Based on the analysis of the current industry capacity level, competition pattern, and profit differences, the lithium battery industry chain has the following characteristics:
1) The industry's large-scale capital expansion is nearing its end, and leading companies have the necessary capacity to occupy the main market share for a long time;
2) The competitiveness of enterprises within each link varies greatly, and leading companies maintain their competitive advantages for a long time through total cost leadership (materials) or differentiated advantages (lithium batteries);
3) As the industry enters a low growth period, the return on equity investment in each link is also stable at 10-15%, gradually approaching the level of equity capital cost. Leading companies with stable operations will increase the cash dividend ratio and reduce the profit share of investment in reproduction.
In the current large market background, the future market of leading lithium battery companies is relatively optimistic. The main reasons are as follows:
1) The lithium battery industry is a technology-intensive industry. In the current global intelligent, electrified, and low-carbon energy transformation background, lithium battery products will inevitably continue to iterate and upgrade, and leading companies' capital investment in R&D technology and new production capacity is expected to obtain a rate of return higher than the market average return level.
2) The profitability and cash flow of material companies are expected to improve. In the past two years, lithium battery material companies have experienced price competition and supply clearance, and are currently at the bottom of industry profitability. With the improvement of industry production scheduling and optimization of supply structure in the second half of the year, the unit profitability of the industrial chain is expected to increase after 2025.
At present, the leading power battery companies maintain their leading advantages in R&D technical strength, management system, production scale effect and car company fixed-point, etc. With these advantages, companies can play a synergistic role in the competition in the field of energy storage. In the future, leading battery companies should accelerate the pace of R&D technology innovation, continuously explore segmented application scenarios and layout related markets, and give play to the synergy of the midstream and downstream industrial chains to reconstruct the value chain. Leading material companies should consolidate their cost leadership through engineering and technical reforms, actively explore the international layout of production capacity, and expand the supply share of overseas battery customers.
This year is the year with the most concentrated price competition and pattern clearing in the lithium battery industry chain. The processing profit of current material companies is at a historical low. With the completion of the integrated layout of the industrial chain, cost reduction and efficiency improvement or market expansion of leading companies in 2025, they will enter a stage of stable performance growth after 2025.
