NIE 2023 | Guoxuan High-Tech Liu Jia: Interpretation of the Overseas Expansion Trend of Lithium Battery Enterprises

Liu Jia pointed out that the global lithium battery market has broad prospects, with overseas markets growing faster than China. The explosion of energy storage scenarios has brought new opportunities to the lithium battery industry.

The global lithium battery market will experience significant growth in the next few years. According to the latest forecasts, by 2025, global lithium battery shipments are expected to reach 2.3 terawatt-hours (TWh), and by 2030, this number will soar to 5.1 terawatt-hours (TWh). Currently, China occupies a large share of the global lithium battery market, but in the Americas, the annual compound growth rate of lithium battery shipments is expected to reach 37%, far exceeding that of China. At the same time, the annual compound growth rate in European and African countries is also expected to reach 26%. This means that overseas markets will face huge demand in the future, driving China's lithium battery industry to go global.

The explosive growth of energy storage scenarios has brought new growth opportunities to the lithium battery industry. Among the four major application scenarios (passenger vehicles, commercial vehicles, two-wheeled vehicles, and energy storage), the annual compound growth rate of lithium battery shipments in the energy storage scenario is expected to reach 34%, far exceeding the industry average growth rate of 25%. This means that the energy storage sector will become an important force driving the growth of the lithium battery industry.

In terms of vehicle exports, in 2022, China's total vehicle exports reached 3.4 million units, among which the penetration rate of new energy vehicles had reached 33%. In the first seven months of this year, China's total vehicle exports have reached 2.78 million units, with the penetration rate of new energy vehicles continuing to climb, reaching 34%. This indicates that China's vehicle exports are undergoing a phase of transformation towards new energy vehicles.

Chinese automakers have demonstrated diverse models in entering overseas markets. From dealer cooperation, direct brand operation, to technology export, and even building factories locally, these automakers are expanding their presence in overseas markets through various means. Currently, the global production capacity layout of new energy vehicles in China is mainly concentrated in Southeast Asia and South America. As these automakers continue to expand their overseas markets, they have also driven Chinese lithium battery companies to extend their operations overseas.

In addition, Chinese enterprises have also frequently appeared at major overseas exhibitions, such as the Munich Auto Show in Germany and the US Photovoltaic & Energy Storage Exhibition this September. At the recent US Photovoltaic & Energy Storage Exhibition, Guoxuan High-Tech made its debut and launched a full range of energy storage products, including liquid-cooled energy storage container products, industrial and commercial energy storage products, as well as household energy storage products. This marks that China's lithium battery industry is accelerating its pace towards the global market.

Overall, with the continuous expansion and diversification of downstream application scenarios, including automotive, energy storage, special applications, and recycling, as well as the growing demand in these areas, the global lithium battery market has very broad prospects. Guoxuan High-Tech will continue to strengthen cooperation with various enterprises and expand global partnerships in the future, pushing China's lithium battery industry globally.

Liu Jia stated that China has always maintained a leading position in the global lithium battery technology field. The future technical development trends of the lithium battery industry mainly focus on two directions: material innovation and structural innovation.

In terms of material innovation, the main upgrading directions for cathode materials are ternary high-nickel, cobalt-free materials, lithium iron manganese phosphate, and lithium-rich manganese-based materials. Anode materials are mainly developing towards silicon-based anodes. It is worth mentioning that the emergence of solid-state batteries has brought new opportunities to the entire industry, but it is expected that this technology will not be truly implemented in practical applications until after 2030.

In terms of structural innovation, automakers and battery companies are actively exploring module-free solutions to optimize the energy density, structure, and safety of batteries, thereby enhancing the rangeability of electric vehicles. In terms of packaging forms, 46-series large cylindrical batteries and blade-shaped square batteries have received significant attention within the industry. Guoxuan High-Tech, as a leading battery manufacturer in China, has achieved an energy density of 240 Wh/kg for its new generation 'Qichen' lithium iron manganese phosphate cell products, while also significantly improving its cycle performance.

As the trend of Chinese lithium battery companies going global continues, Guoxuan High-Tech also hopes to take advantage of this opportunity to share technology globally. Currently, Guoxuan High-Tech has established R&D centers or laboratories in the United States, Japan, Singapore, India, Europe, and other places, dedicated to maximizing technological collaboration. It is believed that in the near future, China's lithium battery technology will exert greater influence worldwide.

Liu Jia emphasized that a globalized supply chain is crucial for ensuring supply. The introduction of European and American bills, along with their high requirements for raw materials, lithium battery recycling, and carbon footprint planning, have prompted battery companies to accelerate their pace of localization overseas. It is estimated that by 2030, the terminal battery demand in North America is expected to reach about 1.2 terawatt-hours (TWh), while the demand in Europe will reach about 962 gigawatt-hours (GWh). However, due to significant gaps in the supply of main materials for local batteries in North America, including ternary, lithium iron phosphate, anodes, electrolytes, and separators, the supply and demand situation in Europe is similar but the supply chain gap is relatively smaller.

In addition, the continuous reduction in battery costs poses a significant challenge to the supply chain. According to Bloomberg's forecast, by 2025, the price per kilowatt-hour of batteries could reach 125$/kWh, gradually narrowing the price gap between electric vehicles and fuel vehicles. Moreover, the price per kilowatt-hour of electric vehicles will continue to decrease, leading to a significant expansion in the application of electric vehicles. Taking Guoxuan as an example, facing challenges from the supply chain and prices, the company has fully deployed its entire industrial chain layout to reduce the risk of price fluctuations. Liu Jia stated that as a lithium battery enterprise, Guoxuan has made comprehensive arrangements in various fields such as raw materials, batteries, cells, battery systems, and recycling, and has deeply implemented a vertical integration strategy to ensure the stability of prices and the supply chain.

In order to implement the globalization strategy of the supply chain, Guoxuan has not only established multiple raw material bases in China but also made investment arrangements in Indonesia and Argentina. Corresponding plans have been made in the United States, Europe, and Africa, with the aim of achieving a closed-loop overseas industrial chain in the future.

Liu Jia stated that capital globalization is accelerating continuously, and the investment progress of lithium battery companies is also accelerating. Data shows that in the past few years, investments in the electric vehicle sector have grown at a rate of about 50%, with a higher growth rate in the energy storage sector. Not only are Chinese local enterprises accelerating their investments, but large companies from Europe and America are also increasing their layout. Against this backdrop, Chinese lithium battery companies must seize this important opportunity and actively expand overseas markets. Chinese battery companies have already started to layout in the European market, with their production capacity planning accounting for about one-third of the total.

As a domestic lithium battery enterprise, Guoxuan High-Tech is also actively deploying in overseas markets. Liu Jia stated that Guoxuan High-Tech plans to build a global capacity of 300 gigawatt-hours (GWh) by 2025, of which 200 GWh will be for the Chinese market and 100 GWh for overseas markets. Moreover, the overseas production capacity plan will be further expanded by 2030 to address various challenges in the overseas market. Currently, Guoxuan High-Tech has formed an overseas R&D, operation, and marketing team of nearly 800 people and is strategically deploying in overseas bases such as the United States, Germany, India, Thailand, and Vietnam. The construction of overseas bases is progressing steadily.

Despite facing instability in overseas geopolitics and fierce competition from local enterprises, Guoxuan High-Tech firmly believes that the continuous growth of the new energy industry still brings tremendous development opportunities. To effectively address the challenges and opportunities in the process of globalization, lithium battery companies must enhance their global strategic capabilities in four key areas: market promotion, product innovation, capital operation, and manufacturing. The improvement of these capabilities will help companies expand their business globally and achieve sustainable development.