SHANGHAI, Jan 17 (SMM) - According to data from the China Power Battery Industry Innovation Alliance, China's power battery production slumped to 52.5 Gwh in December 2022, a year-on-year increase of 65.9%, but a sharp decline of 15.8% from the previous month. Also, it is the largest decline in the past half a year, and second only to the 26% drop in April in 2022 alone when large-scale lockdown across the country caused many battery cell factories and car companies to suspend or reduce production.
In detail, the output of ternary batteries in December reached 18.5 Gwh, an increase of 61.5% year-on-year, and down steeply by 20.5% month-on-month. This marked the third straight month of decline in its output. The output of LFP batteries also fell for the first time in the past half year. The output in December dropped 13% on the month to 33.9 Gwh, an increase of 69% on a yearly basis. The decline in LFP battery output was smaller than ternary battery output thanks to the strong sales of some companies that mainly relied on LFP batteries, such as BYD. This is also the reason why the market share of LFP batteries increased 3 percentage points from the previous month to 65%, its highest level of 2022.
Compared with the sharp decline in battery production across the board, the installed capacity stayed relatively stable. In December, the installed capacity of power batteries reached 36.1 Gwh, a year-on-year increase of 38% and a month-on-month increase of 5.5%. The monthly installed capacity has risen for two straight months and reached its record high. Among them, the installed capacity of ternary battery was 11.4 Gwh, up 3.3% from the previous year and 3.5% from the prior month. The installed capacity of LFP battery stood at 24.7 Gwh, up 64% year-on-year and 6.9% on a monthly basis. It is worth noting that although the installed capacity of both ternary battery and LFP battery maintained positive year-on-year growth in December, the growth rates actually narrowed sharply. This points to a significant slowdown in terminal demand growth.
On the whole, some of the demand in January 2023 was released in advance in the fourth quarter of 2022 due to factors such as high inventory of downstream and terminal companies, the upcoming Chinese New Year holiday, the surging infections of covid-19, and the removal of national NEV subsidies. The market players were thus pessimistic about the demand in the first quarter of 2023, and the demand from NEV market has seen a considerable decline, which prompted many car companies and battery cell producers to plan for sizeable production cuts or suspension.
It is expected that the battery output and installed capacity in January will retreat sharply in January.
