Author: Wang Lingfang
Editor: Qiu Kaijun
“In front are Guangdong’s Zhuang and Jiangsu’s Qiang, and behind is a pack of wolves chasing after.”
This describes the landscape of China’s lithium battery industry chain – Guangdong and Jiangsu take the lead, while some regions follow and catch up.
But this landscape is likely to change soon.
Represented by cities such as Yibin and Suining, Sichuan Province in western China is becoming a leader among the “pack of wolves,” and even has the potential to become the new head of the power battery region.
Academician Ouyang Minggao from the Chinese Academy of Sciences asserts that the trend of China’s power battery industry chain development is definitely shifting to the west, especially to Sichuan.
Today, Sichuan has gathered nearly 20 industry chain enterprises, including Ningde Times and its subsidiary Funeng Technology, Tianhua Ultra Clean, Dehui Nano, Btr New Energy, CATL, KDL, and Zhenyu Technologies, which have all established manufacturing plants in the region.
Looking back about a decade, few would have expected Sichuan to become the gathering area for the lithium battery industry chain; regions such as Henan and Tianjin were then considered to be battery manufacturing centers.
Reviewing the development of power battery industry clusters, we will find that even before the industry moved west, the center of gravity of the power battery industry had already undergone a shift to the east: companies such as CITIC Guoan had moved their production capacity from central regions to Changzhou City, eastern Jiangsu Province.
These two shifts reflect the path that the battery industry chain has taken – from an industry-based region to a market-oriented region and then to a resource clustering region – corresponding to the different stages of the development of the new energy automobile industry.
Now let’s review this process.
Early Stage: Industry-Based Regions Take the Lead
Speaking of the battery industry foundation, Henan and Tianjin are at the forefront in China.
Henan’s Battery Industry Has Lost Its Momentum
Before the founding of the People’s Republic of China, the two regions already had military background battery research and production. After the founding of the country, as market economy developed, related technology entered its civilian transitional period, and battery production companies based on this foundation began to emerge.
In 1950, the first battery company in Henan Province, Xinxiang Battery Factory was established, producing Zhonghua brand disposable batteries.
Being able to be called “Zhonghua” indicates the high status of this enterprise.
In 1956, State-Owned Factory 755 was established in Xinxiang, and developed rechargeable secondary batteries, which was the first of its kind in China. Due to its technological leadership, in 1967, State-Owned Factory 755 provided products for the “Peace 2” space exploration satellite and supported the Antarctic scientific research station in the 1980s.
On new energy vehicle factory qualification certificates, we frequently see Henan Xintaihang Power Source Co., Ltd., which was restructured from Factory 755.# Translation
In 2006, the “Zhonghua” trademark of Xinxiang Battery Factory was taken back by the Xinxiang Municipal Government and authorized for use by another frequent customer, Henan HuanYu Group Co., Ltd., on the qualification certificate for new energy vehicles.
New Taihang is positioned as high-end, and its products are widely used in military and national major projects. While HuanYu’s batteries are widely used in civil fields.
Both of these companies obviously hope to make achievements in the field of lithium-ion batteries for new energy vehicles, but unfortunately, they are mostly limited to the field of special vehicles.
However, another company in Henan, Zhonghang Lithium Battery (formerly known as Zhongchuang Innovation Aviation), is more well-known. Luoyang’s Zhonghang Lithium Battery is also a military-civilian integration enterprise, and its predecessor is the Sky Energy (Luoyang) Co., Ltd., which was incubated by the China Air-to-Air Missile Research Institute and focuses on the production of lithium iron phosphate power batteries.
In 2012, among the electric vehicle models announced by the Ministry of Industry and Information Technology, the number of models using Zhonghang Lithium Battery ranked first.
Another leading company is Do-Fluoride.
Thus, the position of Henan in the lithium battery industry can be seen.
In fact, on the factory qualification certificate for new energy vehicles, there are at least 10 battery companies from Henan: Do-Fluoride, HuanYu Sale, Henan Taihang New Energy, Hengyu New Energy, Zhonghang Lithium Battery (Luoyang), Henan Lithium Dynamic Power, Henan Lixuan Technology, Henan Penghui Power, Henan Shunzhihang, and Zhengzhou Bike Battery.
Henan is able to gather so many companies thanks to its early research and relatively good industrial foundation. But unfortunately, except for Do-Fluoride, most of the Henan companies are supporting commercial and special vehicles and cannot enter the forefront of the installation ranking list. With the increase in the concentration of the battery industry, many companies have no actual number of installations.
As of 2020, the number of battery-supporting enterprises on the factory qualification certificate for new energy vehicles in Henan has been reduced to 7, namely Zhonghang Lithium Battery, Do-Fluoride, Bike, Penghui, Lithium Dynamic Power, New Taihang Power, and Pingmei Guoneng .
Zhonghang Lithium Battery, the pillar in this industry, has also moved its headquarters out of Luoyang and only undertakes some commissioning work. It can be seen that the development of the vehicle lithium-ion battery industry in Henan Province has insufficient momentum.
Obvious Decline of Battery Industry in Tianjin
The situation of the battery industry in Tianjin is similar.
The 18th Institute of Electronics Technology Group Corporation is the technical foundation of Tianjin’s battery industry and was also based on military research before the founding of the country.
The technology of Lishen Battery comes from the military-to-civilian conversion of the 18th Institute.
With a strong foundation in batteries, the technology of Tianjin Lishen Battery was once leading in the industry and was regarded as the leader of the northern battery industry, driving the development of the entire Tianjin battery industry chain on its own.
With the help of upstream companies such as Btray, Jinniu, and Tianjin Stelang, Tianjin has also established a relatively complete industrial chain and attracted many battery companies to settle in.In the heyday of the new energy vehicle industry in 2015, there were up to six supporting battery companies listed on the new energy vehicle factory certificate in Tianjin, including Tianjin Lishen, Tianjin Zhongjue, Samsung (Tianjin), Tianjin Jiewei Power, Tianjin Shenlu, and Baishun Songtao.
With the decline of Lishen and the withdrawal of Samsung’s batteries, Tianjin’s battery industry chain enterprises have also relocated their production centers one after another.
In 2019, only Lishen, Zhongjue, Jiewei Power, and Samsung remained in Tianjin.
After Samsung’s withdrawal, in 2020, only Lishen and Jiewei Power remained with supporting batteries in Tianjin. Moreover, the production centers of these two companies have also been moving towards the Yangtze River Delta and other regions.
The Mixed Market of Guangdong’s Battery Industry
Guangdong is the province with the highest number of supporting new energy vehicle battery enterprises.
According to the vehicle factory certificate data in 2015, there were not less than 20 supporting battery companies in Guangdong province. Most of them were consumer batteries converted to power batteries, represented by consumer battery giants like Dongguan New Energy (ATL), BYD, and Shenzhen Huazheng Electric, and now the giant Ningde Times was born out of ATL.
Later, Ningde Times, after becoming independent, moved to the neighboring province of Fujian, Ningde.
The characteristics of Guangdong’s battery companies are that there are both giants like ATL and BYD, medium-sized companies like XWD, and many small battery companies that are not well-known, such as Dongguan Zhenhua New Energy, Chuangming Battery, and Guangdong Tianjin New Energy. The overall market is mixed but vibrant.
In the early stages of the development of new energy vehicles, power battery technology was not mature, and high government subsidies gave many companies room for survival. However, with the continuous improvement of market technology, some companies with poor technical expertise and quality products that could not get out of the domestic market gradually lost their voice, or even disappeared in the long history.
At the same time, these screened companies became resources that various local governments competed to grab, and Changzhou, Jiangsu, developed in this way.
Today: Market Positioning is Key
In April of this year, the Jiangsu Provincial Department of Industry and Information Technology released a message showing that Jiangsu province has become the world’s largest lithium battery manufacturing base.
In recent years, Ningde Times, CATL, and ProLogium have successively settled in Jiangsu. The number of midstream companies in the new energy vehicle industry chain has reached 3,440, ranking first in the country; the production capacity of power batteries has reached 85.5 GWh, accounting for one-third of the country’s total, both ranking first in the country.
Jiangsu’s lithium battery production capacity is mainly concentrated in Changzhou. It took more than ten years for Changzhou to improve its power battery industry chain.
Guohong Gu, Deputy Director of the Qingdao Automotive Research Institute of Geelyn University and a native of Changzhou, is very familiar with the development of Changzhou’s power battery industry, and has interpreted the rise of Changzhou’s battery industry in his article.
As a prefecture-level city, Changzhou has neither well-known automobile companies nor mineral resources and well-known universities, and the basic foundation of the battery industry chain in the field of batteries was virtually blank.
The earliest foundation of Changzhou’s power battery industry chain came from Boston Power. In 2011, Boston Power was the first to settle in Liyang, Changzhou.According to Gu Guohong, although the Boston battery introduced did not grow into a large industry, its demonstrative effect was very significant, indicating the direction of investment promotion in Changzhou.
In 2015, Zhonghang Lithium Battery mentioned before was introduced to Jintan, Changzhou. Before that, the headquarters of Zhonghang Lithium Battery was located in Luoyang and it was a typical enterprise in Henan Province. With the adjustment of equity relationship, the major shareholder changed to the government of Jintan District, and the production capacity and headquarters of Zhonghang Lithium Battery also moved in.
In June 2016, CATL Jiangsu New Energy Technology Co., Ltd., invested by Ningde Times, was registered in Liyang. In September 2016, Ningde Times designed a 50 GWh capacity project of the Yangtze River Delta Power Battery Base (Jiangsu Times) in Liyang, and started construction. Zeng Yuqun, Chairman of Ningde Times, proposed to build Liyang into the largest lithium-ion battery manufacturing base in China and even in the world.
Subsequently, Liyang, Changzhou once again introduced two incubation projects of the Institute of Physics, Chinese Academy of Sciences: Zhongke Hai’na and Weilan New Energy.
In February 2018, Zhongke Hai’na established a subsidiary in Liyang to promote the industrialization process of sodium-ion batteries.
On March 29, 2018, Jiangsu Weilan New Energy Battery Co., Ltd. held a groundbreaking ceremony for the first phase of the solid-state battery project in Liyang, Changzhou. The total investment of the project was CNY500 million, and the investment of the first phase was CNY180 million.
In 2018, Honeycomb Energy settled in Jintan, Changzhou, and the factory was planned to be built in four phases with a total production capacity of 68 GWh.
So far, Changzhou has established a complete industrial chain in the field of power batteries, including positive and negative materials, diaphragms, battery cells, battery pack boxes and accessories, and BMS (battery management system). “During the 14th Five-Year Plan” period, Jintan, Changzhou, strives to create the first hundred billion-level new energy vehicle industry in the entire region.
Looking at Jiangsu Province, there are more battery companies gathered, such as LG Chem, Suzhou Lishen, Lixing (Jiangsu) Energy, and Guotai Huarong.
The reason why so many companies can be attracted is that Jiangsu Province has obvious location advantages, located in the Yangtze River Delta region, where there are many vehicle manufacturers, such as SAIC, Tesla, Ideal, BAIC New Energy, and Ziyoujia. Furthermore, there are also nearby vehicle manufacturers in Anhui Province, such as Chery, JAC, and NIO; In addition, the consumer market is large, and talent introduction is relatively convenient.
Relying on the efforts of the investment promotion team, Jiangsu Province has been transformed from a weak battery industry base to the largest gathering area for power batteries. The rise of Jiangsu Province in the field of batteries reflects the role of the market orientation.However, having these advantages is not enough, as Sichuan is challenging Jiangsu’s leading position.
Future: Resources Becoming an Important Orientation
Sichuan’s advantages are in green energy, water transportation, mineral resources, and low labor costs.
Initially, Chen Wuyun said that he wanted to build Liyang into the largest lithium-ion battery manufacturing base in the world. However, this is now impossible to achieve as Ningde Era’s investment in Yibin has already surpassed that of Liyang.
On September 25th, 2019, Sichuan Times Power Battery’s 15GWh Phase I production capacity project was signed, and 10 agreements were signed subsequently, with a total production capacity of 190GWh and total investment of 56 billion yuan. Sichuan Times Power Battery’s project is the largest single production base project in terms of capacity and investment scale for Ningde Era, with an expected total output value of 152 billion yuan after full production is reached.
Currently, there are over 100 battery companies and upstream enterprises, including Ningde Era, SVOLT Energy Technology, EVE Energy, CHANGXIN Energy, Xinwanda, and Hua Ding Guo Lian, etc., that have settled in Sichuan.
According to “Electric Vehicle Observer,” both Ningde Era and SVOLT Energy Technology see cost, green energy, coordinated policies, and business environment as significant factors for choosing Sichuan as their location.
In particular, the abundant hydropower advantages are not possessed by Jiangsu.
Actually, under China’s “dual-carbon” goal, battery companies face significant pressure to reduce carbon emissions.
In the view of industry insiders, the new energy industry is a decarbonization industry, but the preparation of the products in this industry is a high-energy-consuming process.
Carbon emissions from power batteries are mainly concentrated in two areas: battery production and assembly, and the production of upstream key materials such as positive and negative electrodes. According to T&E data, carbon emissions from battery production and assembly range from 2-47kg CO2/kWh, while the upstream part of battery production (mining, refining, etc.) is 59kg CO2/kWh, accounting for more than half of the total.
Yang Jie, CEO of BASF SVOLT, said that the positive electrode material is the “electric tiger,” and “our production line is all electrically heated, and steam heating is also unlikely. The only thing we can do is to increase single-line production capacity, which is not unlimited, but limited.”
However, Ren Jianguo, General Manager of Btr New Material Group Co., Ltd. believed that the energy consumption for producing positive electrode materials is lower than that of negative electrode materials. “Negative electrode materials are the real “Electric Tigers.” One ton of graphite requires 10,000 kWh, although the electricity consumption can be reduced to 6000-8000 kWh by using new technology, it is still an “electric tiger,” even larger than the electricity consumption of aluminum electrolysis.”
It can be seen that relying on coal-fired power cannot reduce carbon emissions and emissions. Hydropower is the right path.In addition, Sichuan’s mineral resources are also very rich, with abundant lithium resources accounting for 6.1% of the world and 57% of China’s, mainly concentrated in the two major mines of Jiageka in Ganzi Prefecture and Kuoeryin in Ngawa Prefecture. Moreover, Sichuan is not far from Tibet and Qinghai, making the supply of salt lake lithium resources relatively easy.
Sichuan Province also has a favorable geographical location, which radiates to the auto industry hub of Wuhan and Shanghai downstream of the river, and to countries along the “Belt and Road Initiative” and the Southeast Asian market to the south.
Everything has its pros and cons, and talents and resources in economically developed regions are relatively more expensive. However, the ultimate competitiveness of the manufacturing industry still depends on cost. The lower labor costs, energy costs, and transportation costs in western regions have become the key to this round of victory.
On the other hand, the battery technology has entered a relatively stable stage, and battery companies are expanding madly to catch up with this wave of dividends, with cost reduction and efficiency enhancement becoming an urgent task. Ningde Times related officials clearly pointed out that the Sichuan base is supporting Shanghai Tesla.
Compared with that, Yichun, Jiangxi, which is also known as the “Asian Lithium Capital”, has abundant lithium mines. However, the region mainly relies on railway transportation, and water transportation is not convenient. It also lacks the advantages of hydropower, and there is a shortage of strong vehicle companies around it compared to Yibin, Suining, and even Chengdu in Sichuan Province.
China’s power battery companies are turning their head westward in a grand manner. This transfer of the center of power battery region will continue the industrial innovation vitality of China’s power battery industry, expand the scale effect, and help Chinese power battery companies continue to maintain their leading position in global competition.
On July 21, the 2022 World Power Battery Conference was held in Yibin, Sichuan. Industry giants attended the conference one after another, like a horn blowing the signal for Sichuan’s lithium-ion battery rise. It is believed that power battery industry players in China and even around the world will gather more and more in Sichuan.
Friends, let’s meet in Sichuan.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.