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"Price war", destocking, semi-solid state, and going overseas have become the keywords of the power battery industry in the first half of 2024.

Recently, the China Automotive Power Battery Industry Innovation Alliance released data showing that from January to June this year, the cumulative installed capacity of domestic power batteries was 203.3GWh, a year-on-year increase of 33.7%. CATL and BYD once again took the lead, taking over 70% of the market share, and the head effect of the two strong players continued to expand; the two oligopolies raced, leaving less than 30% of the space for second- and third-tier power battery manufacturers to "share the food".

The results of the first half of the year are very different. Domestic power battery manufacturers continue to differentiate, and the stratification of enterprise echelons is becoming more and more obvious. At the same time, with the continuous decline in lithium battery prices, the industry's "involution" is becoming more and more intense. Battery manufacturers that once made rapid progress and expanded wildly have also begun to seek new growth directions in order to "survive."

After its wild growth, the industry has accelerated its transformation. Overseas markets and semi-solid technology routes have become important breakthroughs, and have also ushered in a rush for beachhead layout by various companies in the first half of the year.

The first line is biting hard, and the second line is sharing the food

Data from the China Automotive Power Battery Industry Innovation Alliance shows that from January to June, my country's cumulative power battery sales reached 318.1GWh, a year-on-year increase of 26.6%; the cumulative installed capacity reached 203.3GWh, a year-on-year increase of 33.7%.

Judging from the installed capacity and market share of specific companies, the gap between first-tier and second- and third-tier manufacturers is becoming increasingly obvious. The two oligarchs, CATL and BYD, continue to occupy the absolute top position and their status is stable.

In the first half of this year, CATL's cumulative installed capacity of power batteries reached 93.31GWh, still ranking first, with a market share of 46.38%, almost accounting for half of the domestic power battery market. At the same time, CATL is also the only one among the top five companies to achieve a year-on-year increase in market share, with an increase of 2.97 percentage points.

BYD ranked second with an installed capacity of 50.51GWh and a market share of 25.1%, a year-on-year decline of 4.75%.

In the first half of the year, the market share gap between CATL and BYD widened to 21 percentage points. In February, the gap once exceeded 37 percentage points. In 2023, the market share difference between the two parties was only 15.9 percentage points.

The two-strong pattern is emerging. In the first half of this year, BYD and CATL together accounted for 71.48% of the domestic power battery market, an increase of 1.16 percentage points over the whole year of 2023. This also means that the head effect is still expanding, and the space left for second- and third-tier power battery companies to "share" is less than 30% under the two-strong pattern.

China New Energy ranked behind BYD with an installed capacity of 13.83GWh, and its market share fell 1.39% year-on-year to 6.87%. Manufacturers such as Yiwei Lithium Energy, Guoxuan High-tech, Honeycomb Energy, and Xinwangda followed closely behind, but in terms of market share, the gap between second-tier manufacturers and the two oligarchs is still widening.

Putting aside the "champion and runner-up", the market share of all the companies in the top 10 list combined is just at the same level as BYD, and there is still a 20% gap with CATL.

While the leading companies are holding on tight, the China Automotive Power Battery Industry Innovation Alliance also pointed out that overall, the concentration of installed capacity has declined.

From January to June, a total of 50 power battery companies in my country's new energy vehicle market have achieved vehicle installation and matching, 2 more than last year. The total installed capacity of power batteries of the top ten power battery companies is 195.3GWh, accounting for 96.1% of the total installed capacity. Last year, the total market share of the top ten companies in my country in terms of power battery installation volume was 99.23%. In comparison, 3.13% of the market share was taken away by small and medium-sized enterprises outside the top ten list.

The reason for this may be related to the fact that car companies have entered the field of self-developed batteries.

Among the top 15 companies in the list released by the China Automotive Power Battery Industry Innovation Alliance, Jidian New Energy was established in October last year. Backed by the veteran automaker Geely Group, it has a cumulative installed capacity of 1.94GWh and a market share of 0.96%, ranking 11th after LG New Energy. Inpai Battery within the GAC system and Geely-backed Anchi New Energy also made the list. The power battery business deployed by automakers has begun to show results.

In fact, due to the anxiety of expanding production capacity and insufficient supply as well as the consideration of reducing costs and increasing efficiency, in order to strengthen the independent control over the automotive industry chain, many vehicle manufacturers such as Changan and SAIC have clearly proposed to enter the field of power batteries through self-research, self-construction, joint construction, and equity investment, and began to backward integrate "battery manufacturing" and layout battery raw materials.

More vehicle manufacturers that "do not want to work for CATL" have emerged in the field of power batteries, and may rely on the car companies behind them to "develop" rapidly and divide the market.

With the leaders suppressing and the companies behind chasing, the survival space of small and medium-sized power battery companies has been further compressed, and their days may become even more "difficult".

Seeking overseas additions under inventory pressure

From January to June, my country's cumulative output of power and other batteries was 430.0GWh, a year-on-year increase of 36.9%; but the cumulative installation volume was only 203.3GWh, and the proportion of installation volume to production was less than 50%. The production was twice the installation volume. Power batteries exceeded market demand, and the industry still faced great inventory pressure.

At the beginning of July, Yang Hongxin, chairman and CEO of Honeycomb Energy, said at the Global Partner Summit that the current overcapacity in the lithium battery industry is expected to be digested by 2026. At the same time, this year will be the first year of deep adjustment in the lithium battery industry. "The number of power battery companies may not exceed 40 by the end of the year. And the next two years will still be a stage of accelerated elimination."

At the same time, overcapacity and oversupply continue to push battery prices down. It is reported that domestic power batteries have accelerated to the 0.3 yuan/Wh era, and some companies are in a loss and urgently need to open up new incremental markets.

The domestic market is still in a state of deep destocking, and competition continues to intensify. Faced with this situation, many power battery manufacturers' "top leaders" have clearly stated that overseas markets will become a new direction for corporate business expansion, and they are paying close attention to overseas markets to seek additional volume and profit.

In terms of exports, in the first half of this year, the cumulative export volume of domestic power batteries reached 60GWh, an increase of 8.2% year-on-year. Among them, the export volume of lithium iron phosphate batteries was 23.9GWh, a year-on-year increase of 48.6%; the export volume of ternary batteries was 35.6GWh, a year-on-year decrease of 9.3%.

The top three companies in power battery exports are CATL, BYD and Farasis Energy; the export growth rates of battery manufacturers such as BYD, Guoxuan High-tech, and Honeycomb Energy all exceeded 100%, and China New Energy's exports in the first half of the year soared 2457.8%.

The latest data from South Korean research institution SNE Research shows that from January to May this year, the installed capacity of CATL and BYD in the global market was 107GWh and 44.9GWh respectively, ranking the top two global power battery manufacturers with market shares of 37.5% and 15.7% respectively.

Leaving aside the global market outside of China, in SNE Research's top ten list of power battery installations from January to May, CATL's overseas market share has expanded rapidly this year, with installations reaching 34.9GWh, a year-on-year increase of 11.4%. Its market share reached 26.9%, surpassing LG Energy Solution to rank first in the world. BYD's overseas installations surged 155.3% year-on-year to 5GWh, ranking sixth with a market share of 3.8%.

In fact, in addition to the acceleration of overseas exports by the two giants CATL and BYD, other domestic power manufacturers such as Guoxuan High-tech, Honeycomb Energy, and EVE Energy have also begun to layout overseas markets at the same time, and building factories in local areas has become the mainstream approach.

"New energy vehicles have entered a market-driven cycle, and so have power batteries. As market demand continues to grow, power batteries have also entered a market-driven cycle. Although domestic competition is fierce, overseas market demand is strong, and power batteries entering overseas markets will become a new growth point." Ma Xiaoli, executive vice secretary-general of the China Automotive Power Battery Industry Innovation Alliance, said.

According to reports, there are currently 42 power battery companies in Europe, including 26 local companies, 10 Chinese companies, and 3 Japanese and Korean companies; there are 28 power battery companies in North America, including 14 local companies, 4 Chinese companies, and 4 Japanese and Korean companies.

Multiple technology routes in parallel

In terms of technology, lithium iron phosphate and ternary batteries are still the mainstream. In the first half of this year, domestic lithium iron phosphate batteries accounted for 69.3% of the total installed capacity, a year-on-year increase of 39.3%, higher than the 30.6% market share of ternary batteries. Among them, the market share of lithium iron phosphate batteries reached 74% in June, setting a new high this year.

South Korean research institution SNE Research once pointed out that in the current electric vehicle market that emphasizes cost-effectiveness, power batteries are gradually shifting towards more price-competitive lithium iron phosphate batteries.

Some industry insiders said that with technological innovation, the safety and low-cost advantages of lithium iron phosphate batteries have continued to emerge. Against the backdrop of a "price war" in power batteries, manufacturers have been attracted to make their own plans, and their market share has continued to surpass that of ternary lithium batteries.

In the first half of this year, CATL's installed capacity of lithium iron phosphate batteries reached 52.43GWh, with a market share of 37.19%, surpassing BYD. Last year, BYD's installed capacity of lithium iron phosphate batteries ranked first in China, about 7 percentage points higher than CATL's market share.

In addition, semi-solid-state batteries and sodium-ion batteries have been installed on vehicles, and semi-solid-state batteries, which have attracted much market attention, have continued to grow rapidly this year.

From January to June, the installed capacity of sodium-ion batteries was 1.5MWh, with supporting companies including Farasis Energy, CATL and China Science and Technology Sodium Battery; the installed capacity of semi-solid-state batteries was 2.1GWh, with supporting companies including Weilan New Energy, achieving a breakthrough in market share from "0 to 1".

Although there is only one supporting enterprise, Weilan New Energy, the market enthusiasm for semi-solid-state batteries and solid-state batteries was high in the first half of the year.

Solid-state batteries, which have no obvious shortcomings, fast charging speed, high safety, long driving range, and are regarded as the "ultimate technology" of batteries, have been pushed to the forefront. Car companies and battery manufacturers are once again focusing on the problem of "installing" solid-state batteries in cars.

In the first half of the year, NIO announced that its 150kWh semi-solid-state battery pack had rolled off the production line; Zhiji Auto, a subsidiary of SAIC Group, announced the world's first mass production of "ultra-fast charging solid-state batteries"; GAC Group announced the completion of research and development of large-capacity all-solid-state battery cells, which will be the first to be mass-produced on its new energy brand Haobo in 2026.

As for mainstream power battery manufacturers, second-tier battery manufacturers are also seizing the opportunity. In May, Guoxuan High-tech released the Jinshi Battery, which uses all-solid-state battery technology. It currently has production lines for 2GWh and 5GWh semi-solid-state batteries. Liang Rui, vice president of Xinwangda, also revealed that Xinwangda's 400Wh/kg solid-state battery has been developed and a production line will be built in 2026 for initial mass production.

Solid-state batteries are gaining popularity again, and automakers and battery manufacturers are actively developing new "formulas" to focus on investment and R&D of solid-state batteries. Although a breakthrough from 0 to 1 has been achieved, only a small number of semi-solid-state batteries have just appeared on the market, and the technical and process problems of all-solid-state batteries are still unresolved.

"For solid-state batteries, each company's technical routes, suppliers and sample levels are not the same. But overall, problems exist in the interface impedance, mass production process, sample life, energy density indicators and prices of solid-state batteries. The degree of development varies, and some still need to be gradually improved." Cao Guangping, partner of Chefu Consulting, said in an interview with a reporter from 21st Century Business Herald.

After semi-solid-state batteries have gradually been put into use in the first half of the year, solid-state batteries are expected to continue to be the focus of competition in the power battery market in the second half of the year. Power battery manufacturers will try their best to overcome key pain points and technical bottlenecks and bring all-solid-state batteries into large-scale mass production as soon as possible.