In 2017, a more than 20% reduction in the price of power batteries became almost inevitable. However, under the condition of maintaining profitability, how to achieve this goal has become a pressing issue for power battery companies. This article draws attention to this matter, referencing the URL: http://.
With the inclusion of new energy development in the 13th Five-Year Plan, the rapid growth of the new energy vehicle industry has brought immense opportunities to the power battery sector. Industry forecasts suggest that the production of new energy vehicles could exceed 800,000 units in 2017. In the long term, the global new energy vehicle market is expected to continue growing rapidly over the next decade.
The cost reduction of power batteries is becoming increasingly urgent. The surge in new energy vehicle sales has led to the rapid development of the power battery industry, creating strong demand for upstream materials, which has provided growth opportunities for the entire industrial chain.
Currently, China's power battery companies hold a leading position in the global market, with their market share expanding significantly. Data from 2011 to 2015 shows an increase of 15 percentage points, and it is predicted that the market size will reach 500 billion yuan between 2016 and 2020.
As the core of new energy vehicles, high-performance power battery technology is crucial. If significant breakthroughs are not made, it could hinder the expansion of the new energy vehicle market. Presently, power battery technology faces challenges such as long life, low cost, high load capacity, and the ability to work under harsh conditions, along with the need for high energy density and fast charging capabilities.
Cost reduction remains a key factor in driving the growth of power batteries. The industry expects the battery price to drop below 1 yuan/Wh by 2020. This cost reduction has also spurred advancements in battery materials. However, regardless of circumstances, power batteries must first achieve "cost off" to enable mass promotion.
Power batteries must overcome the challenge of cost reduction. Currently, new energy vehicles rely heavily on policies, resulting in higher prices compared to traditional fuel vehicles. Even with subsidies, the terminal price remains relatively high.
The rising cost of raw materials, including cobalt, nickel, copper, and lithium carbonate, has placed pressure on power battery companies. These rising costs have become a significant obstacle to achieving cost reductions. Some industry insiders point out that the rampant speculation in raw materials markets has exacerbated this issue. Ensuring that supply and demand dictate pricing levels will help alleviate these pressures.
Fortunately, improvements in power battery technology have driven progress in the new energy vehicle industry. Due to policy influences, the battery routes for new energy vehicles have largely been decided, and technological innovation is becoming the primary focus for power battery companies.
Battery technology advancements, combined with large-scale production, have led to increasing energy densities while reducing costs annually. Data indicates that energy density has doubled in the past five years, and costs are expected to decrease to 1 yuan per watt-hour by 2020. While ambitious, this target drives power battery companies to strive towards it.
For the cost of batteries to reach parity with traditional internal combustion engines, the equivalent cost would need to drop to around $100/kWh, making new energy vehicles competitive in price. Achieving this goal, however, remains challenging in the short term.
To reduce costs, power battery companies must focus on scaling production and standardization. Recently, the government has adjusted the production capacity threshold for power batteries from 8GWh to 4GWh. This measure aims to address the overcapacity issue and accelerate cost reductions through economies of scale.
According to Zhao Xuelin, CEO of Tuxintian Robot Technology Co., Ltd., market and policy changes have impacted battery company profits, prompting them to adopt strategies like product standardization, production automation, and enhanced management. These efforts aim to control costs effectively.
Standardizing production has emerged as a critical method for reducing costs. "Once scale is achieved, research and development costs and manufacturing expenses can be distributed, leading to cost reductions," Zhao explained. Current domestic battery standards remain unclear, posing risks for scaling operations.
"Widespread adoption of standardized PACK modules can reduce design and after-sales costs, improve battery recycling rates, and maximize the residual value of retired power batteries," noted Wu Yang, Deputy General Manager of Henan Lixiang Power Technology Co., Ltd. Integrating battery control systems with vehicle controls can also lower PACK costs.
It’s notable that the current general product completion rate in the power battery industry is less than 80%. Enhancing production yields is another viable approach to cost reduction. Consequently, battery companies need to adapt their products and technologies, even undergoing comprehensive upgrades to their production lines.
"One way is to enhance production capacity through technological advancements under fixed raw material costs. For smaller battery companies, focusing on R&D and improving product qualification rates is an effective cost-cutting strategy," Wu Yang emphasized. Streamlining transaction processes and reducing transaction costs is another pathway.
Improving personnel skills, equipment precision, automation, and raw material purity and consistency are fundamental to boosting yields. For instance, the domestic production rate of 18650 power batteries typically exceeds 80%, but considering matching rates, it might fall to 3-5% lower. Foreign battery cores usually surpass 95%, highlighting the gap.
The need to enhance battery yields is evident. Accelerated transformation of power battery production lines is driven by technological advancements, market demands, and evolving product performance requirements. Some firms have had to modify their lines due to shifting policy trends, impacting the industry significantly.
Policy formulation plays a vital role in guiding the direction of power battery companies. Consistent policies that align with industry needs can stabilize development and reduce costs. For example, BYD announced plans to spin off its power battery division, while SAIC Group and CATL have invested billions in new energy vehicle batteries.
Joint ventures among power battery companies can extend industrial chains and improve product compatibility. Advances in energy density, lifespan, safety, and reliability are expected to address cost concerns effectively in coming years.
In conclusion, overcoming cost barriers through scaling, standardization, and innovation remains essential for the future of the power battery industry.
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