Dialogue with Yang Hongxin of SVOLT Energy: If everyone makes short-blade batteries, I'm sure I can do it better | Preview 2025
At the end of 2024, we originally intended to use a series of reports to summarize this year and look forward to the next 10 years.
To be honest, we failed. In the automotive industry, there are no prophets. It's not that the 36Kr Automotive is not competent, but the industry is changing too fast.
If you look at the statements of industry leaders in previous years, you will find that when it comes to predictions about the future, especially those involving specific businesses, whether positive or negative, most of them are incorrect and very few are correct.
Therefore, we decided that since we cannot predict the distant future, we should find a way to make a preview for 2025 first.
At the end of 2024, in the column "Preview 2025", we will conduct exclusive interviews with vehicle manufacturers or suppliers that we believe will affect the development of the automotive industry in the next year.
We will discuss what definite changes will occur in the Chinese automotive industry in 2025, what is already expected and in progress, and what future will be disclosed soon.
Written by Han Yongchang
Edited by Zhang Bowen
Yang Hongxin was interviewed by 36Kr on Saturday morning. He landed in Changzhou in the early hours of that day and had just finished a European project meeting in the morning.
Constantly being on the go has become the norm for the top leaders of battery companies. As the Chairman and CEO of SVOLT Energy, Yang Hongxin has long been accustomed to the schedule of going to bed late and getting up early. In the battery industry, everyone is like a human-shaped battery, and the boss is no exception.
After experiencing the ups and downs of the past two years, Yang Hongxin's eyes still reveal fatigue, but there is also a hint of relief.
Bringing the time back to the end of 2022, the power battery industry set off an expansion wave, and all battery companies made incredibly capacity planning. SVOLT Energy was also very aggressive.
Yang Hongxin recruited workers, opened production lines, and arranged production according to the order expectations given by customers. However, at the beginning of 2023, the terminal sales of the auto market suddenly declined, orders were difficult to fulfill, and inventory became increasingly serious.
Coupled with the sharp drop in the price of lithium carbonate, the value of battery cell inventory decreased rapidly, and almost every day was a new lowest price. This had a great impact on SVOLT's funds and profits.
Yang Hongxin reflected that at that time, we did not arrange for production reduction and staff reduction in a timely manner, nor did we conduct in-depth and independent market research.
"From the first half of 2023 to the third quarter of this year, the new customer models have not been put into production, and the old models are being replaced. There is a serious shortage of supply. At our lowest point, our monthly installed capacity was only 0.2GWh," he said.
What is the concept of 0.2GWh? In the latest October, SVOLT Energy's installed capacity was 1.9GWh, with a gap of nearly 10 times. At that time, there were even rumors in the industry that "Is SVOLT Energy going to fail?"
In fact, not only SVOLT is like this. In 2023, the new energy vehicle industry entered a strong cost reduction stage. The price war was initiated by Tesla, like a spark falling into a gasoline barrel. The flames instantly swept through the entire industry chain, and no company could be spared. The intelligent driving industry even fell into a battle royale, with companies constantly cutting off their tails to survive, and even merging and reorganizing.
Although the battery industry is also in a precarious situation, fortunately, it is more resilient and has withstood the test of market fluctuations.
By the fourth quarter of this year, the battery industry began to recover as a whole. The sales of Geely, Great Wall, Leapmotor, Li Auto, VOYAH, and Stellantis, which are equipped with SVOLT Energy batteries, are continuously increasing, and the operating rate of the short-blade production line is almost full.
In 2023, without orders, Yang Hongxin was very busy. In 2024, with orders, Yang Hongxin is even busier.
Now, what he is busiest with is delivery. "Because many new cars in the previous year were not successful, when making sales predictions for this year's new cars, customers and suppliers were not confident. But unexpectedly, they all sold particularly well."
Yang Hongxin is very emotional. "The entire industry is actually not very mature and is still constantly developing."
At this stage, the power battery industry has begun to emerge from the low tide period, but there is never an easy moment in the battery business. It's just that the situation has changed from too few orders to too many orders.
Of course, being busy is also effective. SVOLT Energy now not only has more customers but also has taken a differentiated route.
The biggest label of SVOLT Energy in the industry is the short-blade + laminated. Automakers have always focused on products, while the battery industry polishes the process. Yang Hongxin combines the product thinking with the manufacturing process to create such a combination.
Short-blade Laminated Battery
Traditional battery manufacturers, such as CATL and other companies, mostly use the winding process and square-shell specifications. They have reached the extreme in this path, and both the yield and efficiency are mature and stable.
If SVOLT Energy wants to overtake by changing the track, it is necessary to take the laminated route, which is an emerging and significantly differentiated process. It should also be mentioned that the future all-solid-state batteries can only be produced by lamination, although the winding is still the mainstream for now.
Of course, SVOLT Energy's third-generation flying-lamination production line has achieved a speed of 0.125 seconds per piece, which is the highest efficiency of the lamination process in the battery industry.
More and more automakers are turning to short-blade laminated batteries. Geely, Xiaomi, NIO, XPeng, Leapmotor, and others are all using this product. BYD's new blade battery installed on the Yangwang U7 is also in a short-blade shape.
Looking forward to next year, more and more companies will join this field. Yang Hongxin welcomes this very much and is very confident. "If everyone makes short-blades, I'm sure I can do better."
Yang Hongxin's 2025 plan is to form a clearer product competition strategy, find a more precise market segment, and emerge from the price war.
He shared, "We will launch pure electric short-blades, plug-in hybrid short-blades, 2C, 3C, 4C short-blades, and CTP, CTB short-blades, and will create a series."
The target orders are also in place. In terms of the hybrid market that SVOLT is best at, "There are clear orders and customers for 45 - 50 kWh per vehicle, and mass production will begin in the middle of next year. There is also an order for more than 60 kWh, which uses the Dragon Scale Armor Battery, and mass production will begin in the second half of next year."
Of course, the price war is also inevitably continuing, and every company will have products to compete in it.
The efficiency of the flying-lamination production line gives SVOLT the strength to fight the price war. Yang Hongxin predicts that the price of general-purpose battery cells will drop to around 0.3 yuan per watt-hour next year, and the decline will be relatively more moderate.
Just like the NIO Day in the automotive industry, SVOLT Energy also holds a Battery Day every year. This year's Battery Day is coming soon, and SVOLT Energy's plans for next year and the following years will be updated again. Yang Hongxin gave 36Kr a sneak peek of some content:
"Off-road exclusive battery system, the next generation of lamination, the next generation of short-blades, and a new energy storage brand."
The following is an interview between 36Kr and Yang Hongxin, Chairman and CEO of SVOLT Energy, edited:
「After Market Fluctuations, Emerging from the Low Tide Period」
36Kr: 2018 was just the eve of the explosion of the entire new energy vehicle. When SVOLT became independent at this time, did you already have some intentional orders?
Yang Hongxin: When we just started developing products in 2018, there were mainly two customer inputs, one was Great Wall, and the other was BMW. In 2018, BMW put forward a demand, which is the high-nickel silicon anode product that we are now supplying to Spotlight.
Relying on the initial projects and order demands of these two customers, we have developed many products, including pure electric, HEV, PHEV, and high-nickel. When we just started mass production in 2020, only Great Wall had a purchase order at that time.
Later, in 2021, the entire battery supply was extremely tight, in 2021 and 2022. We seized an opportunity and successfully obtained orders from Geely and Stellantis, which immediately opened up the external customer market.
The demonstration effect of Geely and Stellantis is very strong. After they used our products, it dispelled the concerns of many vehicle manufacturers. Therefore, we later expanded to customers such as Hozon, Leapmotor, Li Auto, VOYAH, and XPeng.
In the second half of last year and this year, overseas customers began mass production, BMW Mini and Stellantis began to deliver, which further enhanced the stability of our orders and the confidence of customers. When we went to get new orders, we had a very good endorsement.
36Kr: In 2021, SVOLT ranked tenth globally and sixth domestically for the first time. It only took three years to achieve this result. Were you very optimistic about the subsequent expectations?
Yang Hongxin: Because in 2021 and 2022, the supply was in short demand, and the order demands input by vehicle manufacturers were very large. We had more potential opportunities, so we were very optimistic and made a large-scale expansion.
However, only BYD was particularly successful in 2023, and Li Auto and AITO were relatively successful. Other customers were not very successful, especially traditional vehicle manufacturers, resulting in many of our orders not meeting expectations, the overall capacity utilization rate was not high, the cost was relatively high, and the loss was relatively large. At that time, the entire market was in an adjustment period.
By this year, the biggest change is that many vehicle manufacturers have learned the lessons of 2022 and 2023. When positioning the new car market, they are particularly accurate, and almost every new car is successful, like Geely, Great Wall, and even Changan. These traditional vehicle manufacturers are like this.
In addition, the emergence of high-level intelligent driving has also formed a certain competitiveness. Many traditional vehicle manufacturers' cars have also equipped with high-level intelligent driving, and the overall probability of success has been greatly improved.
But this has led to another problem. Because many new cars in the previous year were not successful, when making sales predictions for this year's new cars, they themselves were not confident, and suppliers were not confident either. But unexpectedly, they all sold particularly well, resulting in a short-term supply shortage and a backlog of market orders.
36Kr: So in the fourth quarter, there was a collective increase in the capacity utilization rate of battery manufacturers?
Yang Hongxin: Yes. The entire industry is actually not very mature and is still constantly developing.
36Kr: From 2018 to now, was last year the most difficult stage in your entrepreneurship?
Yang Hongxin: Definitely. Because in 2022, we made very sufficient preparations, built many production lines, stocked up a lot of goods, arranged a lot of production, and recruited many people. But unexpectedly, many orders in 2023 were far below expectations. Moreover, the sharp fluctuation of lithium carbonate had a very great impact on us.
In particular, at the end of 2022 and the beginning of 2023, we did not arrange for production reduction or staff reduction. Because the order forecast given by the customers was very large, and we ourselves did not conduct in-depth and independent market research, we recruited people, opened production lines, and arranged production according to the customer's orders.
But unexpectedly, at the beginning of 2023, the sales declined rapidly, resulting in a large amount of inventory. These inventories could not be processed quickly, resulting in a large amount of depreciation, causing a great burden. Therefore, this has a very great impact on our fund occupation and profit.
Secondly, in terms of customers, from the first half of 2023 to the third quarter of this year, the new models have not been put into production, and the old models are being replaced and reducing production. There is a serious shortage of supply. So our monthly installed capacity was only 0.2GWh at the lowest point, which is very low.
In the second half of 2023, Geely's Galaxy L6 and L7, as well as Great Wall's Tank began to be put into production, and the orders began to recover. In 2024, Spotlight began mass production, BMW Mini, Stellantis also began mass production, Geely launched several new models, Leapmotor and Li Auto also sold very well, and we also supplied a lot of goods to VOYAH. The volume was concentrated and pulled back.
36Kr: The overall industry is also a relatively optimistic trend, and it has begun to emerge from the low tide period?
Yang Hongxin: Yes. Most of our short-blade production lines are now close to full capacity, and the overall order volume in the fourth quarter is slightly larger than we expected. Not only the fourth quarter, but the first quarter of next year may also be better than in previous years.
「Product Strategy and Cost Reduction Opportunities」
36Kr: What things in the company will occupy more of your time now, cost reduction or supply guarantee?
Yang Hongxin: In the earliest stage of our company, the first step was to clarify the strategy and develop the products. Once the products were developed, we would secure customers.
Now, at this stage, we have reached the stage of grasping internal operations. Internal operations mean cost reduction, quality control, improving OEE, and ensuring output and supply of orders. Therefore, this large block of internal operation and delivery now occupies about half of my time, including cost reduction, delivery, and quality.
In addition, I also need to focus on the planning of the next generation of products, which we call the planning of the product strategy. If we cannot complete a clearer product competition strategy in 2025, we will be stuck in the price war and cannot get out.
So, how to use product differentiation to bring a different perception to customers and find some market segments also requires a lot of energy.
For example, through our cooperation with customers in the past two years, we think that the battery for off-road vehicles can become a new category. In fact, new energy off-road vehicles are becoming a market with a fast growth rate and a high premium. However, previously, no battery company had created a dedicated battery for this field.
Our focus this year and next is to create an off-road exclusive battery, which is our main direction. We want to become an expert and leader in this field.
36Kr: You mentioned the product strategy. Will we gradually switch all production lines to short-blades in the next few years for standardized production?
Yang Hongxin: 60% of our deliveries in the second half of this year are short-blades.