Alliance with Tesla, CATL may continue to maintain the leading advantages of BYD

Recently, Tesla officially announced on the 2019 Q4 earnings conference call that CATL has become its new battery supplier, and the detailed cooperation details will be revealed on the "Battery Day" in April.



It is not surprising that Tesla and Ningde era have joined hands. As early as March last year, foreign media broke the news that Tesla intends to purchase Ningde era batteries. In November 2019, it was reported that Tesla and CATL reached a preliminary agreement on battery supply at the Shanghai plant and will discuss a potential global battery supply agreement.



Although there are many Chinese companies in Tesla's supply chain, CATL is still the first in terms of the core "three power" systems.



It is reported that power lithium-ion batteries account for about 35%-45% of the cost of electric vehicles. For Tesla, after adopting the batteries of the Ningde era, the localization rate of domestic Model 3 parts will be increased, and it will also be the price of domestic Model 3 Continue to dive to create space. At present, the localization rate of domestically produced Model 3 parts is 30%. According to Tesla's localization plan, it will reach 70% by mid-2020, and 100% localization will be achieved by the end of the year.



2019 is a bumper year for CATL, and its leading position in my country's power lithium-ion battery industry has become more and more stable. Although the domestic production and sales of new energy vehicles declined in the second half of 2019, due to the increase in battery density and the continuous improvement of the endurance of new energy products, the installed capacity of power lithium-ion batteries is still showing an upward trend.



According to data from the my country Automotive Power Lithium-ion Battery Industry Innovation Alliance, my country`s power lithium-ion battery installed capacity reached 62.2GWh in 2019, a year-on-year increase of 9.2%. Among them, CATL`s installed vehicle volume was 31.46GWh, with a market share of 50.58%, an increase of nearly 10% compared to 2018. Recently, CATL announced its 2019 annual performance forecast. It is expected that the company will achieve a net profit of 4.064 billion yuan to 4.911 billion yuan in 2019, a year-on-year increase of 20%-45%.



In contrast, BYD and Guoxuan Hi-Tech, ranked second and third, have a harder life. Due to the decline in the sales of new energy vehicles in the second half of 2019, BYD Power`s lithium-ion battery installation has been affected, and the gap with CATL has been further widened. The annual installation volume in 2019 was 10.75GWh, with a market share of only 17.28%; Guoxuan Hi-Tech`s loading volume is 3.43GWh.



Ningde Times stated that the main reasons for the increase in performance in 2019 are:



1. With the rapid development of the new energy automobile industry, the market demand for power lithium-ion batteries has increased compared with the same period last year;



2. The company strengthens market development, releases the output of the early-stage investment in pulling wires, and increases the production and sales accordingly;



3. The company continued to strengthen its expense management and control, and the proportion of expenses to revenue decreased.



In terms of technology, the NCM811 power lithium-ion battery of CATL has been installed from the beginning of 2019, and by September 2019, the installed ratio has reached more than 20%. BMW X1PHEV, GAC New Energy AIONS, Geometry A and other models are the first to carry this high Density battery.



Before cooperating with Tesla, CATL is also actively expanding more cooperation with OEMs. At present, SAIC, Dongfeng, Changan, BAIC, Geely, Guangzhou Automobile and other Chinese car companies, as well as Mercedes-Benz, BMW, Volkswagen, Toyota, Volvo And other international car companies have reached a battery supply cooperation with CATL.



CATL`s overseas layout has also achieved remarkable results. On October 18, 2019, CATL`s first overseas factory in Thuringia, Germany officially broke ground. According to the plan, the processing line of CATL's European plant includes batteries and module products. It is expected to achieve a battery output of 14GWh in 2022. After the plant is completed, it will become Germany's largest lithium-ion battery plant.



However, CATL is also facing severe tests. On the one hand, my country`s new energy vehicle market sales may continue to decline in 2020. If subsidies decline further, CATL will face greater pressure; on the other hand, In order to prevent the battery supply from being restricted by others, more and more car companies no longer adopt the model of a single battery supplier, instead of decentralized procurement, and even consider self-developed and self-produced batteries.



Among them, Volkswagen is the most typical. In 2019, due to the limited battery output of LG Chem, Volkswagen had to lower the output of Audi e-tron, and the established processing plan was severely affected. To this end, Volkswagen has reached new supply contracts with Samsung SDI, CATL, SKI, etc., among which Volkswagen intends to support SKI as its key supplier. At the same time, Volkswagen announced a US$84 billion investment plan in 2017. This huge investment will be used for Volkswagen`s internal battery processing plan to ensure that Volkswagen`s electric vehicles have a stable battery supply in the future.



The decentralized procurement model will have a greater impact on the Ningde era. It is not even ruled out that auto companies will support the batteries of suppliers such as BYD and Guoxuan High-tech. The dominant position of the Ningde era will be shaken.



The cooperation with Tesla will undoubtedly become a "trump card" of the Ningde era. The endorsement of Tesla will affect the attitudes of other car companies towards the Ningde era.