Scrambling for overseas supply chain: holding hands with German chemical giant Chinese battery companies to build European factories in Ningde era

In the context of the continuous increase in the permeability of new energy vehicles around the world, the number of power batteries has ushered in a rapid growth. In the first half of 2021, the global installed capacity of power batteries reached 114GWhh, an increase of 154% over the same period last year. The market predicts that the global installed capacity of power batteries will exceed that of 1TWh in 2025.

In the face of the strong global demand for power batteries, Chinese battery companies have accelerated the pace of going out to sea. A number of domestic power battery manufacturers, including Ningde Times, Guoxuan Hi-Tech and Honeycomb Energy, have announced the construction of battery factories overseas.

"this is an inevitable trend, and it is also a move for Chinese battery factories to expand globally." Wang Rongjin, a partner at Shanghai Jinbang Equity Investment Management Company, said that due to factors such as transportation costs, supply time and exchange rate, building overseas factories has gradually become an important means for overseas layout of Chinese battery companies.

Local cooperation helps speed up the landing of overseas factories

Strengthening the cooperation with local battery material enterprises is the latest move in the overseas market of the new energy automobile industry chain in Ningde era, which is in the vanguard of the global power battery industry.

"the establishment of a partnership with BASF is an important step in our process of European localization. With the innovative battery technology of the Ningde era, and based on BASF's deep expertise in the material field, we will further enhance our ability to serve global customers and accelerate the achievement of the global goal of carbon neutralization. " Zhou Jia, president of Ningde Times, said.

On September 16th, Ningde Times and BASF Europe announced the establishment of a strategic partnership in the field of battery material solutions, including positive active material (CAM) and battery recycling. Through cooperation with BASF, Ningde era will form a localized battery recycling network and create a guaranteed raw material supply chain to enhance customer service capacity in Europe.

In Wang Rongjin's view, BASF has a profound accumulation of technology in the field of materials, and cooperation with it in the Ningde era will form a complementary relationship.

It is worth mentioning that the first European factory in the Ningde era is under construction in Thuringia, Germany, with the aim of localizing the production of lithium-ion batteries. The plant will be built in two phases and is scheduled to start production in 2021. After reaching production in 2022, the production capacity of 14Gwh will be formed. BASF, headquartered in Ludwigshafen, Germany, is the world's largest supplier of chemicals to the automotive industry.

In fact, in recent years, overseas mainstream car companies have taken the lead in breaking the original single-point or AB-point supply pattern and gradually expanding to multi-point supply. Chinese power battery companies have also accumulated a large number of overseas users. According to the statistical analysis of customs export data, from January to June 2021, China's lithium-ion battery exports reached 11.469 billion US dollars, an increase of 83.31 percent over the same period last year; the number of exports reached 1.392 billion, an increase of 66.49 percent over the same period last year.

Grabbing the window period is conducive to the improvement of gross profit

In addition to the Ningde era, in July this year, Guoxuan Hi-Tech acquired Bosch's Gottingen plant in Germany and began to deploy production capacity overseas, while reaching a strategic partnership with Volkswagen to help the latter build a battery plant in Salzgett, Germany.

In November 2020, Honeycomb Energy announced the construction of a battery factory in Sal, Germany, including a cell module factory and a module PACK factory, with a total investment of 2 billion euros. According to the plan, the core module factory will be completed and put into production by the end of 2023, and the module PACK plant can be put into production in mid-2022 at the earliest. When completed, the project is expected to meet the power batteries needed for 300000 to 500000 electric vehicles.

In addition, Vision Power has announced the construction of power battery plants in Douai, France, Ibaraki Prefecture, Japan and Sunderland, England. Fudi Battery, owned by BYD, also revealed in a job message that it was planning to build a factory in Europe.

"the early layout of battery companies to build overseas factories will seize the time window in which European local battery enterprises have not yet formed large-scale production capacity, and seize market share. At the same time, due to the high profits in overseas markets, it is also expected to crack the situation that some battery enterprises do not increase profits. " Some industry insiders said that taking the Ningde era as an example, the financial report showed that in the first half of this year, the operating income of the domestic business in the Ningde era increased by 104.19% compared with the same period last year, but the gross profit margin decreased by 1.77% to 25.11%. The overseas gross profit margin was 9.28 percentage points higher than that of the domestic business, reaching 34.39%, and the operating income increased by 355.45% compared with the same period last year.