Lithium battery materials are at the upstream of the entire lithium battery industry chain, mainly composed of four major materials: cathode materials, anode materials, diaphragms, and electrolytes.
Cathode materials are the decisive factor in the electrochemical performance of lithium batteries, directly determining the battery's energy density and safety, and thus affecting the overall performance of the battery. Although this segment has a higher output value, it is "under pressure from both ends" (upstream resources and downstream batteries) in terms of pricing power.
Since cathode materials account for 30-40% of the cost of lithium battery materials, their cost directly determines the overall cost of the battery. Therefore, cathode materials play a pivotal role in lithium batteries and directly lead the development of the lithium battery industry.
From the current point of view, the Matthew effect of various cathode materials is forming, products are beginning to be stratified, and on the mainstream product lines, it has entered a dynamic game stage among several leading manufacturers.
1. Classification of Lithium Battery Cathode Material Systems
Lithium batteries are mainly divided into lithium cobaltate (LCO), lithium manganate (LMO), lithium iron phosphate (LFP), and ternary materials (nickel cobalt manganese oxide (NCM) and nickel cobalt aluminum oxide (NCA)) according to the cathode material system.
Lithium cobaltate has a high cost and short lifespan, mainly used in 3C products; lithium manganate has low energy density and short lifespan but low cost, mainly used in special vehicles; lithium iron phosphate has a long lifespan, good safety, and low cost, mainly used in commercial vehicles; ternary materials, especially NCM, have high energy density, good cycle performance, and long lifespan, mainly used in passenger vehicles.
High nickel is a new starting point, significantly raising the entry barrier for ternary materials. Currently, high-nickel materials are further developing from the 8 series to the ultra-high nickel 9 series.
2. Competitive Landscape of Lithium Battery Cathode Materials
China is the main concentration of global cathode material production capacity, accounting for about 60%.
The production capacity of the domestic cathode material sector is huge, and the trend of concentration at the top is gradually emerging.
There are mainly 11 representative enterprises in battery materials, among which there are four main cathode material companies (Dangsheng Technology, Ronbay Technology, SGG, and Defang Nano).
The current global capacity layout of cathode material companies is no longer limited to their own countries, but a global layout. Most of them plan for the long term, focusing on technological aspects such as high nickel, high voltage, and solid-state battery materials.
The customer structure of domestic cathode materials has been further optimized, currently focusing on leading battery manufacturers at home and abroad:
3. Ternary Materials
The high energy density advantage of ternary materials has enabled them to occupy an important position in the power field, and the development of power batteries has also driven the increase in ternary materials.
There are many participants in the domestic ternary cathode material industry. Due to the high capital expenditure required for the production capacity investment of ternary and other material systems and the rapid technological iteration, the barriers to entry for conventional ternary cathode preparation processes are relatively low, and there are many subsequent derivative models, leading to technological route diversification. Therefore, the concentration of the ternary cathode material industry has been relatively low.
Competition among ternary material manufacturers is fierce, and the pattern is relatively dispersed. The gap in market share between leading large manufacturers is relatively small. From a dynamic perspective, the industry concentration is showing an upward trend.
In the domestic ternary cathode material market, Ronbay New Energy, Longyuan Lithium Energy, Hunan SGG, Dangsheng Technology, Xiamen Tungsten, Zhenhua New Materials, and Tianjin Bamo are still in the leading positions.
4. High-Nickel Ternary Materials
Due to the increasingly fierce competition among conventional products with high homogeneity of ternary materials, companies are forced to accelerate the development of new series of products such as high-nickel and single-crystal products, while also increasing their expansion into leading battery companies.
Although China accounts for more than half of the global ternary material production capacity, there is still room for improvement for domestic ternary material companies in the high-nickel market.
There are not many domestic companies that can truly achieve mass production of high-nickel ternary materials. Companies with higher shipments mainly include Ronbay, Bamo, Betterie, and Bamp.
According to data from Huachuang Securities, Ronbay's high-nickel production accounts for about 70%, making it the leader in the high-nickel ternary material industry. Bamo, Betterie, and Bamp are in the second tier of the industry, while Dangsheng Technology, Longyuan Lithium Energy, SGG, and Zhenhua New Materials are still some distance from the top four, in the third tier of the industry.
In terms of the current domestic supply pattern of high-nickel ternary materials, the first and second-tier domestic high-nickel ternary material companies are expected to continue to expand their shipment scale, thus entering the ranks of the world's leading high-nickel ternary material producers. For third-tier companies, how to correctly grasp customer needs and produce differentiated products will become an important goal for future company development.
Affected by the epidemic, many car manufacturers in Europe and the United States have chosen to shut down their factories, and companies such as Panasonic, LG, and Samsung have also successively shut down their battery factories in Europe and the United States. Toyota, Panasonic, and other companies are also considering or shutting down their factories in Japan, which to some extent has suppressed the overseas market's demand for high-nickel ternary materials from Japanese and Korean companies.
Comparison of operating conditions of comparable companies in the cathode material industry:
Data source: China Chemical and Physical Power Industry Association, Huachuang Securities Research Institute
5. Lithium Iron Phosphate
Although ternary lithium batteries are slightly inferior to lithium iron phosphate batteries in terms of safety and stability, they have advantages in battery energy density, material cost, and cruising range that other batteries cannot match.
Lithium iron phosphate is mainly used in the domestic power field, but its development has been almost stagnant in the past due to restrictions on subsidy standards. However, with the outstanding cost-effectiveness of lithium iron phosphate, its application in energy storage and other non-power fields has rapidly developed.
At the battery cell level, the low cost advantage of lithium iron phosphate is significant, and the cost of use is still significantly better than ternary materials, with a cost reduction advantage of more than 50% and 20% at the cathode and battery cell levels, respectively. Moreover, because it does not contain precious metals such as cobalt and nickel, the price fluctuation of lithium iron phosphate is far less than that of ternary materials, which is conducive to cost control.
Leading lithium iron phosphate battery companies are increasing their technological advantages through differentiated innovation. From the perspective of production capacity planning, the concentration of the lithium iron phosphate industry will significantly increase, and it has entered a stage of fierce competition among leading manufacturers.
Among mainstream companies, BYD and Guoxuan primarily use their own products, while Defang Nano, Betterie, Hunan Yulong, and Hubei Wanrun mainly sell to external customers.
From the battery pack and structural perspectives, lithium iron phosphate, due to its mature stability, holds advantages in structural innovations like "blade" and "CTP" and assembly efficiency. However, with the technological development and stabilization of ternary materials, especially high-nickel ternary materials, there is room for improvement, and the gap will narrow.
CATL's "CTP" technology can increase the energy density of lithium iron phosphate batteries to over 160Wh/kg, and to 200Wh/kg for ternary batteries.
Besides CATL and BYD, which have high market shares in both ternary and lithium iron phosphate batteries, other competitors mostly focus on one technology route. For example, some focus on ternary materials (like Lishen, China Aviation Lithium Battery, and Gotion), while others focus on lithium iron phosphate batteries (like Guoxuan and EVE Energy). Previous battery suppliers like Woma and Bic Battery have seen their market share shrink and production capacity cleared.
6. Lithium Cobalt Oxide Materials
Lithium cobalt oxide is mainly used in consumer electronics and is highly correlated with the prosperity of the consumer electronics industry. The competitive landscape of lithium cobalt oxide materials has been basically established. In the future, products such as high-voltage lithium cobalt oxide may further enhance product barriers, leading to a tiered high-end and low-end demand.
In the future, high-nickel ternary and lithium iron phosphate batteries will occupy the main share of the domestic power battery market due to their performance and price advantages, changing the current situation where nickel-rich ternary materials dominate. It is expected that by 2025, the combined share of high-nickel ternary and lithium iron phosphate batteries will exceed 80%.
From a global perspective, leading Japanese and Korean battery manufacturers tend to promote and increase the volume of their high-end new products through their internal cathode material production capacity or through their local suppliers. This is especially true under the trend of regional supply chains for new energy vehicles worldwide. This phenomenon is becoming increasingly common, with large-scale production capacity construction of cathode materials underway from Japan and Korea to Europe.
In terms of opportunities, China's ternary precursor production capacity is indispensable to global lithium battery giants, and China's cathode material sector is continuously catching up with the technological gap with Japan and South Korea. In the future, it is expected to play a more important role in the global mainstream and high-end supply system.
The global economic transformation in the post-pandemic era has driven an increase in lithium battery supply, coupled with the wave of automotive electrification leading to an explosion in demand. The world is about to usher in a new round of expansion cycle for the new energy industry. As an upstream industry in the industry chain, the lithium battery material industry chain is expected to benefit as a whole.
