The King'S Ambition And Helplessness: Power Battery Battle Behind Tesla'S Price Reduction

On the first day of 2021, when the domestic Tesla Model Y quickly came to the forefront of public opinion due to the price reduction, the test also followed - under the rumor that "the order broke 100000 within 10 hours", whether Tesla's production capacity can withstand the pressure will directly affect the timely delivery of new cars.

On January 2, the reporter of the 21st Century Business Herald consulted a Tesla salesperson and learned that "if you place an order now, the delivery of Model Y will have to wait until the end of March at the earliest." The official website of Tesla China shows that Model Y will be delivered this month.

In recent years, Tesla has been regarded as a "price killer" in the industry. The market reaction caused by the falling prices of new cars is more vividly reflected in the domestic Model Y: the price is reduced by more than 100000 yuan compared with the expected price, which has become a "big gift" in the mouth of many consumers.

The reason why Tesla dares to fight the "price war" is precisely because of the rapid decline in battery costs in recent years. However, Tesla has the courage to cut prices and seize vehicle orders due to the cost reduction of batteries, but it may also restrict the further expansion of its vehicle capacity due to the untimely supply of batteries.

On Tesla's "Battery Day" last year, Elon Musk, CEO of the company, admitted that Tesla often missed production goals because the design and manufacturing process of new cars and batteries were not fully mature.

Chasing King

In the early morning of September 23, 2020 Beijing time, Musk appeared in front of 270000 netizens as scheduled. At that time, he introduced Tesla's future plans, especially the substantial reduction of battery design and manufacturing costs. Therefore, the press conference is called Tesla "Battery Day". However, the press conference did not meet the expectations of the outside world for the company. Even, the direct evaluation of some institutions after the meeting was that "some expectations fell short." On the same day, Tesla's share price closed down and its market value shrank by more than 150 billion yuan.

The reason why Tesla "Battery Day" has attracted much attention from the outside world is that as the king of new energy vehicles, Tesla is still a catcher in the field of power batteries. This is a pain in Musk's heart, and also the biggest ambition that Tesla is believed to be gathering: to realize the self production of new batteries.

According to the plan, Tesla will realize the production of 100GWh power battery in 2022, and this number will rise to 3TWh in 2030. "If this goal is achieved, Tesla can not only supply batteries for its own vehicles, but also supply batteries to other automobile manufacturers, killing two birds with one stone," a new energy automobile industry analyst told the 21st Century Business Herald.

In fact, Tesla is accelerating its pace of catching up.

On the evening of December 29, 2020, Yahua Group, a domestic A-share listed company, announced that Ya'an Lithium, a wholly-owned subsidiary of the company, had signed a battery grade lithium hydroxide supply contract with Tesla, which agreed to supply Tesla with battery grade lithium hydroxide products worth between $630 million and $880 million from 2021 to 2025. This large order directly led to the realization of two linked board of share price of Yahua Group.

It is worth mentioning that this is not the first time that Tesla has purchased battery grade lithium hydroxide from Chinese enterprises. As early as 2018, Ganfeng Lithium, the largest lithium compound manufacturer in China, announced that it had signed a strategic cooperation agreement with Tesla, agreeing to supply battery grade lithium hydroxide products to Tesla's designated battery suppliers from January 1, 2018 to December 31, 2020 (which can be extended for three years), and the annual purchase quantity was about 20% of the company's total production capacity of this product in that year.

The difference is that Ganfeng Lithium's supply target is Tesla's designated battery supplier, while Yahua Group's supply target is Tesla directly. This change shows Musk's "Sima Zhao's heart".

The demand for high endurance mileage is a problem that the future development of new energy vehicles needs to continue to face. On Tesla's "Battery Day", "lower cost" and "higher energy density and range" became the keynote. However, the particles of ternary materials prepared with lithium hydroxide as the lithium source tend to be more uniform, which is one of the reasons why high-performance power batteries gradually use lithium hydroxide as the lithium source.

In recent years, Tesla has focused on batteries as one of its cost reduction priorities. In terms of battery technology, Tesla adopts the strategy of developing lithium iron phosphate battery and ternary lithium battery simultaneously. After some models are equipped with lithium iron phosphate batteries, the cost is lower, which is the direct reason for the sharp price reduction of models including Model 3.

However, on the technical route of self-made batteries, Tesla still insists on the ternary route of high nickel. In addition, it released a new generation of cylindrical 4680 battery last year. However, in the opinion of industry insiders, even if it is indicated that it will build its own battery production line, Tesla will not be able to achieve large-scale mass production of power batteries in the short term. "Although Tesla has a large number of battery technologies, the overall battery production line technology may not be mature." The aforementioned new energy automobile industry analyst said that in the short term, Tesla's dependence on external battery suppliers is difficult to change.

A feast of power batteries

"Tomorrow will be very busy. When Model Y arrives at the store, many people say they will come to see the car." On January 2, the aforementioned Tesla salesperson told the 21st Century Business Herald reporter that the domestic Model Y used a ternary lithium battery, which was consistent with the vehicle information in the 12th batch of 2020 New Energy Vehicle Promotion and Application Recommended Models Catalogue published by the Ministry of Industry and Information Technology.

Model Y is more popular than expected, or it may affect the shipping target of domestic Model Y, making Tesla's capacity increase more bold.

According to media reports earlier, a source said that Tesla (Shanghai) Plant plans to produce about 550000 vehicles in 2021, including 300000 Model 3 vehicles and 250000 Model Y vehicles.

The 21st Century Business Herald reporter learned that the battery capacity of the standard version of the domestic Model 3 is 55kWh, while that of the long endurance version is 77kWh. The battery capacity of the new domestic model 3 has not changed. In addition, the battery capacity of Model Y announced by the Ministry of Industry and Information Technology is 77kWh. According to this calculation, the installed capacity of power batteries required by 550000 domestic Tesla vehicles is up to 42.35GWh.

At present, the main suppliers of Tesla batteries are Panasonic, LG Chemical and Ningde Times. Among them, the battery suppliers of Tesla (Shanghai) Factory are LG Chemical and Ningde Times.

To be sure, the power battery feast launched by Tesla is something that no power battery manufacturer can swallow alone at present. Statistics in 2019 show that the installed capacity of Ningde Times, Panasonic and LG Chemical Power Battery ranks the top three in the world, with 32.9GWh, 28.5GWh and 15.4GWh respectively, which are still lower than the maximum demand for power batteries required by 550000 domestic Tesla vehicles.

When sharing this big cake, capacity supply becomes an important support for each family to compete for share. Taking Ningde Times as an example, 10 billion yuan expansion has become the most concerned event of the company in recent days.

On February 3, 2020, Ningde Times announced that it had signed an agreement with Tesla to supply lithium ion power battery products to Tesla from July 1, 2020 to June 30, 2022. In terms of supply, Ningde Times is inferior to LG Chem. However, under the expectation of high volume production, Ningde Times is expected to increase its battery supply to Tesla.

On the evening of December 29, 2020, Ningde Times issued three announcements in succession, proposing to build or expand three lithium ion battery production base projects, with a total investment of no more than 39 billion yuan, to further consolidate its top position in the installed capacity of power batteries.

The competition among the three battery suppliers will continue. It is reported that LG Chem announced last month that it plans to supply its ultra-high nickel ternary lithium battery to Tesla in the next year, and this battery is planned to be mass produced in the second quarter of this year and used for the domestic model Y and the next generation of electric vehicle models.

In addition, for the new generation of batteries announced by Tesla, external battery suppliers are also accelerating the trial production pace of Tesla's new batteries. Recently, according to media reports, Panasonic, one of Tesla's three major battery suppliers, plans to start trial production of new 4680 batteries for Tesla electric vehicles as early as 2021. Once the trial production is successful in advance, Panasonic can increase the opportunity to obtain orders from Tesla as soon as possible, which is tantamount to "grabbing food from a tiger's mouth". LG Chem said earlier that its new battery specification is completely consistent with the Tesla 4680 battery. Ningde Era is also actively laying out cylindrical battery production lines, which adds variables to future competition.