February Power Battery Observation

On March 12, the monthly data of the power battery in February was released. Overall, it has the following characteristics:

1) Starting in 2022, the output of power batteries in the first two months reached 61.46GWh, which is equivalent to 73.6% of the whole year of 2020 (83.42GWh) and 23.9% of 2021 (219.68GWh). Continuing to grow at this rate, it is expected to hit 400-450GWh of production this year.

2) The output of lithium iron phosphate (20.1GWh) is nearly twice that of the ternary battery (11.6GWh). Correspondingly, the installed capacity of lithium iron phosphate in February was only 7.8GWh. In the follow-up, lithium iron phosphate will be used on a larger scale, and a considerable part will go abroad with export models, and some will be directly supplied to foreign countries by sea.

3) The demand for pure electric passenger vehicles has become the most important pillar of power batteries, but due to rising costs, plug-in hybrid vehicles have a good opportunity. This will be a very clear trend in 2022. The demand for commercial vehicles has shrunk greatly, and it is expected that there will be a big breakthrough in the replacement of heavy trucks in the second half of the year.

4) In the second half of the year, more battery companies will start to make lithium iron phosphate. In addition, CATL and BYD will be getting closer and closer in the lithium iron phosphate market.

 Yield: Lithium iron phosphate is in stock

 In February, the output of power batteries was 31.8GWh, a year-on-year increase of 236.2% and a month-on-month increase of 7.1%.

 During the Spring Festival holiday in February, the output of power batteries still exceeded the historical peak - 31.63GWh in December last year. Such a high output means that in the planning of battery manufacturers, the demand in 2022 is very high, so the battery will be made at the beginning of the year. Especially under the condition of high raw material prices, even if it is made into inventory, there will be good profits.

 Judging from the output of different types of batteries: the output of ternary batteries is 11.6GWh, which currently only accounts for 36.6% - although a year-on-year increase of 127.2%. Looking back at May 2021, ternary output was surpassed by lithium iron phosphate, and the gap between the two sides has continued to widen since then. At present, the output of ternary batteries is only about half of that of iron and lithium.

The output of lithium iron phosphate battery was 20.1GWh, accounting for 63.1% of the total output, a year-on-year increase of 364.1%.

 The growth rate of these two types of batteries also objectively reflects the battery selection direction of the updated models in 2021.

 It is worth noting that the production of lithium iron phosphate in February was 20.1GWh, and the installed capacity was only 7.8GWh. The difference between these two data is getting bigger and bigger. Reasonable explanations mainly include:

1) More export models are used. According to the data of the China Automobile Association: 56,000 units were exported in January and 48,000 units in February, totaling 104,000 units. If calculated according to 60kWh/vehicle, there are about 6GWh (3GWh a month).

2) Lithium iron phosphate is growing rapidly in commercial vehicle applications around the world, and part of lithium iron phosphate is exported;

3) The last one is inventory: it takes 30-45 days for the batteries produced from January to February to go from the finished product warehouse of the battery manufacturer to the warehouse of various car companies, and then to complete the loading. It is expected that car companies with relatively high follow-up production will complete the reserve ahead of schedule. Since batteries are still relatively short in 2022, it is expected that these car companies will buy batteries first and load them according to later needs.

 From January to February 2022, the cumulative output of power batteries was 61.4GWh, a year-on-year increase of 185.7%. Among them, the output of ternary batteries was 22.5GWh, accounting for 36.6% of the total output, with a cumulative increase of 87.6% year-on-year; lithium iron phosphate batteries were 38.8GWh, accounting for 63.2% of the total output, with a cumulative increase of 308.2% year-on-year.

 In 2022, it is still an era dominated by lithium iron phosphate, and the high growth of power batteries will not reduce the demand for resources in the short term.