Yiwei Lithium Energy Liu Jincheng: the "dominance" of power business is obvious, but it is not "good enough" yet.

At the beginning of this year, Liu Jincheng, chairman of Yiwei Lithium Energy, said in an exchange with Battery China that 2021 would be a "dominant" year for the company in the power market. In a month's time, 2021 will be over. In retrospect, what is the performance of Yiwei Lithium Energy's power battery business this year? How will Liu Jincheng rate the development of his power and energy storage industry?

A few days ago, the battery China editor once again came to Yiwei LiNeng Huizhou headquarters to have in-depth exchanges with Liu Jincheng.

According to the H1 financial report released by Yiwei LiNeng in 2021, the company achieved an operating income of 6.56 billion yuan in the first half of this year. Of this total, the income from the power battery business was 3.891 billion yuan, up 185.95% from the same period last year, and the operating income from the consumer battery business was 2.669 billion yuan, up 47.03% from the same period last year. On the one hand, it shows that Yiwei lithium power battery business has maintained rapid growth, on the other hand, it shows that power business has become one of the main businesses of Yiwei lithium energy.

Liu Jincheng told Battery China that up to now, the company's soft package power battery shipments have exceeded 8GWH this year, and the annual soft package shipments are expected to reach 10GWh. the main domestic supporting Xiaopeng cars, overseas supporting Daimler, Hyundai and other car companies, "so on the whole, this year's power battery shipments in more than a dozen GWh, should be second only to Ningde era, BYD, and should be in the third place." Liu Jincheng judged that with the gradual landing of new production capacity and the continuous improvement and enrichment of the product line, it is believed that the company's market share will increase rapidly in 2022 and 2023, and the goal is to achieve more than 10% of the installed capacity in China's passenger car market by 2023.

In terms of capacity construction, in October this year, Yiwei LiNeng announced that it would build a 50GWh power storage battery project in Chengdu; in November, Yiwei LiNeng signed an agreement with the Jingmen municipal government to build an annual 152.61GWh Jingmen power storage battery industrial park project in Jingmen City. According to statistics, Yiwei Lithium Energy has been built, under construction, the planned capacity scale has entered the top 3 in China.

"generally speaking, we take Jingmen as the center, up to Beijing, south to Guangzhou, west to Chengdu, east to Shanghai, all within 1000 kilometers, so building a large base here is very helpful to meet delivery." When talking about the project of building a super-large battery industrial park in Jingmen, Liu Jincheng said that by introducing industrial chain partners, Jingmen Industrial Park will eventually form an industrial cluster with a scale of 100 billion, which will become a very important unit for the development of lithium electricity in China. In addition, Liu Jincheng also revealed that the future Jingmen Industrial Park will be Yiwei's "Huangpu military Academy" to train talents and cadres and support Yiwei's global layout.

Benefiting from the outbreak of the global electric vehicle market, it has led to an explosive growth in the installed capacity of power batteries, which in turn led to a "blowout" in the demand for raw materials and equipment upstream, triggering a series of price increases. In the interview, Liu Jincheng said that the price increase on the upstream supply side is an inevitable result of the change in the relationship between supply and demand. This is a reality that we must respect, and it is reasonable. "but I am not too concerned about the price increase. This is precisely the time for enterprises to enhance their core competitiveness. It still depends on whether the enterprise's product R & D capability and manufacturing level can really meet the market demand and competition. "

In early November, Yiwei LiNeng announced the start of a project to build large cylindrical batteries for 20GWh passenger cars, and the industry speculated that Yiwei LiNeng would take the lead in building 4680,4695 large cylindrical batteries around the world. In fact, in recent years, Yiwei Lithium can produce xHEV batteries, lithium primary batteries, soft package batteries, power tools batteries and other products in the forefront of the world. "Yiwei's positioning is a company that has the courage to innovate and open up the road, and is not a long-term follower." Liu Jincheng said that they always hope and insist on making themselves an excellent member of the industry, persist in being driven by innovation, and hope to become a company with technological influence. I believe it will not take too long. Yiwei lithium can also be in the forefront of the world in the field of power and energy storage batteries, especially in new technologies and new products.

With the accelerated transformation of global automobiles to electrification and the promotion of the "double carbon" strategy, the demand for key materials upstream of power batteries in the future is growing rapidly. Based on this, the head battery enterprises have carried on the supply chain layout one after another. Since the beginning of this year, Yiwei Lithium has successively established strategic partnerships with leading domestic enterprises in various fields, such as nickel, cobalt, lithium resources, lithium carbonate, lithium hydroxide, high nickel materials, lithium iron phosphate, diaphragms, anode materials, electrolytes and other key links, set up joint ventures and jointly build production capacity.

Liu Jincheng said that through the establishment of a joint venture with strategic partners, 25% of the company's raw material demand is expected to be met, and we have to purchase the remaining 75% from the market. "We do not want to upset the supply balance of the market." or hope to get more supplier support; at the same time, with the support of 25% strategic suppliers, it will provide strong support for Yiwei to participate in the competition of major global projects. "

During the interview, Liu Jincheng also conducted in-depth exchanges with battery China on the risks existing in the development of China's new energy vehicle industry, the participation of Chinese enterprises in the global market competition, and the core focus of the industry, such as large cylindrical batteries.

The following is an excerpt from the exchange between battery China and Liu Jincheng, chairman of Yiwei Lithium Energy:

Battery China: Yiwei is one of the leading enterprises in the field of power battery in China. You should have deep feelings about the development of new energy vehicles and power battery industry. How do you view the future development of power and energy storage industry in China and even the world?

Liu Jincheng: there is no doubt about the future. In the past, we only focused on energy saving and emission reduction of new energy vehicles, but now we define and look at it from the perspective of the national "double carbon" strategy and the global human sustainable development strategy. In fact, the demand for power and energy storage batteries has just been opened, and it will be in great demand.

Whether it is automobile battery or energy storage battery, there will be a very rapid development in the next few years, this speed of development is unimaginable.

Battery China: the new energy vehicle industry is developing vigorously, while many low-related enterprises are coming in with a high profile. The Ministry of Industry and Information Technology recently issued a draft of "Lithium Ion Battery Industry Standard conditions (2021)". There are requirements for the energy density of new projects, and it is also mentioned that "guide enterprises to reduce manufacturing projects that simply expand production capacity". In your opinion, what are the main risks in the development of lithium power industry at present?

Liu Jincheng: a large number of people have invested in iron phosphate and lithium iron phosphate, including large-scale battery expansion arrangements. It can be said that the market has entered a relatively frenzied state. With the development of this state, there will be a relatively large risk of overcapacity, especially the risk of low-end overcapacity. In particular, the excess capacity of iron phosphate is expected to be significant, which is a visible risk. To resolve the risk, the only way is for the invested enterprises to really do a good job in the quality of their products; if the quality of the products is not good, it will be very difficult in the future.

The demand in the battery market is really great. Various companies are carrying out large-scale production expansion, some of the goals are "getting bigger and bigger", and some enterprises have planned production capacity to 500GWh.

First, these production expansion plans reflect that the demand of the power and energy storage industry is indeed very strong, and the industry has very good development opportunities, which is very positive. If the expansion of production is based on the needs of customers and the market, that is a good signal.

However, if companies simply expand for the sake of scale, there is also a risk of capacity, especially the risk of overcapacity at the low end. This risk belongs to the "gray rhino", not the "black swan". It can be seen or vaguely felt that the "gray rhino" is coming towards us. We are very sensitive to the "gray rhino" and want to defuse the risk. Our idea is that at this stage, the only thing the enterprise can do is to improve the quality and performance of your products and provide good customer service.

Battery China: the active investment of the Chinese government and enterprises in new energy vehicles has enabled China to maintain a leading level in the global development of lithium electricity. China accounts for six of the global installed TOP10. Now Europe, North America and South Korea are also making great efforts to develop lithium batteries. Do you have any suggestions for China to continue to take the lead in the future?

Liu Jincheng: the development of China's new energy vehicles and energy storage industry is a market with the needs of more than one billion people. At the same time, enterprises and people who are concerned about the sustainable development of mankind are investing in these things.

In the battery sector, China has invested much more R & D resources than other countries, whether it is institutions, enterprises, or government financial support, China has invested the largest human and material resources in the world. Therefore, Chinese enterprises can account for 6 of the top 10 enterprises in the world (installed capacity).

Moreover, China's manufacturing industry has developed very well in recent years. The equipment, materials and batteries of the battery industry chain, including the new energy vehicles themselves, are in the forefront of the world in terms of the number, scale, volume and manufacturing capacity of our enterprises. Ningde era occupies the first place in the world, which is inevitable.

I believe that Chinese enterprises will increase more R & D investment in the future, this R & D resources are the whole industry chain, batteries, materials, equipment, everyone is increasing R & D investment, and in every single link, China has achieved a leading position in the world.

If we continue to increase investment in R & D and do a good job in products, then I believe that the competitiveness of Chinese enterprises will become stronger and stronger, which should be certain.

Battery China: in fact, Yiwei has achieved a global lead in the field of lithium primary battery, xHEV battery and cylindrical battery. Returning to Yiwei itself, how does Yiwei continue to take the lead in technology in the field of power?

Liu Jincheng: in fact, we always want to be an excellent member of the industry. It's always been like this. Therefore, we always have to identify the direction in which we are going.

In terms of direction and positioning, Yiwei LiNeng is not a long-term follower, but a company that has the courage to innovate and open up its own path, and is a company driven by innovation. Therefore, while we do a good job in existing products, we have been actively doing research and development in new technologies and new product systems. We hope to bring new feelings to customers with new technologies and new products.

Driven by innovation, this requires us to continuously improve our capacity performance to meet more potential needs of our customers; at the same time, we also adhere to rapid response in terms of customer demand response.

Based on such a style of steady development of innovation and service, I think in a few years, not too long, Yiwei Lithium will be at the forefront of the industry in the field of power and energy storage batteries, especially in new technologies and new products.

Battery China: when I communicated with you at the beginning of the year, you mentioned that this year will be a "dominant" year for Yiwei power battery business, and this year will soon be over. Looking back, what do you think of the performance of the company's power battery business this year?

Liu Jincheng: Yiwei LiNeng is driven by technology research and development, our product technology research and development has been making progress, has been preparing for mass production, standing at that node, we put forward the conclusion of "dominant" judgment of power battery business.

In fact, this year Yiwei lithium power business "manifestation" has been very obvious. According to the data I saw yesterday, the planned production capacity of Yiwei Lithium Energy has been ranked in the top 3. Our production capacity planning is relatively definite, there are specific customer projects or customer fixed points, is a very clear market arrangement, and the construction fund is also very certain.

Basically, as far as we are concerned, the current planned construction capacity still belongs to the part of steady development.

This year, our passenger car battery 10GWh soft package battery has been fully produced, another 4GWh passenger car lithium iron phosphate battery factory has been completed and put into production, and new production capacity will be launched next year. With the gradual release of production capacity, it is believed that our share of the domestic passenger car market will increase rapidly next year and 2023. Our goal is to achieve more than 10% of the domestic market by 2023.

Battery China: as far as we know, there is a caliber problem in domestic statistics, which does not include export data. As far as I know, Yiwei Lithium accounts for a higher proportion of foreign exports this year.

Liu Jincheng: if the export is added, we should be the third. Up to now, the export of Yiwei lithium soft pack battery is about 8GWh. To be exact, this year Yiwei soft package shipped 10GWh batteries, and all supporting passenger cars. In China, the main supporting facilities are given to Xiaopeng cars, while the rest are matched to Daimler and Hyundai.

In addition, we also have lithium iron phosphate and other systems of battery mass shipments. So on the whole, shipments in more than a dozen GWh, of this installed capacity should be in the Ningde era, behind BYD, should be in the third position.

Last year, we talked to Zhang Yu about the beginning of "dominance" in these aspects: one is the planned capacity construction of Yiwei; the other is the new capacity built this year, and the actual sales volume of power batteries; and then there is Yiwei in the promotion of new products. The product line is gradually enriched and improved, and new technologies fall to the ground one after another. It is believed that our market share will increase rapidly in 2022 and 2023.

Battery China: we will ship 8-10 GWh? this year

Liu Jincheng: not 8-10GWH, but a dozen GWh, soft bags on 10GWh.Our lithium iron phosphate battery passenger cars and commercial vehicles are also being shipped steadily.

Battery China: Yiwei has built a number of large-scale power battery projects this year, especially Jingmen, with a planned production capacity of more than 150GWh. what is the position of Jingmen industrial base in Yiwei's industrial blueprint?

Liu Jincheng: take a look at the map of China (pointing to the map of China in his office). Jingmen is in the center of the national economic center. Generally speaking, we take Jingmen as the center, going up to Beijing, south to Guangzhou, west to Chengdu, east to Shanghai, all of which are exactly 1000 kilometers (about), so building a large production base there is very helpful to meet delivery. This is one of them.

We didn't plan on such a large scale in the early days. But the whole local environment, including human resources, is very friendly, and the demand for power and energy storage batteries is very strong, so we finally decided to build a hundreds of billions of yuan base here. In fact, this scale has a very obvious advantage, that is, along with the supply chain, Enjie, Kodali, New Zebang, Green Mei, and Zhongke Electric have all settled in Jingmen, thus forming a complete battery industry chain in Jingmen. And this industrial chain is a combination of strong and powerful. In the future, related manufacturers will settle down there one after another, and eventually a 100 billion-level industrial cluster will be formed, which will become a very important unit for the development of lithium electricity in China.

Second, we also have a consideration for training talents. The construction of hundreds of GWh battery industry clusters in Jingmen can train talents and cadres for Yiwei, and can support us to build new factories in other areas in the future. In fact, every small company has five internal organs, but the level of management may not be able to do a good job.

Battery China: Jingmen will be Yiwei's "Whampoa military Academy" in the future.

Liu Jincheng: yes, we will also use it as a base for training talents.

Battery China: we have seen a lot of actions in power and energy storage business this year, and the income of power is growing rapidly. what will be the focus on consumption, energy storage and power in the future?

Liu Jincheng: because we see the huge market potential of power and energy storage, it will play an important role in "carbon peak, carbon neutralization" and even human sustainable development. In order to meet the huge demand of the market, it is necessary for Yiwei to try its best to expand its ability to serve the market.

From the perspective of expansion, first of all, we have expanded our R & D capacity. The Yiwei Lithium Energy Research Institute now has 1800 people and will have 2000 by the end of the year. We are building a 138000 square meter R & D center, which will support a R & D team of about 3000 people. By the end of 2022, the R & D team is expected to reach 3000. We will conduct in-depth research on the subdivision of power and energy storage batteries in order to become a company with technological influence.

The other is to actively expand production capacity. It can be seen from the past few years that Yiwei's product performance and service have been trusted by the market, and the technical level of power and energy storage battery has been moving forward towards the head of the industry. Our expansion of power and energy storage battery capacity is based on customer and market demand.

At the same time, Yiwei Lithium can adhere to the corporate philosophy of "don't do it or do it or do it best", which is proved by the types of customer orders and shipments we get for our products.

Battery China: the prices of all kinds of materials upstream of the battery are rising this year. As one of their most direct customers, how do you feel on this side? How does Yiwei view and deal with the increase in the price of upstream materials and the layout of the supply chain?

Liu Jincheng: first of all, I think the price increase on the upstream supply side is an inevitable result of the change in the relationship between supply and demand. This is a reality that we must respect, and it is reasonable. But personally, I don't care much about the price increase. In fact, I don't care much about it either.

Because at this time, it is precisely the time for enterprises to enhance their core competitiveness. I think it still depends on whether your product research and development capability and manufacturing level can really meet the requirements of power and energy storage.

Car power battery has its own requirements, such as safety. In addition to security, economy is now added. In the past, electric cars were bought and played, but now they have become products consumed by the common people. Economy and the cost of using them in the whole society should be put into our consideration.

The result of the increase in material prices may affect the short-term operating results, but in the long run, it still has to return to the leading technology and product quality, and only this enterprise will have strong profitability.

Now the profit structure is upside down. The terminal car does not make money, the battery earns very little money, the material earns more money, and the more it goes to the front, the more money it makes. In fact, it is a phased phenomenon. Return to the normal situation, in the case of full intervention of capital, in the end, we still rely on technology and service ability to win. I have always believed that. Therefore, I am not too concerned about the price fluctuations in the upstream end of this year.

Battery China: since the beginning of this year, including Ningde era, Tesla, Yiwei LiNeng, Guoxuan Hi-Tech are all in the upstream layout. In the rapid expansion of production capacity, how to ensure the security of the supply chain is very important. Yiwei also has a series of layouts upstream this year. How does Yiwei consider this?

Liu Jincheng: I think our layout is the best, because we all cooperate with the best enterprises in various fields. We uphold a concept called "one can run fast, a partner can go far", and Yiwei's partner is very strong, it can give us strong support, this is also our original intention.

This long-term strategic partnership has two effects: on the one hand, ensuring supply is on the one hand; on the other hand, it can enhance the market competitiveness of enterprises.

The supply chain system built by Yiwei is very helpful for us to win some projects. Yiwei Lithium can want to become stronger and bigger in the field of power and energy storage batteries, which is impossible without the strategic support of these partners and friends. Strategic support is definitely not to make friends, but to cooperate with each other and support each other.

The production capacity of the joint venture with strategic partners is expected to account for about 25% of the raw material demand, and we have to purchase the remaining 75% from the market. In fact, we do not want to break the supply balance of the market, or hope to get more supplier support, which is a consideration in the layout of the supply chain.

But you do not have these 25% strategic suppliers, you do not understand the value of the material end, it is very difficult to compete in large global projects.

Now, our results in these two aspects are still good, which is very beneficial to our future development. After we have completed the chain of the supply chain, I think Yiwei LiNeng will move forward at a faster pace by 2023.

Battery China: recently, Yiwei announced the launch of the 20GWh large cylindrical battery project. at present, it should be the first company in the world to build a large-scale production line of large cylindrical batteries. Why did Yiwei react so quickly? What will be the impact on the overall capacity layout of Yiwei?

Liu Jincheng: all along, we have been very concerned about the safety of the battery system. In the past, there are a variety of optimal design solutions to make the battery system relatively safe, or to achieve a very high safety standard. But these are not intrinsic security, that is to say, there are occasional security risks.

Yiwei Lithium has more than 30 years of battery work experience and serves a variety of application scenarios. I always think that in an application scenario like a car, if the system only relies on protecting this kind of passive defense, there is actually a very high risk. It is not only a risk for people who use cars, but also a great risk for enterprises. So we have been thinking about whether we can find a real solution to the problem-that is, the car's battery system is absolutely safe and very safe and reliable.

Yiwei LiNeng has always adhered to the comprehensive battery technology route, during this period we continue to compare the characteristics of various technical routes, we found that the cylindrical battery has the intrinsic safety capability, it can make the whole system without safety problems.

In the course of the experiment, we let several cells catch fire at the same time, but the system will not catch fire. The nature of the non-ignition of the cylindrical battery system is different from that of the protective measures actively set up by other systems, and it is intrinsically safe. Therefore, we have been actively developing cylindrical battery technology, and the relevant preparatory work is also very sufficient. We believe that once such a product is introduced to the market, the demand is great. If we only build a little mass production (line), time will be wasted, so we directly built a scale like 20GWh. This is a security consideration.

And we have also analyzed that the production efficiency of the large cylindrical battery is very high, which makes the economy of the large cylindrical battery very obvious. As Tesla CEO said, its manufacturing cost will be significantly lower than that of square batteries, and it is only natural that we will work in this direction from the point of view of the development of the whole society and the economy of using electric cars.

The two obvious advantages of safety and economy have prompted us to vigorously develop and build quickly, and we did not have any battery burden in the past, which is a very important reason why we took the lead in construction.

Battery China: can you tell me about the process and technology accumulation of the research and development of the large cylinder?

Liu Jincheng: we don't call this the concept of a big cylinder. There are dozens of cylindrical batteries, large and small, and various systems of cylindrical batteries, which have accumulated a lot in the field of cylindrical battery technology, such as 18650 and 21700 batteries. Technology is in a leading position in the industry, with more than 2 billion cylindrical batteries shipped, and the market performance and feedback are very good. Yesterday we also won the honor of an excellent supplier issued by an international power tool (company), and our quality evaluation is 100 points. This is the second 100 points we got from our international head customers, and the first 100 points are in terms of power batteries, which greatly boosted our morale and confidence.

In fact, 4680 is not big. More than a decade ago, we made cylindrical batteries larger than 4680. Therefore, as far as we are concerned, in terms of structure, there is no problem in terms of size restructuring. It's just that Tesla was the first to put forward the 4680 size (this concept), of course, I believe it is also the result of many scientists after many precise optimization designs. Yiwei has been doing this kind of verification work.

It is precisely with such a long-term experience in battery design, the accumulation of battery manufacturing technology, especially the deep understanding of production management technology, there is no doubt that we should become the leader of cylindrical batteries.

Battery China: has the 20GWh cylinder passed the customer verification, or has there been an order?

Liu Jincheng: with reference to our previous project expansion, you will find that Yiwei LiNeng has always been relatively stable in the layout of the project. The verification and quality engineering of the previous stage of the related products are relatively good, which has won the trust of our customers in this product. We are not going to build 20GWh's big cylindrical battery factory out of thin air to sell batteries, which is troublesome to sell.

Battery China: return to the capital market, some conjectures. Yiwei lithium can give people the feeling that what the market needs is what it has, there are many varieties, and it has done a good job. How does Yiwei achieve the balance of various technologies?

Liu Jincheng: in fact, this comes from our battery (technology research and development) accumulation over the past few decades, and we have been doing research and development, layout and technology accumulation in various product directions. In fact, this is a process of rising abruptly based on accumulated strength. Therefore, when there is a new demand and a new direction in the market, it is an opportunity for us, because we are doing it all the time.

At present, many battery companies have a preference for their products. We are not, we have no preference, we all do, and we just want to make the product well.

To be honest, we are not "good enough" yet, and we can see that we will make great progress next year and the year after next. At that time, I will accept that we have done better.