Narada Power Executive President Gao Xiubing: Data Center Business Orders Are Full, Solid-State Battery Mass Production Costs Expected to Be Below 1 Yuan/Wh

Since 2021, in less than four years, the ESS sector has experienced a rollercoaster ride, transitioning from making easy money to now "losing money for attention." As a key player in the ESS sector, Narada Power (300068.SZ) has been unable to escape the impact of the industry cycle, with its performance rapidly declining in recent years, and is expected to incur a loss of 1.2 billion to 1.56 billion yuan in 2024. Currently, the ESS sector is deeply mired in a survival-of-the-fittest competition due to overcapacity and price slashing. In this context, Narada Power is betting on solid-state batteries to seek new growth points and accelerate its positioning in the global data center ESS sector. As a leading enterprise in solid-state batteries, can Narada Power regain high performance growth through solid-state batteries? Recently, a reporter from Cailian Press interviewed Gao Xiubing, the company's Executive President and Director, hoping to get answers to the aforementioned questions. Gao Xiubing stated, "It is expected that in two to three years, the company's solid-state batteries can be used in low-altitude aircraft. Compared to the current cost of lithium batteries, the overall industry chain cost of solid-state batteries remains high, but with the increase in application scale, the mass production cost of solid-state batteries is expected to drop below 1 yuan/Wh in the future." "The company is building a lithium battery cell capacity of 6GWh and a new-type electricity ESS capacity of 20GWh. These capacity layouts aim to comply with the growth trend of new-type electricity ESS in the current market and the expansion needs of lithium battery application fields. In terms of recycling business, the company will reduce capacity this year and enhance profitability through technological transformation, adjusting business models, and developing high value-added products to reduce losses and strive for profitability. At the same time, the unconfirmed revenue from the company's 2024 shipments will also be reflected in 2025," Gao Xiubing said. Solid-State Batteries: Costs Expected to Drop Significantly Entering 2025, the elimination race in the NEV sector intensifies. Beyond price wars, technology wars are also raging, with breakthrough solid-state battery technology becoming a strategic high ground for international automakers. Since February alone, automotive giants including Changan Automobile, Hyundai Motor, BYD, and Mercedes-Benz have successively announced their "landing" on solid-state batteries. Power batteries are known as the "heart" of NEVs. Compared to liquid lithium batteries, solid-state batteries have revolutionary breakthroughs in energy density, safety, and cycle life. Although it will take time for solid-state batteries to achieve true industrialization, the industry's expectations for the industrialization of solid-state batteries are gradually converging. Gao Xiubing stated that the company has been conducting R&D on solid-state batteries since 2017, has completed pilot testing, and has built a solid-state battery pilot line. It is expected that in two to three years, the company's solid-state batteries can be used in low-altitude aircraft. According to him, Narada Power's solid-state batteries follow the oxide technology route, and the current development is small-capacity solid-state lithium batteries, using a pouch product structure, with an energy density of 350Wh/kg and a cycle life of 2,000 times. They have passed safety performance tests such as extrusion and short circuit, all meeting national standards. Currently, there are three main technology routes for solid-state batteries: oxide, sulfide, and polymer. Among the A-share listed companies deploying solid-state batteries, besides Narada Power, representatives of the oxide technology route also include Ganfeng Lithium (002460.SZ) and Shanghai Xiba (603200.SH); companies such as CATL (300750.SZ), BYD (002594.SZ), Enjie Co., Ltd. (002812.SZ), EVE (300014.SZ), and Gotion High-tech (002074.SZ) adopt the sulfide technology route. Regarding the technical bottleneck of solid electrolyte interface stability, Gao Xiubing said, "We have currently solved the problem of the tight combination of the 'solid-solid interface' that limits the industrialization of solid-state batteries, significantly improving the interface contact performance between the solid electrolyte and the electrode, thereby effectively reducing interface resistance." It is worth noting that since the beginning of this year, Narada Power has repeatedly stated on the investor interaction platform that the solid-state battery business will not have a significant impact on the company's 2025 performance. Shanghai Xiba has also mentioned in recent announcements that, based on the uncertainty of product iteration and market development, the company's current investment in solid-state batteries is relatively small, and the detection, matching results, and application prospects of related sample samples also have great uncertainty. In Gao Xiubing's view, the industry's progress in the development of solid-state battery products should be similar, and the industry's scale requires the joint efforts of the upstream and downstream of the industry chain. Currently, the company needs to find cooperative application scenarios based on customer needs. Based on this, in February this year, Narada Power signed a strategic cooperation agreement with Yadea Group to promote the application of solid-state batteries in light electric vehicles. In addition, the company has also cooperated with companies such as Tailan New Energy to jointly promote the standardization and industrialization of solid-state battery technology. "Solid-state batteries will only have commercial value on the investment side, and then it is possible to achieve large-scale applications. With the increase in application scale, costs are expected to drop significantly, and mass production will accelerate," Gao Xiubing said. Discussing Data Center Business: Orders on Hand Have Been Scheduled to Q3 Data shows that since its establishment in 1994, Narada Power has entered the industrial ESS sector, with downstream customers mainly global operators and data centers. In 2010, the company began to deploy the new-type electricity ESS sector. Currently, the company's business mainly revolves around three sectors: new-type electricity ESS business, data center business, and civilian lithium battery business. Gao Xiubing introduced, "After focusing on the utility ESS market, Narada is currently building its own industry chain closed loop around the principle of 'lithium battery as the main, lead battery as the supplement.' In terms of ESS applications, the company mainly invests in battery cell bases following the LFP technology route, with existing lithium battery cell capacity of about 11GWh and under-construction lithium battery cell capacity of 6GWh; in the new-type electricity ESS sector, the company's existing capacity is 14GWh, and the under-construction capacity is about 30GWh." Cailian Press reporters noted that since March this year, Narada Power's disclosed investor relations activity records have repeatedly mentioned that the company's data center business has full orders on hand. Gao Xiubing told reporters, "The growth of the company's data center business this year is a new highlight. Currently, domestic orders are full, with a capacity utilization rate of over 90%, and orders on hand have been scheduled to after July and August; overseas orders have also increased significantly, especially high-voltage lithium battery products have performed well." He further revealed that the company recently made another breakthrough in cooperation with a global large software company. After successfully winning a 120 million yuan US data center lithium battery equipment procurement project from the customer at the end of February, the customer recently added a 240 million yuan order, with the core product still being the company's self-developed high-voltage high-power lithium battery backup power supply system. "These two orders are expected to be delivered within four to five months." In terms of capacity, it is reported that Narada Power has existing lead battery capacity of 4GWh and high-voltage lithium battery capacity of 1GWh, and still has capacity reserves. In addition, Narada Power's data center products are currently mainly in the backup power supply aspect, and its developed high-voltage lithium battery system adopts LFP technology, with a service life of more than 10 years, and can achieve a discharge rate of 1C to 6C, meeting the full-scenario needs of data centers from 10 minutes to 2 hours. Gao Xiubing introduced that the company's products are positioned as high-end battery products for data centers. Since the second half of last year, data center battery prices have been gradually adjusted upward. According to the market supply-demand relationship, it is expected that data center battery product prices will still have room for growth this year. "In the past two years, the construction layout of computing power centers has accelerated, and data center battery products have experienced explosive growth, with both domestic and overseas markets growing simultaneously. However, currently, the application of lithium batteries in domestic data centers is relatively small, and it is expected that in the next two years, the order growth of domestic lead battery products will be relatively large. But in North America and Southeast Asia, influenced by environmental protection and space requirements, the penetration rate of lithium batteries is increasing." Gao Xiubing predicted that with the technology becoming more mature, safety performance improving, and costs decreasing, the application of lithium batteries in data centers will become more widespread.