Automobile manufacturers are flocking to seek supplies. He Xiaopeng said bluntly, "I've even had drinks with the bosses of battery manufacturers." The production capacity of power batteries is tight again. Is the upcoming reduction of the purchase tax the main reason?
“I've had drinks with all the bosses of our battery manufacturers in the past one or two weeks!” On the evening of November 6th, He Xiaopeng, the chairman of XPeng Motors, sighed with emotion about the current production capacity situation of power batteries when being interviewed by a reporter from National Business Daily.
According to the reporter's understanding, the production capacity supply of power battery manufacturers in China has tightened in the fourth quarter of this year, and the capacity utilization rate has reached a high level. Automobile manufacturers have been taking various measures to “grab” batteries, whether they are ternary lithium or lithium iron phosphate batteries.
Sun Shaojun, the founder of Che Fans, said, “Recently, the allocation of supplies in the supply chain has been a major problem, especially for core suppliers like CATL. The time for each brand to place orders is extremely tight. Now it's all about using personal connections.” In addition, some media reported that procurement personnel from several Chinese automobile manufacturers gathered at the sales office of CATL's headquarters to “block the door” in order to secure battery production capacity. The reporter sought confirmation from CATL, but as of press time, no comment was obtained.
Photo source: Photo taken by Liang Xiao, a reporter from National Business Daily. File photo
Policy adjustments stimulate order growth, and consumers flock to pick up cars at the end of the year
Some analysts believe that the continuous increase in the sales volume of new energy vehicles, the optimistic market expectations for the future, the traditional sales peak season in the fourth quarter, and the approaching end of the purchase tax exemption policy have all contributed to the “battery hoarding” war among automobile manufacturers.
Data from the China Association of Automobile Manufacturers shows that from January to October this year, the production and sales of new energy vehicles in China reached 13.015 million and 12.943 million units respectively, a year-on-year increase of more than 30%. In October, the monthly sales of new energy vehicles exceeded 50% of the total sales of new cars for the first time. The China Association of Automobile Manufacturers said that the halving of the purchase tax for new energy vehicles next year has prompted some consumers to buy cars in advance, leading to a new round of consumption peak in the market.
Affected by policy adjustments and the year - end sales peak season, the number of customers and orders at new energy brand stores in many places have increased significantly recently. The vast majority of consumers hope to pick up their cars before January 1st, 2026, which also poses a challenge to the supply of power batteries. In response, Zhang Jinhui, a senior researcher at Xinluo Information, told the reporter, “Everyone (automobile manufacturers) is busy rushing for deliveries. Because the purchase tax will be halved next year, the battery production lines for models with good orders are in short supply.” Mo Ke, the founder of Zhenli Research, added that this situation applies to the battery suppliers bound to automobile manufacturers with a large number of orders.
An industry analyst who wished to remain anonymous told the reporter, “The reduction of the purchase tax discount mainly brings pressure on the consumer side, but enterprises will reflect market expectations in advance. For enterprises, it is not a ‘cost issue’ but a ‘demand rhythm issue’. Once the market expects that ‘prices will rise next year’, enterprises will actively increase the shipment rhythm to seize the sales window.” “The expectation of the reduction of the new energy vehicle purchase tax discount has made some automobile manufacturers speed up the delivery rhythm. However, the purchase tax is not the main driving force. What enterprises really care about is that the year - end settlement period is approaching. Early vehicle registration and confirmation of delivery are helpful for improving the financial report performance and cash flow.” The industry analyst added.
In addition, the sales of some new cars have exceeded expectations after their launch, while the battery production capacity has not been expanded synchronously, which has also intensified the supply - demand tension of power batteries. Some reports say that different from the full - scale shortage of power batteries from 2021 to 2022, the current supply constraints are concentrated on high - end products with high - nickel systems, and many of the vehicles equipped with such batteries are popular models launched recently.
Liu Yuncheng, a senior analyst at Omdia, a global technology market research and consulting firm, told the reporter, “Domestic high - nickel batteries (NCM/NCA) are mainly used in high - end pure - electric and plug - in hybrid models (especially long - range medium - and large - sized vehicles), and are sensitive to the purity and price fluctuations of upstream nickel sulfate and lithium hydroxide. The recent fluctuations in international raw material prices and the long safety verification period have led to a short - term shortage of high - nickel supply.”
The demand in the energy storage market is booming, and the industrial chain forms a ‘reverse siphon’
The industry believes that the surge in the demand for lithium batteries in the energy storage market is another key factor causing the “renewed tightness of power batteries”. “The power batteries for domestic passenger cars are mainly lithium iron phosphate batteries. Although the production capacity of lithium iron phosphate battery cells is large, the concentrated release of energy storage projects has led to a phased occupation of vehicle - use resources.” Liu Yuncheng told the reporter, “The current problem with lithium iron phosphate is that although the total amount is sufficient, many production lines have been diverted to energy storage.”
Regarding the performance of the energy storage market, Zhang Jinhui told the reporter, “The energy storage market has witnessed an overall explosion this year. The global energy storage market has exceeded expectations, and the production lines of each company are operating at full capacity.” Another securities analyst analyzed to the reporter that there is a gap between the actual performance of the energy storage market and the early - year prediction, and the previous production capacity reserve was not planned on such a scale.
Photo source: CATL's official WeChat account
According to the research and statistics of the GGII, in the third quarter of this year, the shipment volume of energy storage lithium batteries in China reached 165GWh, a year - on - year increase of 65%. In the first three quarters of this year, the total shipment volume of energy storage lithium batteries in China was 430GWh, exceeding 30% of the total volume in 2024. It is expected that the total annual shipment volume is expected to reach 580GWh, a year - on - year increase of 67%.
It is reported that energy storage mainly uses lithium iron phosphate batteries. A listed company mainly engaged in lithium iron phosphate business revealed in an investor research activity that in the third quarter of this year, the sales volume of its lithium battery cathode materials increased significantly year - on - year, and its market competitiveness continued to strengthen. Among them, the lithium iron phosphate business had strong production and sales and achieved profitability, and the sales volume increased significantly year - on - year.
It is worth noting that battery manufacturers usually follow the “T + 3” model for raw material procurement, that is, they lock in materials and orders three months in advance. In the middle of this year, some battery companies predicted that the energy storage demand would increase, so they increased the procurement of lithium iron phosphate materials for energy storage. This change has also made it difficult for some popular models using lithium iron phosphate batteries to expand production in the short term.
“The current boom in the energy storage market has formed a ‘reverse siphon’ on the power battery industrial chain. Due to the short cycle and fast cash flow of energy storage projects, some manufacturers have prioritized adjusting their production lines to produce energy - storage - specification battery cells (such as 280Ah and 300Ah large - capacity cells). The power battery end relies more on customization and has a long verification period, resulting in a situation where automobile manufacturers face a reduction in available battery cells in the short term.” Liu Yuncheng said.
Entering the fourth quarter and next year, the energy storage demand remains highly certain. Based on the analysis of multiple institutions, the growth rate of global energy storage installation next year will be between 40% and 50%. Soochow Securities said in a research report that the battery production plan in October increased by another 10%, reaching a new high in the peak season. It is expected that the production plan in November will still increase slightly, and the high - prosperity situation will continue, with the energy storage demand exceeding expectations.
In this context, some analysts believe that it may still be difficult for popular models equipped with lithium iron phosphate batteries to expand production in the short term, and this situation will continue for some time. In response, the above - mentioned industry analyst told the reporter, “Similar situations occur every fourth quarter. The current shortage of power batteries is a short - term problem.”
This article is from the WeChat official account “NBD Auto”. Author: Reporter from National Business Daily. Republished by 36Kr with permission.