Author: ⊙ GF Securities
New target plan for charging stations by 2020 (Unit: seat)
Source: National Development and Reform Commission, GF Securities Development Research Center
New target planning for charging piles by 2020
(Unit: 10,000)
Source: National Development and Reform Commission, GF Securities Development Research Center
Total output and forecast of new energy vehicles
Source of data: China Automobile Association, Guangfa Securities Development Research Center
New energy vehicle total inventory and forecast
growth rate
Source of data: China Automobile Association, Guangfa Securities Development Research Center
The dual-integration policy has guided the healthy development of the industry, and new energy vehicles have entered an era of parity. The introduction of the double-point system indicates that relevant departments are gradually shifting from being industry demand leaders to industry development leaders, providing support at the production end for new energy vehicles and benefiting leading companies in the sector. Based on calculations considering cost transfer caused by the integration policy, it is expected that without subsidies, the full life cycle cost of electric vehicles will be lower than that of fuel vehicles by 2021, and by 2025, the purchase cost of electric vehicles will be lower than that of fuel vehicles, showing economic advantages. With the potential boom in charging infrastructure globally, equipment providers are expected to benefit first. According to estimates, the market size of charging piles could reach 38.7 billion yuan over the next three years, with significant profit growth anticipated for manufacturers. In the medium to long term, the charging pile operation market is expected to become a new investment hotspot in the industry chain. Due to policy support, short-term operators may rely on subsidies to turn profits into losses, but as business models evolve and value-added services develop, platform-based operations are showing results. A group of outstanding operating companies are expected to emerge, capturing lucrative benefits from the market. The dual-point system supports the growth of new energy vehicles. On September 28, 2017, the "Measures for the Concurrent Management of the Average Fuel Consumption of New Passenger Cars and New Energy Vehicles" was issued, effective April 1, 2018. Key points include assessing fuel consumption points and new energy vehicle points. Fuel consumption points can be carried forward or transferred, while negative points can be offset through transfers or purchasing new energy vehicle points. New energy vehicle positive points can be sold externally, but negative points must purchase new energy vehicle points. This means traditional car companies, even if meeting fuel-saving standards, must subsidize new energy vehicle companies, increasing enthusiasm for producing new energy vehicles. The official version continues to encourage high mileage and high-energy-density batteries. High energy density products are expected to enter the market gradually. The pure electric passenger car standard replaces the step function with a continuous function, improving calculation precision. It also introduces a unit load quality power consumption standard to reduce power consumption and promote cleanliness. Additionally, for fuel cell vehicle model changes, driving range is used to determine integration levels, introducing a system rated power index proportional to obtained points. Required driving range is not less than 300 km, increasing battery model thresholds. The introduction of the double-point system shows that departments are shifting from direct administrative orders or subsidies to indirect policy guidance. Policies like the double-point system guide the industry toward "high energy density, high cruising mileage" technology lines. Considering cost transfer from the integration policy, without subsidies, it's expected that the full life cycle cost of electric vehicles will be lower than fuel vehicles by 2021. By 2025, electric vehicle purchase costs will be lower than fuel vehicles, showing economic advantages. For the entire industry, without transferring fuel consumption points between related companies, the 2016 industry fuel consumption negative points were 1.54 million. Assuming sufficient internal transfers, the actual situation would be somewhere in between. According to our calculations, from 2018 to 2020, the fuel consumption points needed after full transfer are approximately 950,000, 1.47 million, and 2.5 million. Combined with new energy points requirements, new energy points required in 2019 and 2020 are 2.75 million and 3.44 million respectively. From 2018 to 2020, annual new energy points required are 950,000, 4.22 million, and 5.94 million. For example, if calculating average new energy car mileage by 3 points per vehicle, the output of new energy passenger vehicles is about 320,000, 1.41 million, and 1.98 million. National policy is expected to optimize short-term growth. We expect new energy passenger vehicle sales to increase by 45% to 60%, reaching 800,000 units in 2018. Sales of new energy buses and special vehicles will maintain around 200,000 units, driving overall new energy vehicle sales to about 1.1 million. Affected by increased average charge capacity of passenger vehicles, overall battery consumption is expected to increase by around 30%. As national subsidies are withdrawn, there may be future adjustments. The new policy clearly states that local subsidies for purchases will gradually shift from 2018 to support charging infrastructure construction and operation, and use of new energy vehicles. In license-restricted cities, license plate attractiveness is greater than subsidy attractiveness, and consumer groups are less price-sensitive. Subsidy withdrawal has little impact on new energy passenger vehicle demand. Additionally, subsidies will be redirected to charging pile construction, further facilitating the practical use of new energy vehicles and promoting willingness to use them. Passenger car and special vehicle production and sales are bullish. Limited city crowding effect increases demand for passenger vehicles. Influenced by restricted city effects, demand for personal new energy vehicles just needed for licenses continues to grow steadily. Currently, promotion of new energy passenger vehicles in individual consumer areas is mainly driven by license dividends, with sales concentrated in first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen. Economic advantages from linkage policy support make taxi electric space vast. The taxi market is an important growth segment in the coming years. Compared to ordinary cars, new energy vehicles are more expensive to purchase but cheaper to operate and maintain. Government encouragement for public transport ensures the direction of the new energy automobile industry remains unchanged, with taxi electrification as a key policy focus. Vehicles with ranges from 300 km to 350 km will be the main replacement for large-scale urban operation vehicles. Buses are dominated by administrative procurement, with rigid demand becoming an important factor in sales stability. New energy buses are mainly based on administrative procurement, with users less sensitive to price. In the context of subsidy withdrawal, sales volume is expected to remain stable. Bus electrification is a general trend. The "Thirteenth Five-Year Plan" for urban public transport development outlines that by 2020, the number of new energy vehicles in urban public transport will reach 200,000, and the "New Energy Bus Promotion and Application Assessment Method (Trial)" sets assessment requirements for the effectiveness of new energy vehicle promotion. New energy special vehicles have low penetration and future growth may be delayed. According to Ministry of Transport data, in 2016, China’s express delivery volume reached 31.183 billion, an increase of 51.4% over the previous year. Electric logistics vehicles are mainly used in logistics terminal distribution. With increased terminal single-batch delivery volume and implementation of the “forbidden to limit electricity and electricity†regulations, considering the low penetration of electric logistics vehicles, there is ample room for future growth. The incentives of the double-integration policy on the supply side and growing internal demand for new energy passenger vehicles, passenger cars, and special vehicles have driven the sustained and steady growth of new energy vehicle totals. Overall, 2018 sales are still expected to increase rapidly. Annual production and sales of 1.1 million vehicles are expected, resulting in a 30% increase in battery consumption. In 2019, the credit system begins to take effect, with many consumer-grade new energy models emerging, and sales growth rates increasing. According to our calculations, the output of new energy vehicles in China from 2018 to 2020 is expected to reach 1.1 million, 1.586 million, and 2.332 million. Cobalt: Price and price increase, supply and demand tight, bring high prosperity. In terms of demand, steady growth in the 3C battery field and the outbreak of ternary batteries stimulated rising cobalt demand in the upper reaches. According to our estimation, China’s ternary battery demand will reach 18.02Gwh, 29.59Gwh, 45.52Gwh, and 70.48Gw from 2017 to 2020, with an average annual compound growth rate of 41%. As an important raw material for the ternary cathode, cobalt demand will continue to flourish. On the supply side: Supply elasticity is low, and the supply and demand gap is expected to come. In the current market situation, cobalt supply is effectively controlled. Cobalt is a relatively rare metal with uneven global distribution. According to USGS estimates, in 2016, global cobalt reserves were about 7 million tons, with Congo (Gold) accounting for 48.57% of the reserves, and China's reserves only 1.14% of the world. At the same time, cobalt production is highly concentrated in international giants like Glencore and Vale. In 2016, the top 10 cobalt producers accounted for 69% of total output, with Glencore alone at 23%. Under this pattern, production giants have strong bargaining power in the global cobalt market due to effective supply control, and cobalt supply flexibility remains low. In addition, low prices of copper and nickel have affected the release of new cobalt supply. Cobalt is associated with copper, nickel, and other minerals. In recent years, copper and nickel prices have been relatively low, directly affecting the enthusiasm of relevant enterprises to increase production and develop new mines. As a result, short-term growth of new cobalt supply has been limited. It is estimated that by 2020, with the large-scale application of high-nickel ternary, downstream manufacturers can withstand cobalt prices exceeding 800,000 yuan/ton, and material costs will account for more than 90% of the total cost of the ternary anode. Strong demand side growth and slow supply side growth, along with the high-nickel ternary process, have accelerated price elasticity. We expect the probability of cobalt price rise in 2018 is greater. Lithium Carbonate: Coexistence of danger and machine lithium prices gradually stabilized. Supply side: Under the background that lithium carbonate prices continued to rise this year and lithium extraction technology from salt lakes has gradually made breakthroughs, most of the major lithium companies in salt lakes at home and abroad have formulated expansion plans. According to the capacity planning of mainstream lithium lakes, it is estimated that by 2020, 200,000 tons of salt lake lithium will be put into production. At the same time, it is worth noting that, in 2013, the market also had concerns about the supply of lithium in domestic salt lakes and the oversupply of lithium carbonate in China. However, according to Wind's statistics, China's lithium carbonate production only increased from 38,000 tons in 2013 to 40,700 tons in 2014, then to 42,000 tons in 2015, with no large-scale production capacity previously worried about releasing. Based on the above factors, we infer that the future supply of lithium carbonate will continue to maintain steady growth, it is difficult to significantly expand, and the actual release effect of lithium production capacity in the future of salt lake remains to be seen. Demand side: Comprehensive acceleration of vehicle production and active battery de-stocking, we believe that the current power battery inventory has been better alleviated, and the future growth of the entire downstream vehicle production and sales will be expected to bring power battery industry production recovery and growth, and the increase in demand for lithium carbonate. We believe that new supply of lithium carbonate will grow relatively stable in 2018, and production will maintain steady growth. At the same time, the pressure on battery inventory has been better relieved. Under the impetus of the recovery of downstream new energy vehicles, we expect lithium carbonate prices to gradually increase in 2018, with a steady recovery. Charging pile: Policy support to increase or usher in investment boom. A complete charging infrastructure system is an important guarantee for the popularization of electric vehicles, and the support policies of relevant departments have been continuously introduced. In 2018, the government's subsidy policy made it clear that local supplements will be gradually transferred to support the construction and operation of basic charging facilities. As early as in October 2015, the "Guidance on Accelerating the Charging of Electric Vehicles" was issued by the State Council in 2020. In 2005, we basically built an intelligent and efficient charging infrastructure system with appropriate advancement, car piles, and follow-up. According to statistics from the Charging Federation, as of November 2017, a total of 205,000 public charging poles and 199,000 private charging poles have been built nationwide, totaling 404,000, with considerable growth potential. According to our forecast, the market size of the charging piles can reach 38.7 billion yuan in the next three years, and the profit growth of equipment manufacturers can be expected. According to the results of the three batches of tenders of the State Grid in 2017, the total number of DC Charging equipments of the successful bidders is not far behind. XJ Electric, with the largest number of successful bidders, accounted for only 8.29%. The top five companies that won the bid were only 30.85%, and the companies with the lowest number of successful bids accounted for 6.17%. At the same time, a total of 5,916 sets of AC charging equipment were tendered by the State Grid Corporation of China this year. XJ Electric, Guodian NARI, Beijing Huashang and other three companies shared the total tender amount. However, taking into account that the price of a single set of AC charging equipment is less than one tenth of the price of a single set of DC charging equipment, the successful outcome of AC piles does not change the overall competitive landscape. The downward price of charging equipment has boosted the investment enthusiasm of operators, which is conducive to further opening up market demand. The constant bullish market attracts new players to enter the market one after another. Under the increasingly fierce market competition, the price of charging equipment is gradually adjusted downwards. At the same time, Huawei and other companies with strong technical reserves and R&D capabilities have entered the field of charging modules, or further reduced the production costs of DC piles, which in turn drove down the price of DC piles. At the same time, under the policy of increasing support for charging piles, the reduction in equipment prices has also led to a reduction in the construction cost of charging pile operators and a wider profit margin, which has helped boost operators’ investment enthusiasm and helped to further open up the market demand for equipment. Charging piles long-term hope for innovation in business model. Charging pile operation industry is still in its infancy. Due to the high investment cost in the early stage of the charging station construction, the lack of a scientific construction layout for some charging pile operators, the low utilization rate of the charging piles, and the unclear profit model of the operators, it is difficult for the company to make profits at this stage. Currently, there are many participants in the market for charging piles, and the overall competitive landscape is scattered. The market has great potential. According to statistics from the Charging Federation, as of the end of November 2017, the number of charging piles owned by State Grid Corporation, Star Charging, China Putian, and SAIC An Yue was among the top domestic operators, and the number exceeded 6,000. Although the number of charging piles owned by operators is quite different, because the construction of charging piles in our country has just started, the size of charging piles owned by each company is still far from the planned target of 4.8 million in 2020. The market has huge potential space. It is expected that with the continuous increase of new energy vehicle ownership and the gradual acceleration of the marketization process, the competition in the charging operation market will become increasingly fierce, and the future industry reshuffle will be inevitable. In the end, a few large-scale platform operators will form a dominant position. A large number of small and medium-sized operators will adhere to the industrial ecology pattern of a large platform. Operators relying on charging networks, Internet of Things, transportation networks, and the Internet will be more likely to stand out. The double-integration policy has guided the healthy development of the industry, and new energy vehicles usher in the era of parity. The introduction of the double-point system shows that the relevant departments have gradually shifted from industry demand leaders to industry development leaders, providing power for new energy vehicles at the production end, and benefiting the leading companies in the industry. After calculation, considering the cost transfer caused by the integration policy, in the absence of subsidies, based on certain assumptions, it is expected that the full life cycle cost of electric vehicles will be lower than that of fuel vehicles by 2021, and the cost of electric vehicle purchases will be lower than that of fuel vehicles by 2025, showing economic advantages. We believe that the 2018 subsidy retreat will not change the general trend of growth of new energy vehicles. The demand for various types of vehicles is guaranteed, and the long-term outlook for the new energy auto sector is firmly established. Upstream: Cobalt is still the focus of lithium to see prices and valuations. As far as cobalt is concerned, policies have led new energy vehicles to increase their energy density and high cruising range, driving the demand for Sanyuan batteries to continue to rise. As an important raw material for the ternary cathode, cobalt demand is expected to continue to flourish in the future. Under the tight supply and demand pattern, we expect the future price of cobalt will remain firm. As far as lithium is concerned, taking into account the buffering period for the first half of 2018 adjusted by the country's subsidies, the factor that the downstream companies actively reduced production and inventory in the fourth quarter of 2017 was added. Last year, the higher power battery inventory has been better relieved. This year, the increase in production and sales volume of downstream vehicles is expected to bring about production recovery and output growth in the power battery industry and bring about an increase in the demand for lithium carbonate. On the supply side, based on the statistics of the domestic and international major Lithium-producing lithium company's expansion plans, we conclude that the lithium carbonate supply end will maintain a stable growth in 2018, and it will be difficult to increase in the short term. The actual release effect of lithium extraction capacity from the salt lake in the future will remain to be observed. Under the impetus of downstream demand, we expect lithium carbonate prices to gradually stabilize and recover in 2018. It is recommended to pay attention to the relevant standards in the lithium and cobalt industry and pay attention to the vertical and vertical technology of the ternary cobalt precursor. Downstream: policy plus charging pile is expected to usher in construction boom. We believe that the continued growth of new energy vehicles and strengthened policy support will become the main drivers for the future growth of the charging pile industry. Specifically, according to the goal of building 4.8 million charging piles by 2020, the construction plans and preferential policies for charging piles of related departments in various regions have been gradually introduced. The adjustment of the ground compensation is tilted from the purchase side to the charging pile construction and operation end, which is to boost the charging piles. The main policy factors in the industry's upside. The current 4:1 car pile is more than the addition of new energy vehicles, and the urgent need for supporting the construction of charging piles is the fundamental driving force for the continued upward growth of the industry. In the short term, equipment providers are expected to benefit first, with the potential for possible future charging pile construction. According to calculations, the market size of the charging piles can reach 38.7 billion yuan in the next three years, and the profit growth of equipment manufacturers can be expected. In the medium and long term, the charging pile operation market is expected to become the next investment hot spot in the industry chain. Due to the policy overweight, short-term operators are expected to rely on subsidies to turn profit into losses, and as business models continue to innovate, value-added services continue to develop, and platform-based operations have achieved results, a group of outstanding operating companies are expected to come to the fore, and obtain lucrative benefits from the market. Related companies: Kingpin Electric, KSTAR, etc., core manufacturers of charging pile equipment; Midstream: Subsidy downgrade focus on mid-stream prospects. From the demand side, we believe that the subsidies adjustment in 2018 will not change the growth trend of production and sales of new energy vehicles, so the overall demand for batteries and battery materials in the middle reaches will continue to decrease. In terms of batteries, the downward price has made the market increasingly fierce. Large-scale battery companies bind downstream high-quality vehicle customers, especially the A-class passenger car supply chain. With the growth of production and sales of passenger vehicles, the company will expand production in an orderly fashion to meet customer needs. The competitive landscape of the strong and permanent strong has become increasingly prominent. The competitive pattern of ternary materials is relatively loose. The upstream cooperation arrangement of third-party positive enterprises will help to create cost advantages and maintain profitability. At the same time, binding downstream battery customers to gain market share will achieve greater performance growth. At the same time, high-nickel triple terns are in line with policy guidance, and companies that prioritize high-nickel triple terns will gain first-mover advantage. In the field of diaphragms, the cost performance of dry diaphragms is highlighted. In the downward trend of the battery pack price, the battery factory was forced to seek cost reduction through profitability pressure, and the gap between the dry and wet coating separators continued to maintain a relatively high level. The cost-effectiveness of dry diaphragms was highlighted, and some leading battery manufacturers had begun to switch back. Use a dry diaphragm. At the same time, we are optimistic about the development momentum of new energy auto parts. New energy vehicles are different from the main components of traditional fuel vehicles and their cost structure has led to the outbreak of demand for related auto parts. Related companies: The middle stream is optimistic about batteries, dry diaphragms and electrolyte leader Guoxuan Hi-tech and Tianci materials, concerned about the source material; at the same time continue to focus on automotive electronics and other fields. Source: Shanghai Securities News, China Securities Network12v trolling motor battery,solar powered golf cart,valve regulated lead acid battery,lithium marine batteries ,12v deep cycle marine battery,valve regulated lead acid vrla batteries
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