New energy subsidies extended for 3 years

Uncontrolled lithium battery

The new energy vehicle subsidy policy, which is expected to be announced in July, will further increase the overcapacity in the lithium battery industry.

The “Financial National Weekly” reporter learned from industry sources that the subsidy policy for new energy vehicles will be extended for three years, and the original 25 model cities will be further expanded; the car enjoyment subsidies will no longer be limited by the demonstration urban area, and pure electric vehicles Up to 60,000 yuan / vehicle subsidies remain unchanged, domestic plug-in hybrid new energy vehicles original 3000 yuan / kilowatt-hour subsidy standards are expected to increase.

The subsidy policy has not yet been formally announced. Lithium batteries and raw material production companies have already started to move. With the production capacity already oversupply, a new round of capacity expansion has begun.

China Battery Network CEO Yu Qingjiao introduced that from the end of 2012 to June 2013, due to policy expectations, lithium battery investment continues to heat up, and the current planned investment projects will exceed 5 billion ampere-hour capacity by 2015 .

CCID Investment predicts that in 2015, the power lithium battery will account for 38% of the market share of the lithium battery market, according to the current domestic passenger electric vehicle battery capacity 6000-8000 ampere calculation, can assemble 230,000-300,000 pure electric car .

According to a report released by Frost & Sullivan, the total demand for pure electric vehicles, plug-in hybrid new energy vehicles, and electric commercial vehicles for passenger cars in China was only about 120,000 in 2015, and about 900 million ampere-hours of lithium batteries were needed.

According to some interviewed industry insiders, the subsidy policy will stimulate the Chinese lithium battery industry to run out of danger.

Rapid expansion

In January 2009, the Ministry of Finance and the Ministry of Science and Technology promulgated the Interim Measures for the Administration of Energy-Saving and New Energy Vehicles for the Promotion of Demonstration and Promotion of Financial Aid Funds, which stipulates subsidies of up to 60,000 yuan per vehicle for pure electric vehicles and up to 50,000 yuan for subsidies for hybrid vehicles. / Vehicle.

In a public forum in January 2010, Miao Wei, the then vice minister of the Ministry of Industry and Information Technology, painted a grand blueprint for electric vehicles. By 2015, the country's output will reach 50-100 million units.

In May 2010, the Ministry of Finance and other four ministries issued the "Circular on Launching Private Subsidy for Subsidies for New Energy Vehicles," further clarifying that new energy vehicles will be subsidized at 3,000 yuan/kWh, and the implementation time will be from 2010 to 2012. This year, the pilot cities for the promotion of new energy vehicles and new energy vehicles have increased to 25.

Subsidy policies have stimulated the investment boom in China's lithium battery industry. At present, the planned capacity of the lithium battery industry in China has reached 5 billion amp-hours, which is almost 4-5 times the market demand expected in the next five years.

The potential overcapacity has not attracted enough attention. Some local governments have also added layers to the central government's subsidies in order to cultivate new economic growth points.

On the basis of state subsidies, Hangzhou and Shenzhen have added 60,000 yuan per vehicle to customers purchasing pure electric vehicles. Jiangxi Yichun will refund the income tax of lithium battery companies, and the project loans will be discounted.

As of 2011, only lithium battery anode material production enterprises have reached more than 200, and the production capacity has reached 50% of the total sales of the global market. The expansion of lithium battery separators is even more serious. According to data from the China Electronic Information Industry Development Institute, the production capacity announced in 2011 has reached 477 million square meters per year, which is three times the domestic market demand. The estimated production capacity in 2015 is 1.2 billion. Square meters/year, exceeding the global market demand.

In July 2012, the State Council issued the "12th Five-year Plan for the Development of New Materials Industry." By 2015, the total production and sales of new energy vehicles will exceed 500,000. Under this plan, the lithium battery industry set off another round of investment climax.

Wu Feng, deputy director of the China Battery Industry Association, introduced that lithium-ion battery industry, especially lithium-battery electrolytes, required rapid growth in lithium hexafluorophosphate material production capacity in 2012. In 2011, the global production of lithium hexafluorophosphate was only 4,000 tons, and in 2012, China's capacity alone jumped to 6,400 tons. Some companies have increased production capacity by more than 60%.

In addition, in the field of lithium battery separators that are already in surplus, according to the latest statistics from Asian Chemicals Consulting, there are currently 28 domestically announced enterprises with production capacity of 962 million square meters per year. Based on this, it is expected that the total production capacity in 2015 will reach 2.2 billion square meters per year.

“The lithium battery industry in China has already formed a competition for capacity expansion.” According to Qingchao Education, in the past few years, the investment in battery manufacturing and battery materials industry, including private capital, has not exceeded 300 billion yuan.

However, the development speed of electric vehicles is far lower than government planning. At the end of 2012, when the first round of subsidies lasted for three years, the latest statistical data from the China Association of Automobile Manufacturers showed that the actual production and sales of pure electric vehicles were more than 11,000 and the number of plug-in hybrid vehicles was 1,311. This is a far cry from the cumulative number of over 500,000 vehicles that reached government planning in 2015.

Prisoner’s Dilemma

Observers in the industry recognize that there has been a significant excess of lithium battery capacity. Chen Qiudong, vice president of Bole Investment, said that companies that have entered the power battery industry are now being sentenced to “life imprisonment” and companies cannot see the future.

However, in the view of some investors, only by continuing to expand production capacity and diluting costs can we persist in the moment when the market breaks out. If we do not expand, we must be squeezed by others.

According to industry insiders, China's largest lithium battery material producer Shanshan Iron & Steel Co., Ltd. experienced a 22% year-on-year decrease in net profit from its lithium battery business due to sudden changes in market prices. Subsequently, Shanshan Co., Ltd. launched a large-scale expansion of its capacity. By 2012, the cost will be gradually reduced and the profit growth will be restored.

However, the disorderly expansion of the entire industry will put the whole industry at risk of collapse. Li Zhongdong, chairman of Henan Huanyu Group, said that China's lithium battery companies are facing prisoner's dilemma for industrial competition.

At present, the price of raw material separators for power lithium battery production has dropped from 20 yuan/m2 in 2009 to 12 yuan/m2, a drop of 40%; the international market price for lithium hexafluorophosphate, another raw material, has smashed from nearly 1 million yuan per ton. It fell to 400,000 yuan in 2011 and fell to 250,000 yuan/ton in 2013, a decrease of more than 70%.

Lithium cobalt oxide and lithium carbonate, which account for 80% of the cathode production cost of lithium batteries, have been increased by 13%-20% due to more than 80% of imports.

“The rapid changes in the market have changed the profitability expectations of the initial investment, and the original industry’s high rate of return has ceased to exist, and companies have moved into competition in industry scale and cost. In the case of overcapacity and long-term market expectations, Enterprises must make a decision between withdrawal and expansion," said a person in charge of a large-scale lithium battery material manufacturer in China.

"Withdrawal means that the previous investment is written off, and increasing production capacity will mean lowering the cost and allowing the company to survive." The person in charge of the company stated that if an enterprise in the industry expands production capacity, other companies must also follow the expansion of production capacity. Means losing the original market share. Because of his limited capacity and high cost, his company's net profit fell by about 38% year-on-year in 2012. At present, enterprises are actively expanding their production.

"Over the expansion of the remaining, China's lithium battery industry is re-entering the old path of the photovoltaic industry." Lee Middle East is pessimistic forecasts, in the next 10 years, nearly 300 lithium batteries and related companies, up to 20, of which the vast majority Some will be eliminated.

The continued excitement of China's lithium-ion battery industry has not shown signs of dissipating. The development model of “policy stimulus-capacity expansion-excessive losses-policy rebrring-capacity re-expansion” is still continuing.

In mid-2013, the news of the extension of new energy vehicle subsidy policies spread wildly. Local governments once again set off a new round of policy stimulus for lithium battery investment.

On May 10th, Xinxiang City of Henan Province won the plaque of "China's Battery Industry Capital" awarded by China Light Industry Federation and China Battery Industry Association. Li Qinggui, secretary of the Xinxiang Municipal Party Committee, said, "The government does industry and enterprises make products. Our goal is to strive Become the leader of the same industry in the Central Plains Economic Zone."

On June 6, Yang Shaojun, deputy director of the Shandong Economic and Information Commission, said at the provincial meeting on accelerating the development of energy-saving and new energy automobile industry that by 2015, the sales revenue of new energy vehicles in Shandong Province will strive to reach 100 billion yuan, and pure electric vehicles will Plug-in hybrid vehicle production scale and strive to reach 50,000, by 2020 to reach 200,000.

Zhejiang Province has signed the “Responsibility Document on Conducting Comprehensive Pilot Projects for the Pure Electric Vehicle Industry Technology Innovation” with 5 companies including Dadongnan and Wanxiang Group, and strives to form 50,000 pure electric vehicles and 1 billion ampere-hours of power batteries by 2015. The annual production capacity of the qualified new energy automobile and pipe fittings production enterprises is preferentially recognized as a high-tech enterprise, and the enterprise income tax is levied at a tax rate of 15%.

In line with the enthusiasm of local governments, companies are also buzzing. The recent news is that four companies invested a total of 4.737 billion yuan to expand their existing production capacity.

In the lithium battery industry's madness, Xiao Zhong, a research fellow of China Investment Advisor New Energy Industry Co., Ltd. suggested that relevant state agencies and local governments should control their development speed and scale as soon as possible.