There have also been some changes in the game between car enterprises and battery manufacturers, and the rules of price negotiation have changed.
“The days of battery enterprises are very sad recently, especially affected by the price of raw materials.” Farasis Energy (Gan Zhou) Co.Ltd(688567) senior vice president and Secretary Zhang Feng said in an interview with China business news on March 27 at the 2022 hundred people’s forum.
Public data show that in 2021, the price of lithium carbonate in China rose from 50000 yuan per ton at the beginning of the year to 500000 yuan per ton at the end of the year, and the price rose 10 times in one year, putting pressure on battery enterprises and new energy vehicle enterprises. Wan Gang, chairman of the China Association for science and technology, said at the 100 people meeting that since the second half of last year, the price of power battery materials has increased rapidly, which has deviated from supply and demand and produced abnormal growth.
On the one hand, the rapid growth of new energy vehicles has triggered the demand for power batteries, while the production expansion cycle of lithium ore is slow, and the mismatch between supply and demand leads to the rise of raw material prices; On the other hand, some battery manufacturers have panic mentality, lock in production capacity in advance, and the trampling effect of the supply chain is obvious. The rising price of raw materials makes battery enterprises have to raise the price. With the enhancement of the voice of power battery, a core component supplier, the game between car enterprises and battery manufacturers has also changed, and the rules of price negotiation have changed.
“a customer has proposed a price red line”
“At present, except for a few large customers, the price increase has been completed, which is basically a buy it now price.” Zhang Feng told reporters. From the price increase time node, the price increase began on January 1 this year, and the price negotiation was completed in November and December last year. “Now the price of raw materials is rising further, so we are also negotiating with individual customers to share the price increase with customers from January to the end of March this year. Now we are negotiating the second round of price increase.”
At present, several battery factories including Contemporary Amperex Technology Co.Limited(300750) , Farasis Energy (Gan Zhou) Co.Ltd(688567) , BIC battery, etc. have completed price adjustment. However, the pace of price adjustment of each battery factory is not the same Eve Energy Co.Ltd(300014) Chairman Liu Jincheng said in an interview with the first financial reporter that the price of materials rose faster in the first quarter of this year. At that time, he hoped to smooth down the way of rapid price fluctuation, so he did not make rapid price increase arrangements. However, after analysis, such price will remain stable for some time, so we are actively discussing the price with major customers and have reached a consensus. The price of major customers will be adjusted in March.
For the specific range of price increase, Zhang Feng said it was inconvenient to disclose, but he said it was more than 25%. Recently, the relevant person in charge of a new energy vehicle enterprise told the first financial reporter that since the second half of last year, the price of Contemporary Amperex Technology Co.Limited(300750) power battery has increased twice. According to the battery cost of a new energy vehicle, it increased by 10000 yuan last time and 10000 yuan not long ago.
“By the end of 2020, the price of lithium iron phosphate was 0.68 yuan / wh, and now the price is 1.4 yuan / wh, which has doubled. The general battery cost accounts for about 40% of the whole vehicle, which means that the cost of the whole vehicle has increased by 40% due to the rise in the price of raw materials.” An industry source who asked not to be named told the first financial reporter.
Since last year, the phenomenon of tight battery supply has begun to appear, which has also led to the delayed delivery of many new energy vehicle enterprises. The reporter learned that at present, the production lines of many battery factories are full, and the battery supply is still tight. Zhang Feng told reporters that it is difficult to lock the battery output this year, because at present, the production and supply are basically very tight. Take Farasis Energy (Gan Zhou) Co.Ltd(688567) as an example. This year’s production capacity has been fully contracted, and there is no more. Next year is also very tight. Farasis Energy (Gan Zhou) Co.Ltd(688567) ‘s battery production capacity has just met Daimler and GAC, which is not enough.
“At this stage, we have very significantly felt the changes in the market, including energy storage batteries. Some important customers clearly put forward the price red line, which can’t be done beyond a certain price. Based on this judgment, we think the price at the supply side should be near the high point.” Liu Jincheng told reporters.
Judging from the performance of the head battery enterprise Contemporary Amperex Technology Co.Limited(300750) and battery raw material enterprises, many enterprises made a lot of profits in 2021. Taking Contemporary Amperex Technology Co.Limited(300750) as an example, its performance forecast shows that the net profit in 2021 is expected to be 14-16.5 billion yuan, with a year-on-year increase of 150.75% – 195.52%. However, in contrast to new energy vehicle enterprises, there are no truly profitable enterprises at present.
From the situation in 2021, the price of battery raw materials began to rise, but at that time, battery enterprises did not transmit the cost pressure to car enterprises, and most chose self digestion. “Now the price is rising too fast, and we also need to properly convey the pressure of price rise to customers. After all, this is a market behavior, and we have no way to digest all this price.” Fan Wenguang, vice president of Shenzhen BIC Power Battery Co., Ltd., told reporters that now and upstream raw material suppliers strengthen the utilization of recycled materials. In the future, this proportion will become larger and larger. At the same time, we are accelerating the research and development of alternative systems and developing some new suppliers or new technical routes. In addition, observe the appropriate time to seek a safer supply chain through external equity investment, or acquisition and joint venture.
“When lithium carbonate rises to the level of about 500000 yuan, the procurement of energy storage users has been somewhat divergent and shaken. The relationship between supply and demand and the behavior of end consumers may limit the rise in the price of materials, so I think the price of materials should be near the high point at this stage.” Liu Jincheng said.
price negotiation rules changed, advance payment became normal
Fan Wenguang believes that there are two main factors in this round of price rise. One is that the massive release of the demand side has pushed up the price of raw materials. The tension of the global epidemic has also had a very negative impact on the raw material market, which has produced a certain trampling effect on the supply chain. Some battery factories lock in production capacity out of panic. Second, individual players hoard and fuel the fire, resulting in the soaring price of raw materials, which has been transmitted to the whole industrial chain. “We are working closely with upstream suppliers to reasonably adjust the pace of procurement. For example, we slow down the pace at the high price point, buy and sell slowly, and do not promote the flames or help the stampede effect. We have inventory or support in the early stage and avoid the high price point.” Fan Wenguang told reporters.
\u3000\u3000 “The price rise of raw materials is too outrageous. In the middle of 2021, a lithium carbonate manufacturer told me that his expected price is about 120000 yuan / ton, and now the price has reached 500000 yuan. There must be some opportunistic people to make huge profits, but this irrational price rise is unsustainable. Recently, we have seen that downstream enterprises do not accept high priced lithium salt, and the price of upstream materials will be adjusted at the policy level Turn off regulation.
” Beijing Centergate Technologies (Holding) Co.Ltd(000931) new battery technology innovation alliance secretary general and director general of the battery hundred people’s Association Puritanism told the first financial reporter.
It is worth noting that with the advent of the era of new energy vehicles, power batteries, as a core component supplier, are becoming more and more important. From the current market point of view, Contemporary Amperex Technology Co.Limited(300750) is still dominant, which makes subtle changes in the relationship between parts and host manufacturers. In the past, the main engine factory was relatively strong and had the right to speak in the relationship with parts enterprises. However, due to the tension of battery supply chain and the concentration of head effect, the discourse power of battery factories is increasing. At present, in order to ensure a stable supply, many car companies pay in advance to battery factories. This round of rising raw material prices, some car companies also bear the corresponding costs.
\u3000\u3000 For example, the price of lithium-ion batteries will not be changed after the negotiation between the two sides. For example, the price of lithium-ion batteries will be determined according to the price of lithium-ion batteries in the sixth and sixth quarter of last year. It is understood that the price of lithium-ion batteries will not be changed after the negotiation between the two sides The payment method has also changed greatly, and advance payment has become a common phenomenon. For example, Farasis Energy (Gan Zhou) Co.Ltd(688567) , Gotion High-Tech Co.Ltd(002074) received the advance payment lock order from overseas car enterprises last year. ” Yu qingjiao told reporters.
At present, although Contemporary Amperex Technology Co.Limited(300750) is still a dominant company, the partners of the main engine factory are no longer limited to one. In the near future, Weilai automobile, Xiaopeng automobile and ideal automobile, the new forces of head car building, have invested in battery enterprise Sunwoda Electronic Co.Ltd(300207) .
“There was a new car making force that asked for customized production, but the customized production was not easy to operate, and the negotiations between the two sides did not agree well. Therefore, the new car making force talked to other battery enterprises, and made some progress. After receiving the relevant news, the company was afraid of being robbed of the order, then went to talk to the team of the new car making force, and finally made some customized plans for them.” Li Meng (a pseudonym), an insider of a head battery enterprise, told reporters that in the past supply chain relations, car enterprises were relatively strong. They didn’t want to let the battery supplier dominate, so they would rather take money to support other battery enterprises. In this way, there will be some comparison in price negotiations with battery enterprises.
Li Meng said that when negotiating prices with battery manufacturers, battery enterprises adjust them according to the orders of different manufacturers. For long orders signed by some manufacturers, the price will be lower. However, if a long-term order is signed, the price is not finalized at one time. Generally speaking, it is phased and measured by quantity.
“With the acceleration of electrification, the zero adjustment relationship has become very subtle, and the interests of all parties must play a game. The specific sharing proportion is not understood, but the price increase of automobile enterprises will consider the rise of various raw materials and adjust the battery cost. In order to ensure the stability of the supply chain, it will certainly leave some profit space for upstream suppliers.” Yu qingjiao told reporters.
