Lithium battery profit improvement is in sight: BYD joins the rising price tide and sets a new high side by side with "Ning Wang"

A few days ago, the market released a contact letter for the price increase of BYD batteries. The price increase letter shows that due to market changes and superimposed power and production restrictions, the raw materials of lithium batteries continue to rise in 2021. According to the actual situation of the rise in the price of raw materials, it is decided to increase the unit price of battery products such as CO8M. Among them, the product including tax price is no less than 20% higher than the current Wh unit price. From November 1, 2021, all new orders will sign new contracts and implement new prices, and all outstanding old contract orders will be closed and cancelled by the system.

In this regard, BYD insiders told Science and Technology Innovation Board Daily: "it is being verified."

On the 15th, a price increase letter from Penghui Energy came out of the market. In the letter, the company listed various raw material projects and recent price changes, and said that with the continuous rise in raw materials, the cost pressure "has far exceeded the limit." New orders carry out bulk linkage pricing and do not receive orders with long periods and waiting for notification of delivery and delivery; all orders that have been received but not picked up need to be renegotiated.

In addition, a number of price increase letters from battery manufacturers such as Zhuoneng New Energy, Shengli High-tech Energy, Liyang Battery, Hongli Power supply and Neutron Energy have also circulated on the Internet at the same time. Battery companies have different specific price increases and measures, but the reasons for price increases all point to the same direction: upstream raw materials are out of stock, prices are skyrocketing, and it is difficult to bear cost pressure.

The rising price tide of lithium battery link has begun, and the lithium battery plate led by "Ning Wang" finally ushered in a rebound, and the stock price rose again and again. In intraday trading this morning, the market capitalization of Ningde era and BYD both reached new highs.

The agency pointed out that the more important reason for the upside of the battery link is that the profit inflection point is expected to respond in advance. Around the second quarter of next year, the production capacity of some material links will be expanded and the shortage will be alleviated, and the inflection point of battery profit is expected to appear. If car companies' price increases fall more widely at the end of 2021, the profit inflection point is expected to come ahead of schedule.

For battery companies, how much pressure is there to increase the price of raw materials?

The upsurge in the prosperity of new energy vehicles has long been an indisputable fact, so since the beginning of this year, the supply of raw materials for power batteries has fallen short of demand, prices have gone up centrally, and some auxiliary materials have risen several times more than at the beginning of the year. Tianfeng Securities calculates that the cost of raw material price increases transmitted to the end of the power battery will rise by about 20% and 25%.

The rise in raw material prices in the first half of the year was mainly carried by battery factories, and the cost pressure was not transmitted downstream. Although the head manufacturers have strong bargaining power and have the opportunity to lower the actual purchase price, their performance has also been affected to a certain extent. At present, the major battery companies have not yet released three quarterly reports, but from the medium report, Guoxuan Hi-Tech, Funeng Technology and other companies reported a year-on-year decline in gross profit margin, which mentioned in the report that the rising price of raw materials put pressure on operating cost / gross profit margin.

The industry estimates that this wave of out-of-stock prices of raw materials will continue into the first half of 2022. For example, Ganfeng Lithium Industry has recently raised the price of all lithium metal products, the unit price soared 100000 yuan / ton, and the price adjustment letter is only valid until early November, it is expected that the follow-up price may continue to explore. Under such circumstances, it is not a long-term solution for the battery factory to "knock out its teeth and swallow" alone.

Will the pressure of price increase be transmitted to the terminal?

According to the usual practice in previous years, car companies discuss battery cost reduction with battery manufacturers in October, a drop of about 10-15%, according to a new power car company. However, affected by the rise in raw material prices this year, the cost reduction at the beginning of the year and in the near future has not been implemented, which plays a certain role in hedging the cost of raw materials for power battery enterprises.

Soochow Securities reported on October 22 that Q3 second-line battery manufacturers have partially adjusted prices, Q4 first-line or increased by 10-20%, after the price increase, cost increases can basically be smoothly transmitted, superimposed Q3 production is expected to improve, battery profitability is better than expected, leading performance increased by another 20% month-on-month.

While the battery price rises by 10%, the cost per kilowatt-hour of electricity increases by about 100 yuan. Calculated by the 50wh of carrying electricity per car, the bicycle cost of the corresponding car company increases by 5, 000 yuan or more, which is within the scope of the car company.

However, Tianfeng Securities also pointed out that the vehicle cost of new energy vehicles may be reduced, which can reduce or even offset the impact of rising battery costs to a certain extent.