Recently, the international consulting organization SNE Research released global energy storage battery shipment data in 2023 and the global energy storage lithium battery company shipment list, attracting market attention.

Relevant data shows that global energy storage battery shipments reached 185GWh last year, a year-on-year increase of approximately 53%. Looking at the top ten global energy storage battery shipments in 2023, Chinese companies occupy eight seats, accounting for about 90% of the shipments. Against the background of periodic overcapacity, price cuts in upstream raw materials are transmitted, superimposed price wars intensify, and the concentration of the energy storage battery market further increases. Only CATL (300750.SZ), BYD (002594.SZ), and Yiwei Lithium Energy (300014 .SZ), Ruipu Lanjun (0666.HK), and Haichen Energy Storage, the total market share of the five leading companies exceeds 75%.

In the past two years, the energy storage battery market has undergone a sudden change. What was once seen as a value depression that was being fought over has now become a red ocean of low-price competition, with companies willing to compete for global market share at lower prices. However, due to the uneven cost control capabilities of various companies, the performance of energy storage battery companies in 2023 will be differentiated. Some companies have achieved growth, while others have fallen into decline or even losses. From the perspective of the industry, 2024 will be an important watershed and a critical year for accelerating the survival of the fittest and reshaping the pattern of the energy storage battery market.

Long Zhiqiang, a senior researcher at Xinchen Information, said in an interview with a reporter from China Business News that energy storage battery companies are currently making little profit or even losing money. Because first-tier companies have stronger comprehensive competitiveness and their products have premium capabilities, second- and third-tier companies are more inwardly involved in product quotations, so their profitability performance varies.

Cost pressure

In 2023, with the growth of new energy installed capacity and the fall in the price of upstream raw material lithium carbonate, the global energy storage market will develop rapidly, thereby increasing the demand for energy storage batteries. However, along with this, energy storage battery production capacity has entered a period of surplus due to the rapid expansion of production by new and old players.

According to InfoLink Consulting’s forecast, global battery cell production capacity will be close to 3,400GWh in 2024, of which energy storage cells account for 22%, reaching 750GWh. At the same time, energy storage battery cell shipments will grow by 35% in 2024, reaching 266GWh. It can be seen that the demand and supply of energy storage cells are seriously mismatched.

Long Zhiqiang told reporters: “At present, the entire energy storage cell production capacity has reached 500GWh, but the real demand of the industry this year is that it is difficult to reach 300GWh. In this case, production capacity exceeding 200GWh is naturally idle.”

The excessive expansion of production capacity of energy storage battery companies is the result of multiple factors. In the context of the rush to carbon neutrality, the energy storage industry has risen rapidly with the development of the new energy power generation market. Cross-border players are swarming in, rushing for performance and share, and all want to get a piece of the pie. At the same time, some local governments have also regarded the lithium battery industry as a focus of investment promotion, attracting energy storage battery companies through subsidies, preferential policies, etc. to support the implementation of projects. In addition, with the help of capital, energy storage battery companies have further accelerated the pace of expansion by increasing research and development efforts, expanding production capacity, and improving channel construction.

Against the background of periodic overcapacity, the overall price of the energy storage industry chain has shown a downward trend since 2023. As the price war over lithium carbonate prices intensifies, the price of energy storage cells has also dropped from a low of less than 1 yuan/Wh at the beginning of 2023 to less than 0.35 yuan/Wh. The drop is so large that it can be called a “knee-cut”.

Long Zhiqiang told reporters: “In 2024, the price of lithium carbonate has shown a certain fluctuation and rise, but the overall downward trend of battery cell prices has not changed significantly. At present, the overall battery cell price has dropped to around 0.35 yuan/Wh, which needs to be Depending on factors such as order volume, application scenarios, and the comprehensive strength of battery cell companies, the price of individual companies can reach the level of 0.4 yuan/Wh.”

According to calculations by Shanghai Nonferrous Metal Network (SMM), the current theoretical cost of a 280Ah lithium iron phosphate energy storage cell is about 0.34 yuan/Wh. Obviously, energy storage battery factories are already hovering at the cost line.

“Currently, the market is oversupplied and demand is not strong. Companies are cutting prices to grab the market, including some companies clearing inventory at low prices, which has further depressed prices. Under this situation, energy storage battery companies are already making small profits or even losing money. Compared with the first-line Enterprises, the product quotations of second- and third-tier enterprises are more involute.” Long Zhiqiang said.

Long Zhiqiang also said: “The energy storage industry will accelerate reshuffling in 2024, and energy storage battery companies will present different survival situations. Since last year, the industry has seen production shutdowns and even layoffs. The operating rate is low, production capacity is idle, and products It can’t be sold, so it will naturally bear operational pressure.”

Zhongguancun Energy Storage Industry Technology Alliance believes that the bottom of the energy storage industry has been determined, but it will still take some time to clear production capacity and digest inventory. The apparent recovery of industry profits depends on the increase in demand and the speed of optimization and adjustment on the supply side. InfoLink Consulting previously predicted that the overcapacity problem of battery cells will bottom out in the first quarter of 2024. Combined with material cost considerations, the price of energy storage cells will have limited downward space in the short term.

Profit differentiation

At present, lithium battery companies basically walk on two legs: power batteries and energy storage batteries. Although the deployment of energy storage is slightly late, companies have placed it in a prominent position.

For example, CATL is the “double champion” in terms of shipments of power batteries and energy storage batteries. It has previously identified three key areas: “electrochemical energy storage + renewable energy generation”, “power batteries and new energy vehicles” and “electrification + intelligence”. Grand strategic development direction. In the past two years, the company’s energy storage battery scale and revenue have continued to grow, and it has further extended to the energy storage system integration link. BYD entered the energy storage field as early as 2008 and entered overseas markets early. Currently, the company’s energy storage battery and system businesses rank in the first echelon. In December 2023, BYD further strengthened its energy storage brand and officially changed the name of Shenzhen Pingshan Fudi Battery Co., Ltd. to Shenzhen BYD Energy Storage Co., Ltd.

As a rising star in the field of energy storage batteries, Haichen Energy Storage has focused on the energy storage industry since its establishment in 2019 and has shown strong development momentum. It ranked among the top five energy storage batteries in just four years. In 2023, Haichen Energy Storage officially started the IPO process.

In addition, Penghui Energy (300438.SZ) is also implementing an energy storage strategy, which “plans to achieve a compound growth of more than 50% in the next three to five years, exceeding 30 billion in revenue, and become the preferred supplier in the energy storage industry.” In 2022, the company’s energy storage business revenue will account for 54% of total revenue.

Today, in a fiercely competitive environment, factors such as brand influence, funding, product quality, scale, cost, and channels are related to the success or failure of energy storage battery companies. In 2023, the performance of energy storage battery companies has diverged, and their profitability is in dire straits.

The performance of battery companies represented by CATL, BYD and EV Lithium Energy all maintained growth. For example, in 2023, Ningde Times achieved total operating income of 400.91 billion yuan, a year-on-year increase of 22.01%, and net profit attributable to shareholders of listed companies was 44.121 billion yuan, a year-on-year increase of 43.58%. Among them, the company’s energy storage battery system revenue was 59.9 billion yuan, a year-on-year increase of 33.17%, accounting for 14.94% of total revenue. The gross profit margin of the company’s energy storage battery system was 23.79%, a year-on-year increase of 6.78%.

In contrast, the performance of companies such as Ruipu Lanjun and Penghui Energy presents a different picture.

Among them, Ruipu Lanjun predicts a loss of 1.8 billion to 2 billion yuan in 2023; Penghui Energy predicts that the net profit attributable to shareholders of listed companies in 2023 will be 58 million to 85 million yuan, a year-on-year decrease of 86.47% to 90.77%.

Penghui Energy said: “Due to the sharp drop in the price of upstream material lithium carbonate, coupled with market competition, the unit selling price of the company’s lithium battery products has dropped significantly, which has been superimposed on the destocking factors of downstream companies, thus affecting revenue and profits; product price reductions have also This resulted in a large amount of inventory depreciation provisions being made at the end of the period, thus affecting the company’s profitability.”

Long Zhiqiang told reporters: “CATL is making great efforts in both domestic and foreign markets. Its quality, brand, technology and scale are unmatched in the industry. Its products have premium capabilities, 0.08-0.1 yuan/Wh higher than those of its peers. In addition, In addition, the company has expanded its upstream resources and signed cooperation with major domestic and foreign customers, which makes its market position difficult to shake. In contrast, the comprehensive strength of second- and third-tier energy storage battery companies needs to be further improved. There is a big gap in terms of scale alone, which also makes its costs less advantageous and its profitability weaker.”

Brutal market competition tests the comprehensive competitiveness of enterprises. Liu Jincheng, chairman of Yiwei Lithium Energy, said recently: “Making energy storage batteries inherently requires long-termism and high requirements for quality itself. Downstream customers will understand the reputation and historical performance of battery factories. Battery factories have already differentiated in 2023. , 2024 will be a watershed; the financial status of battery factories will also become an important consideration for customers. Companies that blindly adopt low-price strategies will find it difficult to defeat leading companies with top manufacturing levels. Volume price is not the main battlefield, and it is unsustainable .”

The reporter noticed that in the current market environment, although profitability continues to be under pressure, energy storage companies still have different expectations for business goals.

Liu Jincheng revealed that Yiwei Lithium Energy’s business goal in 2024 is to cultivate intensively and return particles to warehouses, hoping that every factory built can achieve profitability. Among them, in terms of energy storage batteries, we will strive to further improve the delivery ranking this year and next year, and starting from this year, we will gradually increase the delivery ratio of Pack (battery pack) and system.

Ruipu Lanjun previously stated that it believes the company can achieve profitability and generate operating cash inflows in 2025. In addition to adjusting product prices, the company will achieve its goals by improving production efficiency, enhancing its ability to respond to fluctuations in raw material costs, increasing sales revenue, and forming economies of scale.