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[SMM Analysis] their respective teams open the new era of new energy vehicle companies to extend the layout of nickel raw materials.
Jul 23,2020 17:44CST
The content below was translated by Tencent automatically for reference.

Recently, Tesla CEO Musk said on the second quarter earnings call: "if you mine nickel efficiently in an environmentally friendly way, Tesla will offer you a huge contract for a long time." As the first echelon of the new energy vehicle industry, Tesla's every move often causes hot discussion in the market, especially in the current period of intensified competition in the new energy vehicle industry, Tesla's proposed layout of the raw material end in advance makes people wonder whether the competition of terminal manufacturers has risen from a simple competition between terminal models and power batteries to the raw material end.

The other side of the battle for raw materials: anxious terminal car companies

This deja vu scene also happened on cobalt and lithium, which are both important raw materials for power batteries. As early as 2014, when the wave of new energy vehicles had started, with the rapid expansion of power battery capacity, the demand for upstream raw materials cobalt and lithium surged, and the supply was gradually tight. As the power battery companies that need these minerals directly as battery raw materials, they began to aim at and buy these "the most important energy metals of the 21st ji". Since cobalt and lithium resources are not abundant in the world, it also means that once the raw material end is locked by competitors, they may face the situation of putting rice into the pot, which is even more anxious for the already competitive battery manufacturers. however, terminal car companies are also anxious.

As a theoretical matching battery factory and automobile, there was also a honeymoon period. In the early years, due to the economy of the industry scale, it was not cost-effective for automobile companies to build their own battery factories. At the same time, in order to better resist market and policy risks, enterprises in the industrial chain also hugged each other for warmth and carried out in-depth cooperation. However, with the decline of policy subsidies and the increase of the scale of competitors, the industry accelerates cleaning, and only a small number of head enterprises can withstand the cold winter through the advance layout of technology and cost. At this time, the control of the overall cost of the car has become the primary task of the major automobile enterprises.

Generally speaking, the battery accounts for nearly 25% of the vehicle cost, if it can be used as a breakthrough to reduce costs, it will effectively enhance the competitiveness of their own models. At the same time, for car companies, in the face of the detached head battery factory, the issue of voice is still part of their anxiety, which makes them want more technology control, supply stability and price say. In this regard, some terminal car companies lay out and stabilize their battery suppliers by buying shares or acquiring battery manufacturers, while others also intend to build their own battery factories to reduce their dependence on battery suppliers and solve the problem once and for all. Therefore, in order to lock their own raw material supply chain, domestic and foreign terminal cars start plans to layout upstream lithium and cobalt ore resources.

Targeting battery vendors: to meet a more fierce hand-to-hand battle

Recently, battery supplier Yiwei LiNeng announced that its subsidiary Hubei Yiwei Power has received a supplier order letter from brilliance BMW, which means that Yiwei Lithium is expected to become the second power battery supplier BMW will cooperate with in the Chinese market after the Ningde era. For BMW, it already has three battery suppliers: Ningde Times, Samsung SDI and Sweden's Northvolt, and will launch a fifth-generation power battery by 2021.

Not only does BMW frequently have large-scale operations, Volkswagen Group also invested 1.1 billion yuan in Guoxuan Hi-Tech, and then locked Wanxiang 123 Co., Ltd. as a new power battery supplier. And Tesla will be the world's top three power battery companies Panasonic, LG Chemical and Ningde era are all included in Tesla's supply chain, industry analysts said that because of supply security and other factors, head car companies in each parts system, will choose at least two suppliers. One family has a problem and the other can quickly make up the supply gap. Nowadays, battery suppliers are scarce resources, so binding with them in advance can also prepare for the electrification strategy of car companies.

The battery layout war among the giants seems to have revealed the coming more brutal competition. According to data, in June this year, the production and sales of new energy vehicles in China completed 102000 and 104000 respectively, up 21.3% and 26.8% from the previous month, down 25.0% and 33.1% from the same period last year. Xu Haidong, deputy chief engineer of the China Automobile Association, said that the obvious decline in new energy vehicles this year is mainly due to the decline in subsidies last year, resulting in a negative marginal effect of manufacturers, that is to say, in a state of loss. Under this year's new subsidy policy, manufacturers may also be in a state of marginal loss. Therefore, manufacturers should adjust their strategies accordingly.

At present, in the new energy car track, there are traditional car companies transforming into new energy, as well as various new car-building forces. At the same time, there are also foreign brands from foreign sha into China, such as Tesla, which coincides with the impact of the epidemic, automobile enterprises are obviously divided, some enterprises are marginalized in the cold winter, and some are even eliminated. With the gradual recovery of the epidemic and the gradual improvement of domestic and foreign demand, after surviving the "battle for survival" in the first half of the year, we may need to usher in a more fierce hand-to-hand battle, from price to technology, from technology to the market. therefore, similar cobalt and lithium resources are important to battery factories, and the protection of battery resources is also a job that automobile companies spare no effort to strive for.

The opening of a new era of cooperation and vertical: the intensity of integration extends the end of raw materials.

Musk's invitation for a "huge contract" issued by nickel miners actually reflects another path of the ternary industrial chain. Car companies directly start with raw material resources to be processed by the factories of the industrial chain, which is different from the traditional nickel intermediate / scrap / nickel bean powder delivered to the smelter, the smelter to the precursor plant, the precursor factory to the cathode material factory, the material factory to the battery factory, and the battery factory to the terminal car company. Automobile companies directly start with the raw material side, and the enterprises in the whole industry may only exist as processing plants, or even some of them will be skipped directly. This precedent can be seen in the former cobalt and lithium.

In June, according to media reports, Tesla plans to purchase cobalt from Glencore, the world's largest metal miner, which will supply Tesla with 6000 tons of cobalt a year under a long-term cooperation agreement. With its purchase of 6000 tons of cobalt, it can either hand over cobalt to battery suppliers to produce batteries or produce its own batteries. Tesla also hopes to take control of battery production in its own hands, combined with a series of moves by Tesla last year to buy battery manufacturers and build companies specializing in the production of single battery equipment.

After cobalt and lithium, the same is true of nickel. Among the many battery raw materials, the role of nickel is very important. The high nickel content of lithium batteries is the future development trend. It is expected that high-nickel and low-cobalt batteries will account for 7% of the total electric vehicle batteries by 2020, and this proportion will increase to 57% by 2030. At present, there is a dispute between lithium iron phosphate and high nickel ternary routes, but with the gradual solution of the safety of high nickel ternary materials, the market demand for ternary materials with high mileage is still considerable.

At present, led by a giant car company, supplemented by a number of battery factories, the battery factory is gradually emerging in conjunction with their respective raw material smelters, and if the car companies directly control the raw material side, it will also greatly increase its bargaining power over battery costs. In the increasingly fierce competition, there are more advantages for the ability of cost optimization, which also means who can lead the integrated market.

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