·Power battery gross margin is declining

New energy vehicle trends Currently, under this trend, power batteries have become a vital part of the development of the entire industry. The prices of rare metal raw materials such as cobalt and lithium are also rising wildly due to the imbalance between supply and demand at this stage.
Haofeng Lithium is one of the most successful listed companies in the past few years. Before the stock market crash in June 2015, its stock price was around 19 yuan, and then fell to a minimum of 7.8 yuan in less than two months. When the market rushed down, investors needed to find a safe haven, they chose the leading company of lithium batteries.
In the first round, Yanfeng Lithium started to use a year from July 2015 to rise from 7.8 yuan to 40 yuan. In the second round, from the outbreak of new energy vehicle sales in February this year, Yanfeng Lithium Industry rose from 25 yuan to 95 yuan today. In the past two years, the market value has soared 11 times. Although the growth of other lithium battery concept stocks is not too much, it is still very impressive. This is enough to illustrate the entire market, the urgent need for power batteries.
Ok, now that we are talking about something interesting, Yanfeng Lithium disclosed the gross profit margin of the lithium battery business in its financial statements:
The gross profit margin of the lithium battery business disclosed in December 2015 was 20.13%;
In June 2016, the lithium battery business gross margin was 11.15%;
In December 2016, the gross profit margin of the lithium battery business was 10.6%;
In June 2017, the gross profit margin of the lithium battery business was -11.42%.
It can be seen that the gross profit margin of this business is rapidly declining. The increase in the performance of Yanfeng Lithium relies mainly on the smelting and processing of non-ferrous metals. In the same period, the operating income of this company has doubled, while the net profit of the returning mother has increased tenfold.
Since other lithium battery manufacturers, such as Tianqi Lithium and BYD, have not separately disclosed this business, we have no way to compare it.
China, Japan and Korea are three-legged in the lithium battery industry, accounting for 97% of the market. Since China's mass production capacity has always been unparalleled, in 2015 China's total capacity of lithium batteries has surpassed Japan and South Korea.
According to the National Bureau of Statistics, the cumulative production of lithium-ion batteries in China reached 7.84 billion in 2016, a year-on-year increase of 40%, and the advantages continued to expand. The industrial scale reached 128 billion yuan, breaking through the 100 billion yuan mark for the first time. According to Forbes News, it is estimated that the global share of lithium batteries in China will increase from 40% in 2016 to 70% in 2020.
When it comes to industry, especially compared with Japan, people often say "China is big but not strong", and the same is true in the field of lithium batteries. There is indeed a gap in core technology. But another fact is that once a certain industry is mass-produced by China, the industry will quickly become "cabbage" and the profit rate will continue to decrease. The data disclosed by Yanfeng Lithium Industry coincides.
Nissan's sale of the AESC battery business may also be an example. It is reported that Nissan and NEC have almost stripped off all lithium battery business.
Nissan may have other realistic considerations to do so. However, the rapid rise of China's lithium battery industry, the scale of competition is intensifying, and the low profit level of the industry is also an indisputable fact.
The competition in the lithium battery industry has entered a level of enthusiasm. It’s getting harder and harder to get profits just by relying on lithium batteries. The possession of important minerals such as upstream lithium mines and the ability to smelt and process standardized raw materials have become competitive factors in the industry.
The competition in the power battery industry has long been more than just competition for core technologies. In the industrial chain, it can be roughly divided into the development of rare metal mineral resources, the smelting processing and recycling capacity of the middle reaches, and the energy storage products based on the downstream lithium battery materials. As mentioned in this article, Lifeng Lithium Industry, although the downstream lithium battery business does not make money, but has already earned a lot of money in the upstream and midstream.

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