Forecast and Analysis of China’s Lithium Battery Industry in the Next 5 Years



Forecast and Analysis of China’s Lithium Battery Industry in the Next 5 Years

I. Favorable factors

(I) Unveiling of industry norms and standards

In the recent several years, portable power charger and portable power bank experienced rapid development, the market is brisk, it is supported by extremely wide population groups for application. Since portable power bank has low access requirements, the industry also lacks compulsory execution standards, product quality varies greatly, safety accidents such as spontaneous combustion and explosion of portable power banks are frequent and common. China’s first lithium ion battery compulsory standard –“Safety Requirement for Lithium Ion Battery and Battery Pack of Portable Electronic Products“ formally came into force on August 1, 2015, this standard will facilitate healthy development of lithium battery industry.

In order to strengthen management of lithium ion battery industry, improve industry development standard, guide industry transition, upgrading and structural adjustment, propel continual healthy development of lithium ion battery industry, on August 31, 2015, the MIIT promulgated “Standard Conditions for Lithium Ion Battery Industry”. This document established standards for industrial deployment and project setup, production scale and process technology, product quality and performance, integrated utilization of resources and environmental protection, safety management, sanitation and social responsibility, supervision and management.

(II) New energy vehicle

In 2012, the State Council discussed and approved the “Development Plan for Energy Saving And New Energy Vehicle Industry (2012-2020)” (the “Plan”), clarified the main strategic orientation of electric driving for transition of automobile industry, proposed the vision to promote and popularize non plug-in hybrid power vehicle, and put forward the target of total production & sales of electric and hybrid power vehicles to reach 500,000 sets in 2015, and surpass 5 million sets by 2020. the unveiling of the “Plan” intangibly delineated a giant market contour for core component power battery industry of energy saving and new energy vehicles.

In July 2014, the State Council printed and distributed “Guiding Opinions on Speeding up Popularization and Application of New Energy Vehicles”, which once again emphasized that developing new energy vehicle is national strategy, benefiting from continual growth of new energy vehicle, lithium battery industry embraced another round of development opportunities.

(III) Commercialized and large-scale development of energy storage industry

In June 2014, the State Council released “Action Plan for Energy Development Strategy (2014-2020)”, which for the first time introduced energy storage into national level energy planning, proposed to strengthen coordinated planning of power source and grid, scientifically arrange peak load regulation, frequency regulation, energy storage supporting ability, and effectively solve abandoning of wind power, abandoning of hydropower, and abandoning of photovoltaic power problems.

On June 7, 2016, the National Energy Administration published ‘Notice on Promoting Pilot Work for Electricity Energy Storage to Take Part in Electricity Auxiliary Service Compensation (Market) Mechanism in “Three North” Regions’, which for the first time established the standing of electricity energy storage as independent market entity, clarified the role of electricity energy storage to take part in peak load and frequency regulation auxiliary market service. This time’s new policy will, through perfection of auxiliary service market compensation mechanism, promote acceleration in the commercialized development of energy storage industry.

Energy storage technology provides strategic support to transformation of future energy structure and reform of electricity production & consumption methods. Driven by development and commercialization trend in energy storage technology, as one of the protagonists of new energy industry, power lithium battery will also embrace new opportunities for development. Whereas large-scale development of energy storage industry will facilitate extension and integration of lithium battery industrial chain, urge power lithium battery industry upstream, mid-stream and downstream to dock with capital, synchronize with the market, and fulfill cooperation and win-win.

(IV) Wide application

Lithium ion battery is massively used in mobile phones, notebook computers, electric tools, electric vehicles, backup power for street lamps, navigation lamps, and household small electric appliances, and is arguably the biggest application group. Meanwhile, lithium battery is widely used in energy storage power system such as hydropower, coal fired, wind and solar energy power station, UPS power for postal telecommunication, as well as electric tools, electric bicycles, electric motorbikes, electric vehicles, military equipment, and air and space fields.

II. Unfavorable factors

(I) Poor safety

In the development process of lithium battery, due to different formula of the cathode/anode materials being adopted, there are multiple unsafe problems such as explosion and combustion. On the one hand, incorrect usage method by users will lead to short circuit, which will result in combustion and explosion. On the other hand, lithium ion has very active chemical property, aided by graphite anode, once there is high temperature, it is easy to trigger explosion and combustion, therefore manufacturers usually will install lithium battery protective plate inside the battery, in order to protect battery. However, some miscellaneous brand batteries differ greatly from brand batteries in terms of raw material and assembly technique, the circuit and protective plate being used have poor quality, and therefore tend to develop spontaneous combustion after aging.

(II) Economic environment

In 2015, the global economy recovered slowly, Chinese economic structure experienced diversification, micro variations, and violent turbulence. In 2016, Chinese economy will stay at the bottom. Under the impact of macro economy and national policy, operation risk in downstream application fields of lithium battery industry led to increased risk of bad debt, which may affect industry development.

Furthermore, the lithium battery industry is troubled by repeated investment of capacity, and chaotic competition, such unfavorable phenomena will not benefit the industry’s long-term healthy development.

(III) Foreign-invested enterprises occupied high-end market

Global lithium battery industry is mainly concentrated in China, South Korea, and Japan, compared with industry giants in South Korea and Japan, Chinese enterprises are numerous in number, but their sizes are generally limited. According to widespread market estimate, in the second half of 2016, power lithium battery will reach balance in supply and demand, industry reshuffling is inevitable. As Samsung SDI, LG Chemical and Panasonic one after another set up factories in China, the pressure they brought to domestic power lithium battery manufacturers is self evident. Compared with domestic manufacturers, International giants enjoy considerable advantages in battery’s consistency, stability, and circular service life, and therefore have strong appeal to downstream OEM factories. The massive entry of Japanese and South Korean lithium battery giants into China will also give tremendous boost to lithium battery industrial chain and even domestic new energy vehicle market.

Compared with the other two countries, China’s lithium battery industry lags obviously behind in terms of core technology, 30% above of the entire domestic lithium battery materials are imported. For this reason, the manufacture cost of domestic lithium battery core is very high.

(IV) Environmental protection issue

Lithium battery itself does not create serious pollution, but in its extraction and smelting process, it will generate chemical substances such as Lithium hexafluorophosphate and Poly dipropylene, these substances will contaminate the environment.

Lithium battery has less environmental pollution in comparison with other batteries, therefore few enterprises recycle waste lithium battery. Nevertheless, discarded lithium battery contains massive non-renewable metal resources with high economic value, such as cobalt, lithium, nickel, copper and aluminum etc, if efforts can be made to effectively recycle and treat scrapped or unqualified lithium battery, it can not only reduce the pressure of waste battery on the environment, but also avoid waste of metal resources such as cobalt and nickel.

www.ocn.com.cn gives a forecast on output of China’s lithium ion battery in the period from 2017 to 2021

In 2015, China’s output of lithium ion battery is 5.6 billion pieces, up by 3.1% on Y-o-Y basis. Between January and September, 2016, the output reached 5.24 billion pieces, up by 32.8% on Y-o-Y basis. According to our estimate, in 2017 China’s output of lithium ion battery will reach 7.35 billion pieces, in the next five years (2017-2021) the annual average compound growth rate is about 7.17%, in 2021 China’s output of lithium ion battery will reach 9.7 billion pieces.

www.ocn.com.cn gives forecast on sales income of China’s lithium ion battery in the period from 2017 to 2021.

In 2014, sales income of China lithium battery products is 71.5 billion yuan, up by 21% on Y-o-Y basis; in 2015, sales income is about 92 billion yuan. We estimate that, in 2017 sales income of China’s lithium ion battery industry will reach 123.8 billion yuan, in the next five years (2017-2021) the annual average compound growth rate is about 16.89%, in 2021 sales income of China lithium ion battery industry will reach 231.1 billion yuan.