"GAC Group will continue to build a vertically integrated new energy industry chain layout of 'lithium ore+basic lithium battery raw material production+energy storage and power battery production+charging and swapping+battery recycling+energy storage', reduce industry chain costs, achieve overall safety and controllability of the new energy industry chain, and improve the core competitiveness of the industry chain. " At the beginning of 2023, GAC Group Chairman Zeng Qinghong announced one of GAC Group's business goals for 2023.

This car company leader, who once bluntly stated in 2022 that "the main engine factory is working for the battery factory" due to the soaring battery prices, has demonstrated his determination to create a complete supply chain for power batteries in his development plan.

In recent years, due to the continuous rise in raw material prices, the price of power batteries has continued to rise significantly. However, as car companies step down to lay out power batteries and expand their production capacity, battery prices are gradually returning to rationality.

Zhang Hong, Secretary General of the New Energy Vehicle Branch of the China Automobile Distribution Association, stated in an interview with a reporter from Shell Finance that due to the 100% -150% increase in demand for various battery raw materials in China's power battery vehicle industry in 2021 and 2022, there was a shortage of battery raw materials. Therefore, upstream industries such as battery raw materials have increased their raw material production capacity, which not only greatly alleviates the shortage of battery raw materials, but also leads to oversupply. Even if the demand for battery raw materials continues to increase in 2023, the price of battery raw materials is likely to decrease.

The market demand is strong, and the price of battery raw materials fluctuates in a pendulum like manner

Public information shows that on September 21. 2020, the spot price of battery grade lithium carbonate once dropped to 40000 yuan/ton. Subsequently, its price began to rise continuously. In 2022, the price even approached 600000 yuan/ton at one point.

In mid-2022, Fu Bingfeng, Secretary General of the China Association of Automobile Manufacturers, told reporters from Shell Finance at the 2022 China Automotive Supply Chain Conference and the First China New Energy Intelligent Connected Vehicle Ecological Conference that the price of lithium carbonate, a raw material for power batteries, has increased from 50000 yuan/ton to 500000 yuan/ton, and its fluctuations have affected the development process of China's new energy vehicle industry.

In 2022, the average price of lithium carbonate reached 500000 yuan/ton, a rapid increase, but this is more like a cyclical phenomenon in industry development. "Li Xuan, a senior analyst in the Haitong Securities Technology industry, said," Currently, the price of battery raw materials is like a pendulum, reaching a high point of oscillation. The entire battery industry, including positive and negative electrodes, materials, etc., is expanding production. We estimate that the price of lithium carbonate will approach 300000 yuan/ton in 2023

According to data from the China Association of Automobile Manufacturers, the cumulative sales of new energy vehicles in China reached 5.674 million units in 2022, a year-on-year increase of 90.0%, exceeding market expectations; According to the White Paper on the Development of China's New Energy Vehicle Industry (2023), global sales of new energy vehicles reached 10.824 million units in 2022, a year-on-year increase of 61.6%.

The rapidly growing sales of new energy intelligent vehicles have also led to an increase in demand for elements such as chips and batteries, and the industry was once facing a situation of "shortage of cores and expensive electricity". With the rapid growth of new energy vehicles, the shipment volume of power batteries is also rapidly increasing.

According to the latest data from the China Automotive Power Battery Industry Innovation Alliance, in 2022, China's power battery production reached 545.9GWh, a year-on-year increase of 148.5%; According to the "White Paper on the Development of China's Lithium Ion Battery Industry (2023)", the overall global shipment volume of lithium ion batteries in 2022 was 957.7GWh, a year-on-year increase of 70.3%.

Huang Wei, the Managing Director of Wanchuang Investment Bank, told the Beijing News Shell Finance reporter that there is currently a partial decline in the price of lithium carbonate, mainly due to two reasons: Firstly, changes in supply and demand, and the cyclical impact of the slowdown in the production growth rate of new energy vehicles on upstream raw materials, resulting in a decrease in market demand compared to now. On the other hand, the proven lithium reserves in China have further expanded, the technology of extracting lithium from salt lakes has gradually improved, and the industrialization supporting facilities in the early stage of extracting lithium from mines have been solved to a certain extent.

Regarding the reasons for price fluctuations, Mo Jiawen, a new energy policy research expert at the China Automotive Research and Political Research Consulting Center, believes that the price fluctuations of lithium carbonate are mainly influenced by factors such as demand growth, international friction, and capital speculation. Overall, in 2023, due to factors such as global economic weakness, weak international demand, reduced market growth expectations, and China's strengthening of key strategic resource reserves, it is expected that the price of lithium carbonate will steadily decrease.

Experts predict that power battery prices are expected to return to rationality

In order to win corporate orders, battery factories are also actively expanding production. In January 2023 alone, several battery companies made high-profile efforts to promote the construction of battery factories.

On January 19th, Ganfeng Lithium announced that its subsidiary, Ganfeng Lithium, plans to invest 10 billion yuan with Three Gorges Water Resources and Dongfang Xinyuan in the Fuling High tech Zone of Chongqing to build a power battery project with an annual output of 24GWh and a PACK assembly production line with an annual output of 10GWh batteries, as well as related supporting facilities.

On January 28th, the Bike Battery Large Cylinder Production Base settled in Changzhou, with a total planned investment of 13 billion yuan. The project plans to build a 30GWh large cylinder battery production line and research and development center. In addition, Yiwei Power, a subsidiary of Yiwei Lithium Energy, plans to invest 10.8 billion yuan in Jingmen High tech Zone to build a 60GWh power storage battery production line and auxiliary facilities project.

Power batteries are facing the trend of expanding production. According to research reports from Zhejiang Securities, in 2023, the global lithium resource end is expected to release 352000 tons of new production, basically meeting demand.

Bao Wei, General Manager of Zhejiang Huayou Recycling Technology Co., Ltd., told reporters from Shell Finance that based on current market feedback, the price of waste recycling is likely to decrease, but the speed and depth of its decline depend on the growth rate of new energy vehicles.

"Battery grade lithium carbonate has decreased by about 20% since December last year. The industry predicts that lithium carbonate will fall back to around 350000 yuan in the second half of the year and return to a reasonable range in 2024. From this trend, it is not very optimistic about a significant decline in lithium battery prices this year, but it is expected to become an industry trend by following the market and conducting price surveys. " The head of Guoxuan High Tech, a power battery enterprise, said in an interview with a reporter from Shell Finance, Starting from 2023, there is a high possibility that the price of lithium battery raw materials will return to rationality, and it will become a stable but declining trend.

According to the latest industry forecast, lithium production growth will be between 22%-42% in 2023, with a strong momentum. According to data from Shanghai Steel Union, on February 1, 2023, the average price of battery grade lithium carbonate decreased by 2500 Yuan perton to 469000 Yuan perton. The price of lithium carbonate has decreased by nearly 21% compared to the historical highest average price of 590000 Yuan perton in mid November last year.

The power battery company Xingheng Power, which focuses on two wheel and four wheel electric vehicles, is relatively optimistic, In 2023, there will be a significant price drop in lithium battery raw materials. Firstly, there is a consensus in the industry that the current raw material prices are in an irrational state. When an industry has only the most upstream enjoying excess profits, it forms an unhealthy state and is also unsustainable. Secondly, the supply capacity of lithium battery raw materials will increase over time and continue to expand production, thereby stabilizing prices. Thirdly The development and implementation of new material technologies represented by sodium ion batteries will divide a portion of the lithium battery market; Fourthly, the industrialization of lithium battery recycling and recycling has made rapid progress, which can also reduce the market demand for lithium battery raw materials The person in charge said so.

Huang Wei believes that whether there will be fluctuations in the price of lithium carbonate in the future is a factor that needs to be considered for enterprises' costs and the grade of the mine, but the overall trend tends to be rational.

Overall, with the expansion of production capacity, application of new technologies, and enhanced recycling, battery prices will improve in 2023. However, due to the increasing demand for new energy vehicles and the expansion period of resources such as lithium mines, which is about 2-3 years, there is still uncertainty about the final price decline.

Power battery enterprises will face more opportunities

2023 has arrived, and power battery technology and industry chain are also ushering in new possibilities. In 2022, the power battery related industry attracted a large number of players, reflected in the capital market. The stock prices of enterprises in the fields of battery raw material mining, battery energy storage, recycling, and other related fields also rapidly fluctuated in 2022 and gradually returned to rationality.

For example, the highest price of battery company Yiwei Lithium Energy reached 146.2 yuan/per (December 2021). In January 2020, its stock price was only 25 yuan/per. Currently, its stock price has returned, but it is still at 88 yuan/per.

Regarding the possible changes in the battery industry in 2023, Xu Yanhua, Secretary General of the Battery Alliance, shared her views with reporters from Shell Finance.

In Xu Yanhua's view, the innovation of power batteries based on material innovation will continue to promote technological progress in safety, energy density and volume density improvement, process and manufacturing, cost optimization, low-carbon green, and further improve the quality of industrial development of power batteries; Secondly, with the release of the ongoing production capacity of a group of mainstream battery and material enterprises, the supply pressure of mainstream power batteries will be alleviated, and the price of lithium carbonate is likely to decrease.

In international competition, Chinese enterprises will accelerate their overseas layout and continue to increase their export volume. The proportion of Japanese and Korean batteries in the domestic market will further decrease. In addition, the government will also increase its attention to the production capacity of power batteries.

In terms of technology, sodium batteries will form a small batch capacity and will be demonstrated and applied in small scenarios; Solid liquid hybrid batteries enter the stage of mass loading. The demand for energy storage batteries remains strong. The benign development of battery recycling still faces many challenges. The mass production of 9-series positive electrode materials for power batteries is gradually increasing, and most positive electrode material enterprises are developing 9-series materials.

In 2023, is there still a blue ocean and investment opportunity in the power battery industry? Bao Wei stated that there is almost no blue ocean in the upstream and downstream of the power battery industry. Even in the previously relatively unpopular and downstream battery recycling industry, most provinces have almost all enterprises with a processing capacity of 100000 tons according to theoretical data.

"The competition in the battery industry is constantly intensifying, and the market is gradually returning to rationality. In 2023, major enterprises will face more opportunities and challenges", said Bao Wei.