Medium-Nickel High-Voltage Lithium Battery, a New Solution to Cost Control?

SHANGHAI, Jan 31 (SMM) - From the perspective of the industry's competitive environment, subsidies for new energy vehicles were officially removed by the end of 2022. With the boom of industry demand, the prices of upstream raw materials have been soaring rapidly in the past two years. Specially, the prices of lithium salt, required for cathode active materials, once approached 600,000 yuan/mt from merely several tens of thousands of yuan per tonne, which made it increasingly difficult for midstream material factories, downstream battery factories, and automobile factories to control the cost. As demand for cost reduction has become increasingly urgent, the medium-nickel high-voltage lithium battery has become a new trend. By increasing the voltage platform, the energy density is comparable to the 8-series NMC battery, while the safety performance is more outstanding, leading to great cost effectiveness. The drastic fluctuations in raw material prices have prompted battery factories to pay more attention to this once "transitional product" far beyond market expectations. .

So far, the medium-nickel high-voltage battery market has clearly developed into two camps. Among them, ternary cathode material enterprises mainly serving CATL have launched 65XX and continued to upgrade, with a relatively stable market position; while others now focus on iterating 6XX products, betting on the high growth potential of emerging power battery customers in the future, such as Sunwoda, EVE Energy, Tafel, etc.

Judging from the profit model, the CATL camp adopts tolling production, which helps the cathode active material suppliers to rapidly increase its market share and accumulate mass production experience. The risk of cash collection is low. However, since both precursors and lithium salts are provided by customers like CATL, the profit margin of suppliers have been falling. Without the independent control of raw materials, the material suppliers could hardly obtain substantial profits and rely heavily on a single customer. The non-CATL camp does not favour the tolling manufacturing model. The profit margin of cathode active material suppliers is relatively great. Moreover, the production capacity planning of emerging power battery factories is very active, and the future growth potential is great. The sooner the suppliers establish long-term cooperation, the more likely they will gain a certain first-mover advantage. However, from the perspective of cash flow, without supply of raw materials from battery companies and mature supply chain management, the profit will change greatly with the fluctuation of raw material prices, and the payment period is relatively long.

For new entrants in the medium-nickel high-voltage market, SMM believes that it is a realistic and effective choice to increase the market share by striving for in-depth cooperation with top customers like CATL in the early stage. Although it is difficult to earn excess profits at the beginning, the advantages of rapid increase in share, relatively healthy cash flow, and technology accumulation are quite obvious. After the transitional period, with the accumulation of technology, financial strength, and client pool, it is expected that they will be able to optimise the customer structure, and jointly research and develop with new customers to achieve more profits.