news

Original｜Jaden Edited｜Cong

The Mercedes-Benz electric car fire accident that occurred in South Korea earlier this month finally began to ferment after Mercedes-Benz revealed its Chinese battery supplier.

In the underground parking lot of a high-end apartment in Incheon, South Korea,Mercedes-Benz EQEThe electric car caught fire. The parking lot sprinkler system failed in the early stages of the fire, which took eight hours to put out. Twenty-three residents were hospitalized for smoke inhalation, and 140 cars in the garage were burned or damaged.

Some residents were also forced to move to shelters as their apartments lost power and water.

"We are making every effort to work with fire authorities to determine the root cause of the fire," Mercedes said in a statement.

A spokesman for the Incheon Fire Department said that although the investigation into the fire is still ongoing, surveillance footage showed that the fire was caused by an electric vehicle battery.

Although Mercedes-Benz had not previously disclosed its supplier list due to commercial confidentiality, this incident forced Mercedes-Benz to disclose on its official website the power battery information of 16 models sold in South Korea. Thirteen models used power batteries from Chinese companies, including five models whose power batteries came from Farasis Energy.

The Mercedes-Benz EQE 350 model that caught fire was equipped with Farasis Energy's 88.8 kWh NCM battery.

Mercedes-Benz said that in addition to Farasis Energy, its electric vehicle battery suppliers also include South Korea's LG Energy Solution and SK On, as well as China's CATL.

The accident caused great panic among local consumers about electric vehicles. Therefore, after Mercedes-Benz disclosed its battery manufacturer, the South Korean government recommended that vehicle manufacturers disclose information on batteries for electric vehicles sold on the market.

Previously, Korean electric vehicle manufacturers would provide information such as power consumption rate and battery capacity when releasing new vehicles, but would not disclose detailed information such as battery manufacturers or product names.

Apart fromTeslaIn addition to General Motors, South Korea's Hyundai,Kia, KG Automobile, and foreignBMW、Volkswagen、Renault、Rolls-Royce, Stellantis and other car manufacturers have proactively announced the brands of batteries installed in their electric vehicles.

Among them, except Stellantis, the electric vehicle batteries of other brands are all equipped with Korean power batteries.

Stellantis' brandsJeep, Peugeot,DS Automobiles) Electric vehicles sold in South Korea use a mix of Korean and Chinese brand batteries. Among them, Peugeot e-208, e-2008 SUV models and DS 3 E-Tense models are equipped with CATL batteries, and Jeep's first pure electric SUV model Avenger, which is scheduled to be launched next month, is also equipped with CATL batteries.

Jeep's plug-in hybrid vehicles, the Wrangler 4xe and Grand Cherokee 4xe, are equipped with batteries manufactured by Samsung SDI.

And the fact that Mercedes-Benz introduced Farasis to take the blame can only be said to be adding insult to injury.

Affected by the fire, Farasis Energy’s stock price continued to fall. As of now, its market value is only 10.7 billion yuan, less than one-fifth of its peak.

In the past few years, Farasis Energy has been facing an embarrassing situation of high revenue growth and increasing losses. In the first quarter of this year, the company still failed to turn losses around, with a net loss of 217 million yuan.

In terms of gross profit margin, Farasis Energy's overseas sales gross profit margin in 2023 was 12.72%, while that in China was -5.91%, with a large gap between domestic and overseas gross profit margins. Therefore, Farasis Energy has begun to shift its strategic focus to overseas markets in the past two years, and currently more than half of the company's revenue comes from overseas business.

In this regard, Farasis Energy explained that the main reason is that the overseas new energy vehicle prices and energy prices are higher than those in China, so the overseas power battery product prices are relatively high. In addition, overseas products have high added value, and the terminal product positioning of overseas customers is relatively high, so the gross profit margin of overseas business is higher than that in China.

It is worth mentioning that in 2023, the company's sales revenue in North America increased significantly by 317.25%. The customer in North America is Mercedes-Benz.

In 2018, Farasis Energy reached a strategic cooperation with Daimler, the predecessor of Mercedes-Benz, and signed a supply contract totaling 140GWh from 2021 to 2027. In 2020, Daimler invested in Farasis Energy as a strategic investor, holding 2.64% of the shares and becoming Farasis' eighth largest shareholder.

So far, Mercedes-Benz has launched EQE,EQA、EQBThe battery is from Farasis Energy. However, although the supply volume has increased, the total price is not much, that is to say, the sluggish sales of Mercedes-Benz electric vehicles have not brought Farasis the expected performance explosion.

In the first half of this year, the global sales of all Mercedes-Benz electric vehicles were only 93,400 units, and among so many electric vehicles, Farasis is not the supplier of all of them. The sales volume cannot be increased, which is undoubtedly a great pressure for Farasis Energy.

With the fire in South Korea, Farasis Energy may face not only the claims from Mercedes-Benz and the costs of replacing the batteries of related models, but more importantly, it may deal a heavy blow to Farasis Energy's overseas business, which is something Farasis Energy cannot afford.

Regarding the unsatisfactory performance, Farasis Energy once stated that in 2023, the oversupply of industry production capacity led to a continuous decline in product prices, and the intensified competition among automobile companies transmitted the pressure to the power battery industry and other multiple factors squeezed the company's product gross profit.

This kind of pressure is certainly not only applied to Farasis Energy, but is also transmitted to the entire battery industry, especially second-tier battery manufacturers.

In the first seven months of this year, CATL ranked first in the market with an installed capacity of 112.73GWh, with a market share of 46.54%, an increase of 3.41 percentage points year-on-year.BYDIt ranked second with an installed capacity of 59.88GWh and a market share of 24.72%.

The share of these two leading manufacturers exceeds 70% of the total power battery market. The remaining 20 to 30 second-tier manufacturers such as Honeycomb, Sinovac, EVE Energy, Guoxuan High-tech, and Farasis Energy will compete for the remaining less than 30% of the market share. It is conceivable how much share each company will be able to get.

In this case, given that they do not have an absolute technological advantage, it is a luxury for second-tier manufacturers to cut prices in order to survive.

Take CATL as an example. According to its 2024 semi-annual report, CATL's manufacturing cost is approximately 0.05 to 0.06 yuan/Wh lower than that of second-tier battery manufacturers.

If an electric car is equipped with a battery pack with a capacity of 50 degrees, the manufacturing cost per watt-hour will be reduced by 0.05 yuan. This item alone can save the car company 2,500 yuan per car. This is more than enough for car companies that generally lose money on every car they sell.

Even so, CATL is still making huge profits by relying on economies of scale. In the first half of 2024, CATL's power battery gross profit margin reached 26.9%, while second-tier manufacturers generally suffered losses and were in dire straits.

At this year's 100 People Forum, Liu Jincheng, chairman of Yiwei Lithium Energy, said that the characteristic of this industry is that you want to compete, but you are not qualified. The brothers behind (CATL and BYD) each have their own difficulties. We are not competing, but coexisting and dying together. How can you compete? There is no competition.

However, a big reason why second-tier companies can still get orders is the soul-searching game between automakers and top suppliers. Automakers want to get rid of their dependence on a single top supplier, avoid being reduced to working for others, and control their own destiny. This is also the reason why automakers now generally choose two, three, or even multiple suppliers.

Take the new forces as an example. In addition to the cooperation with CATL, NIO has Weilan New Energy, Ideal has Sunwoda and Honeycomb Energy, Xiaomi also has Fudi and Sunwoda, and Xpeng has Sunwoda, Sinotruk, BAK, EVE Energy and many other battery suppliers. In addition, without exception, these car companies are also developing their own batteries at the same time.

But this is not enough to support the survival of all small and medium-sized manufacturers. In the past five years, the number of domestic power battery companies has dropped sharply, from more than 100 in 2018 to more than 50 in 2023, and only more than 30 this year.

However, the competition has not eased due to the reduction of players. This is because the production capacity of the entire battery industry has been expanding rapidly in the past few years, while the growth rate of actual demand cannot keep up with the speed of capacity planning.

Also at this year's Hundred People Forum, Ouyang Minggao, an academician of the Chinese Academy of Sciences, mentioned that China's battery production capacity may reach 3,000GWh in 2025, and shipments are expected to be 1,200GWh. According to current capacity planning, by 2025, the total capacity of CATL alone will exceed 700GWh.

Even CATL has not escaped the pressure of overcapacity. Financial report data shows that in the first half of 2024, CATL achieved operating income of 166.767 billion yuan, a year-on-year decrease of 11.88%. Among them, the revenue in the second quarter fell by 13.18% year-on-year. This is the third consecutive quarter that CATL has experienced a decline in revenue.

"Editor's note: For more information on CATL's strategies and measures to break through, please follow our content next week."

But in any case, for second-tier battery manufacturers, it is still a good choice to find their own positioning and place in the gap between car companies and leading battery manufacturers, survive and slowly seek breakthroughs.

Liu Jincheng once said that each company has its own advantages. In his decades of battery career, he could make money with sales of 200 million, but he could not make money with sales of several billion. This sentence also reveals the uniqueness of this industry.

If this is the case, then between market share and making money, second-tier battery manufacturers seem to be able to find a way to survive.

I know you're watching