-person Forum, Zhang Feng, senior vice president of Funeng Technology, also said, “The life of battery companies has been very difficult recently, mainly due to the increase in raw material prices.” In addition, Sunwoda executives also said at the performance briefing that the current increase in the price of upstream raw materials for power batteries is an industry problem.
Since April, although the upward trend of raw material prices has been curbed to a certain extent, the prices are still at a high level. In the face of continuous pressure, more and more power battery companies have begun to transmit more pressure on raw material costs to downstream OEMs. However, this is only a measure with limited effect, not a long-term solution.
Mixed results
The financial report shows that in the first quarter of this year, the total operating income of CATL was 48.678 billion yuan, a year-on-year increase of 153.97%; Xinwangda’s operating income was 10.62 billion yuan, a year-on-year increase of 35.11%; Guoxuan Hi-Tech’s operating income was 3.916 billion yuan, a year-on-year increase of 203.14% %; Yiwei Lithium Energy’s operating income was 6.733 billion yuan, a year-on-year increase of 127.69%; Funeng Technology’s operating income was 1.529 billion yuan, a year-on-year increase of 317.09%.
Revenue growth depends on strong downstream demand. According to data from the China Automotive Power Battery Industry Innovation Alliance, in the first quarter of this year, my country’s power battery output was 100.6GWh, a year-on-year increase of 206.9%; power battery sales were 65GWh, a year-on-year increase of 172.6%. ; The installed capacity of power batteries was 51.3GWh, a year-on-year increase of 120.7%.
From the perspective of market ranking, in the first quarter of this year, CATL ranked first in China with a loading volume of 25.51GWh, with a market share of 49.75%, Guoxuan Hi-Tech ranked fourth with a loading volume of 2.57 GWh, Yiwei Lithium Energy , Funeng Technology and Xinwangda ranked seventh, eighth and ninth respectively.
At the same time of increasing revenue, none of the five battery companies achieved profit increase. In the first quarter of this year, CATL’s net profit attributable to shareholders of listed companies was 1.492 billion yuan, a year-on-year decrease of 23.62%; Xinwangda’s net profit attributable to shareholders of listed companies was 94.9232 million yuan, a year-on-year decrease of 26.13%; Guoxuan Hi-Tech attributable to listed companies Shareholders’ net profit was 32.2037 million yuan, down 32.79% year-on-year; Yiwei Lithium’s net profit attributable to shareholders of listed companies was 521 million yuan, down 19.43% year-on-year; Funeng Technology‘s net profit attributable to shareholders of listed companies was a loss of 244 million yuan.
The direct reason for the decline in profits is the pressure on the price of raw materials. The data shows that from the beginning of 2021 to March this year, the average price of cathode ternary lithium materials has risen from 124,000 yuan/ton to 368,000 yuan/ton, an increase of 196.8%; the average price of lithium iron phosphate materials has soared from 40,000 yuan/ton. To 162,000 yuan / ton, an increase of 305%; the average price of ternary lithium battery electrolyte increased by 146.2%; the average price of lithium iron phosphate battery electrolyte increased by 190.2%.
The price changes of each of the above-mentioned raw materials will significantly affect the cost of power batteries. Ma Xiaoli, deputy secretary-general of China Automotive Power Battery Industry Innovation Alliance, said that according to the industry average, cathode materials account for 40% of the cost of power battery materials, anode materials account for 15%-20%, films account for 15%-20%, and electrolytes account for 15%-20%. It accounts for 15%, and other materials such as adhesive account for about 10%.
short-term price increase
In order to alleviate the urgent need of high raw material costs, more and more power battery companies have begun to announce product price increases since the second half of last year.
Jiang Li said: “It is true that the growth rate of (raw materials) has been too fast and too strong this year, which has far exceeded the reasonable price level. In the Ningde era, we had to conduct friendly negotiations with major customers and come together to face the pressure of the supply chain. Dynamically adjust prices.”
Yiwei Lithium Energy also announced that it has conducted price discussions with major customers and reached a consensus. Sunwoda also stated that according to different customers, projects and product structure, the price has been adjusted accordingly, and the rate of increase refers to the level of leading companies in the industry. Zhang Feng, vice president of Funeng Technology, said at the forum of 100 people of electric vehicles that Funeng Technology also conducted a second round of consultations with customers, hoping to share the increase in raw material prices with customers.
Why has the net profit of power battery companies still declined significantly in the first quarter even though the price increase has been announced? Bai Yiyang, manager of the research department of CMB International and an analyst in the automotive industry, said that power battery products have a price adjustment cycle. Like the Ningde era, it should be the second quarter of this year that the price will increase on a large scale, so the cost in the first quarter is still affected by the price of raw materials. The obvious impact of rising.
But price increases are not a long-term solution for power battery companies. In January and March of this year, in order to release the cost pressure on materials such as batteries, OEMs have launched two rounds of “price increases” for electric vehicles, and more than 40 models have increased their terminal prices in the market. The highest price increase is over 30,000 yuan. The “price increase” will increase the cost of consumers to buy a car and discourage their car buying.
In addition to affecting the enthusiasm of consumers, the effect of the power battery price increase measures itself is actually limited. In Bai Yiyang’s view, the current expansion of battery factories is relatively aggressive, and many car companies have gradually formed a multi-supply system for batteries. Therefore, the bargaining power of battery factories has weakened compared with the past. Therefore, the pressure on raw material costs is not expected to be fully transmitted to car companies. Battery factories will still take part.
Long-term layout upstream
The direct reason for the soaring price of raw materials for power batteries is the relative shortage of upstream supply. The industry generally believes that the relative shortage of supply is not only related to the outbreak of downstream demand, but also to the hype of some upstream traders and even raw material manufacturers.
Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers, said, “This round of raw material price hikes is unconventional, deviating from the normal supply and demand relationship, and is an irrational increase. There are hype parties who are hoarding and deliberately driving up prices in order to seize the last window period before lithium production capacity expansion. and other acts of unfair competition.”
And many power battery companies, in order to avoid being “squeezed” by upstream companies, choose to strengthen their layout in the upstream of the industrial chain to ensure the supply of raw materials and enhance their voice in the upstream.
In April 2021, Ningde Times announced that it would take a stake in the copper-cobalt ore project of China Molybdenum Industry Co., Ltd. in Congo (DRC). In September 2021, CATL announced that it had reached an agreement to acquire Millennial Lithium, a Canadian lithium mining company, which owns a salt lake of more than 10,000 hectares in Argentina. In April this year, Yichun Times, a subsidiary of CATL, purchased the exploration rights for ceramic soil (including lithium) in the Jianxiawo mining area of Fengxin County, Zhenkouli, Yifeng County, Jiangxi Province.
Not only the Ningde era, but other power battery companies are not to be outdone in terms of “mining”. In July 2021, Yiwei Lithium Energy announced that its controlling shareholder would acquire a 29% stake in Dahua Chemical, which holds the mining rights of Dachaidan Salt Lake. In March this year, Guoxuan Hi-Tech announced that it plans to invest in the construction of a production base for upstream raw materials and battery recycling projects of power lithium batteries in Feidong, with a planned total investment of 12 billion yuan.
However, upstream layouts such as “mining” did not work quickly. “We have been working hard on the layout of the supply chain, including long-term (long-term) agreements (negotiations) with upstream companies, joint ventures and cooperation, etc. However, on the one hand, due to the development and mining of mineral resources that take a certain amount of time, on the other hand, we are also Our own power battery shipments are growing very fast, so (currently) it seems that we are still somewhat affected.” Jiang Li said.Return to Sohu, see more
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