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Mainstream power battery companies suffer production declines in Q4
Nancy From Gasgoo| November 14 , 2017

GGII power battery  production declines, energy density  subsidies lithium iron, phosphate batteries

Shanghai (Gasgoo)-It is revealed that a great number of power battery companies are arranging to reduce production in the last quarter and focusing on destocking. According to the data released by Shenzhen Gaogong Industry Research Co., Ltd (GGII), China kept a redundant stock of power batteries during the previous three quarters. The Q1, Q2 and Q3 battery outputs are respectively 6.42Gwh, 11.97Gwh and 13.25Gwh, while the installed capacities are 1.27Gwh, 4.5Gwh and 8.9Gwh respectively. Due to the large stock of batteries, part of battery companies faced short payment terms and pressure accounts receivable, thus they suffered a large growth of assets devaluation compared with the earlier period.

Statistics also showed that the inventory of lithium battery reached RMB 13.165 billion during the first half of 2017, increasing 137% year on year. The account receivable totaled RMB 24.771 billion, representing a year-on-year increase of 133%. Apart from new energy vehicles, battery segment witnessed the highest inventory and accounts receivable. Meanwhile, the overall inventory turnover ratio and accounts receivable turnover ratio of lithium battery segment reached 1.7% and 1.1% respectively with drop of 0.3% and 0.2% year on year.

Generally speaking, the inventory of power battery in the second quarter is more than that of the third quarter. The reason is as following: Due to the subsidy increase of some certain NEV models from the second quarter, new energy vehicles were expected to see sales growth, so many power battery companies increased production. But in fact, several reasons like slow announcement of purchase tax exemption impacted the growth of the battery demands, thus the battery inventory shaped. In the third quarter, the market shuffle cut the demands of some battery companies. Meanwhile, policy change also accelerated the upgrading period for power battery material system, thus making the inventory of power battery less than that of the third quarter.

What's worse, it is rumored that the 2018 NEV subsidies will be reduced 20% in advance, and with the price of power battery further decreasing, the energy density and threshold of subsidies will be raised again. Therefore, some battery companies started to destock their batteries. In the fourth quarter, with a large number of battery companies concentrating on destocking, the price competition of battery become more and more intense. Some mainstream battery companies even offered a price of RMB 1400/Kwh, and may provide a lower price for car companies.

According to the data released by GGII, the lithium iron phosphate batteries are stocked more than ternary materials. With the potential uplift of energy density, the lithium iron phosphate batteries may face tougher situation in the future.

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