Electrical Equipment Industry: "Walking Far: Summary of the 2016 New Energy Vehicle Investment Strategy Conference"

Report Highlights

Event Description

From March 3 to 4, we held the "Road to Success: 2016 New Energy Vehicle Investment Strategy Conference."

Event Comments

Upstream Viewpoint: It is expected that in the short term, for one to two quarters, domestic lithium salt prices will remain strong, while overseas transaction prices are expected to rebound significantly. 1) Looking at supply, Orocobre is expected to reach an annual production of 80,000 to 100,000 tons this year, but the volume imported to the domestic market through Toyota Tsusho remains uncertain; it is expected that the production of Australian mines targeting the Chinese market will accelerate significantly in 1-2 years; additionally, the production release of domestic salt lakes and mines entering Q2 is also worth paying attention to; overall, the industry's high prosperity is stimulating the acceleration of new projects, but reaching production capacity requires a certain time cycle. 2) Looking at demand, at the beginning of the year, the production capacity of positive electrode materials and batteries continues to expand, and terminal sales are expected to grow rapidly in Q3-Q4, further driving upstream demand.

Midstream Viewpoint: Based on an estimated annual production and sales scale of 600,000 vehicles, 1) the demand for power batteries may increase by 80% year-on-year to reach 34GWh, while production capacity is rapidly expanding, leading to a balance between supply and demand for the year. High-end products are in short supply, and the price reduction is relatively small. 2) There is an overall surplus of positive electrodes; although the "metal price + processing fee" pricing model can transmit the price increase pressure of lithium carbonate, the gross profit margin has decreased, while some independently priced high-end products have considerable gross profit; dry-process diaphragm capacity is abundant, while wet-process diaphragms still have a gap, with a higher gross profit margin; in the electrolyte segment, LFP6 supply remains tight throughout the year, and recently some bulk prices have reached 400,000 yuan, predicting a high level of 200,000 to 250,000 yuan for the year. The price increase of LFP6 has led to a significant rise in electrolyte prices recently, with some product quotes reaching 80,000 yuan, doubling compared to last year. Overall, LFP6 manufacturers benefit the most, and the profitability of electrolyte manufacturers producing LFP6 has further improved. 3) The market for motor and electronic control segments is relatively fragmented, mainly depending on the signing of large orders by enterprises, while also paying attention to the industrialization process of new technologies such as hub motors.

Downstream Viewpoint: Judging from the first quarter's production and sales scale, influenced by factors such as the controversy over ternary batteries, subsidy fraud, the Spring Festival holiday, and last year's rush to install, there is a significant month-on-month contraction. Considering the central government's frequent introduction of supportive policies and the recent continuous launch of local subsidies, the industry's maturity is further improving, and we are optimistic about a repeat of last year's growth trend in the second half of the year. 1) Passenger Cars: Personal consumption will become the main battlefield. In the short term, competitive pricing is key, while in the long term, the focus is on the key technologies of the three electrics and after-sales service capabilities. 2) Buses: The base last year was relatively high, so this year's growth rate will slow down. The suspension of ternary batteries does not affect the strategic trend of electrification for car companies. 3) Logistics Vehicles: Under the stimulation of three major factors: economy, environmental protection, and market potential, there may be significant growth this year.

Charging Infrastructure Construction: The central government attaches great importance to this, and it will enter local "13th Five-Year Plan" in the future, further accelerating promotion. 1) Currently, the base of equipment is far from the targets of 4.5 million charging piles and 10,000 stations set for 2020, indicating a huge market space and good profitability for enterprises. 2) Operations currently mainly rely on charging service fees, with fixed customer fast charging stations having good profitability, while dispersed AC charging piles are still early for profitability.