Shanghai-based Chinese financial news site East Money recently reported that, “as the period of frenzied investment has passed, the Chinese lithium battery industry has been shrouded in the shadow of overcapacity and price wars. .. After the Chinese New Year, which is often the peak period for job hunting and employment, many battery companies reported suspensions of production, layoffs, and salary cuts.” Below are some translated excerpts from the article.
The oversupply situation in the lithium battery industry has been reflected in all aspects of the entire supply chain. Some sources told the reporters that, in the new energy industry chain from top to bottom, no orders and half-stopped factories have become the norm. “The bosses themselves are looking to find a more stable job.” Starting this year, even large companies are in danger. Other than the two “super players,” CATL and BYD, the question is: how many battery companies can survive past spring?
The turning point for the lithium battery industry’s sharp decline occurred in the fourth quarter of 2022. The trigger was that the sales growth rate of new energy vehicles began to slow down significantly, which was not expected by the industry. Because of this, since 2023, the battery industry has fought a fierce price war, and capacity utilization has further declined as well. Even for CATL, its 2021 manufacturing capacity utilization rate was as high as 95 percent, dropped to 83.4 percent in 2022, and further dropped to 70.47 percent in 2023, which is still much higher than the industry average capacity utilization rate – around 41.8 percent.
Right now, the lithium battery industry is still facing the challenge brought by the worsen high EV inventories as the result of the rapid expansion of new energy vehicles. In the meantime, the battery inventory of the energy storage industry is piling up too. No one knows when the lithium battery industry will emerge from the bottom. A new round of elimination in the market seems to be just starting.
Source: East Money, April 1, 2024
https://finance.eastmoney.com/a/202404013031165676.html