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In The 1st Half of 2016 China’s Investment In Lithium Battery Industry Topped 60 Billion Yuan

In the 1st half of 2016, investment enthusiasm in China’s lithium battery industry remained high. According to incomplete statistics, a total of over 30 companies published investment & construction or capacity expansion plans, whose total amount topped 60 billion yuan.

In the recent several years, benefiting from vigorous support of the state government toward new energy automobile industry, China has become the world’s biggest electric vehicle market. Consequently, as the core component in the new energy vehicle industrial chain, power lithium battery embraced a good opportunity for development, meanwhile it also extended demand to upstream cathode material, anode material, separator, electrolyte, lithium carbonate, and lithium concentrate.

Although in the 1st half of 2016, the domestic lithium battery industry suffered from impact of the inspection on “subsidy swindle” for new energy vehicle, and the release of “Standard Conditions for Vehicle Power Battery Industry” enterprise catalogue, which accelerated the formation of ‘Survival of the fittest’ competition system in the market, nevertheless, this does not dampen enterprises’ investment enthusiasm. According to incomplete statistics of CCM, a total of over 30 companies published construction or expansion plans for lithium battery and related upstream materials, whose total investment amount topped 60 billion yuan. In the past 5 years, the development standard of China’s electro-chemical energy storage market surpassed global average standard dramatically, the industry’s compound annual growth rate is up to 110%, about 6 times that of global average growth rate. Lithium-ion battery market accounts for about 66% market share.

In its latest report “Development Trend of China’s Lithium-ion Battery Market (2016-2020)”, CCM pointed out that in 2014, China manufactured 5.43 billion lithium-ion batteries, with an compound annual growth rate of about 40%, accounting for about 70% of global total output. In 2015, this figure reached 5.6 billion, up by 3.13% on Y-o-Y basis. In the aspect of electric capacity, in 2015, total output of domestic power lithium-ion battery rose to 15.7GWh, which is three times that of 2014.

With the surge of upstream raw material prices and the increase of downstream product sales, most lithium-ion battery listed companies all recorded historical new high in operating revenue and net profit growth in the 1st half of the year.

For instance:

--Guoxuan High-tech Power Energy Co., Ltd expects its 1st half year net profit will rise by 130-180% on Y-o-Y basis. It also points out that, this year two big orders have locked down whole-year price, if upstream lithium battery material price stabilizes and shows rational downward adjustment, the company’s cost is expected to drop further, so as to continue to raise its profit-earning level;

--Sunwoda Electronic Co., Ltd forecasts its 1st half-year net profit to rise by 20-50% on Y-o-Y basis; it has received orders from domestic OEM manufacturers including Chery Automobile, Beiqi Foton, Dongfeng Motor, GAC Group, Wuzhoulong etc. Wherein, Wuzhoulong has an order for about 20,000 electric logistic vehicles in 2016, whose amount of transaction reaches 60 billion yuan;

Furthermore, with the inauguration meeting of the National Power Battery Innovation Center in Beijing on June 30, it aims to face the industry’s common needs, by coordinating all resources including technology, equipment, talent, and capital, straighten out the industrial chain from R&D supply, transfer & diffusion, to first-time commercialization of frontier technologies and generic technologies, so as to provide strategic support for China to fulfill power battery technology breakthroughs, enhance industrial competitiveness of power battery, and accomplish expansion and development of new energy vehicle market.

With the unveiling of another supportive measure from the state government, domestic lithium battery industry is expected to gradually bid farewell to “small, scattered, chaotic” development condition, improve technology progressiveness and industry concentration degree, by relying on the world’s biggest new energy vehicle market, continue to march forward on the road of rapid development.