SMM analysis: September saw a gradual increase in NEV and energy storage demand, with battery cell production up 8% MoM

In September 2024, China's battery cell production was 126.8 GWh, up 8% MoM, up 48% YoY.
By material, China's ternary battery production was 33.97 GWh, up 3% MoM, up 40% YoY, with a cumulative YoY increase of 30%. Meanwhile, LFP battery cell production reached 87.10 GWh, up 10% MoM, up 56% YoY, with a cumulative YoY increase of 31%. SMM expects China's battery cell production in October 2024 to be 133.4 GWh, up 5% MoM, up 60% YoY.
Demand side, by market:
1) NEV market: Since August, policies on car trade-ins and car retirement subsidies have intensified, along with the launch of new cars by car makers and autumn auto shows, boosting overall car sales and driving September car sales to new highs. During the Golden Week, NEV orders continued to rise, with future sales expected to grow, potentially boosting power battery sales. However, the car market price war continues, with transaction prices showing a downward trend. LFP battery cells, with higher cost performance, are expected to continue gaining market share from ternary battery cells, with growth faster than ternary cells.
2) Energy storage sector: In September, energy storage battery cell production and sales continued to grow. In terms of orders, due to some energy storage projects approaching grid connection periods, domestic demand for energy storage battery cells increased; at the same time, overseas demand for industrial and commercial energy storage gradually grew, driving a recovery in global energy storage battery cell demand in September. Regarding energy storage battery cell production, due to the actual order recovery in September and optimism about traditional grid connection periods in the fourth quarter, this month's energy storage battery cell production continued to grow, with stockpiling for the upcoming peak season.
Future expectations: From the cyclical perspective of the energy storage industry, the end of the year is a rush installation period for domestic energy storage projects, with the concentrated procurement period for energy storage battery cells in early Q4, expected to drive energy storage battery cell production and sales to peak during this phase. The NEV sector is similar, with the end of the year being the traditional sales peak for NEVs, with power battery cell sales expected to reach a peak around November, after which sales will begin to decline. Currently, power battery cell production is scheduled based on sales planning to maintain inventory levels within a safe range, and production is expected to continue rising driven by orders.