The global inflation situation is severe, and investor concerns about inflation are also spreading throughout the new energy industry chain. Nowadays, in addition to the recent popular nickel price, various sectors are also concerned about the rising lithium price.

Recently, new energy companies represented by TSLA have begun a new round of price hikes. TSLA's Chinese company was the first to announce a price increase on March 15th, with prices for models such as Model 3 and Y increasing by 14000 to 20000 yuan. Following closely behind, BYD also announced a price increase of 3000 to 6000 yuan for new energy vehicles starting from March 16th. Since 2022, more than 20 new energy vehicle companies have announced price increases, with nearly 40 models experiencing price increases.

Wang Bin, Co Director of Automotive Industry Research at Credit Suisse Asia Pacific, stated at the 24th Credit Suisse Asia Investment Forum (AIC) that it is expected that battery price hikes will continue in the short term, with a further 20% increase in the second quarter and a slight increase in vehicle prices. However, in the medium to long term, technological progress will still drive cost reduction. For example, NIO announced the official launch of a ternary lithium iron standard endurance battery pack, which uses a mixed ternary lithium formula and lithium iron phosphate formula to reduce battery costs. In addition, CTP (Cell To Pack) technology and CTC battery system (CelltoChassis) also contribute to cost reduction.

Long term increase in penetration rate of new energy vehicles

The global penetration rate of new energy vehicles is accelerating. According to Autohome's statistical analysis, in 2021, the global registered sales of new energy vehicles reached 6.5014 million units, an increase of 108% from 2020, and the penetration rate reached 10.2%.

The latest data released by the March China Association of Automobile Manufacturers shows that wholesale sales of new energy passenger vehicles reached 317000 units in February, an increase of 189.1% year-on-year and a decrease of 24.1% month on month, with a smaller decrease compared to previous years. Affected by the price increase, orders for new energy passenger vehicles showed weak performance in late January, but there was a significant rebound in February, with retail sales reaching 272000 units, a year-on-year increase of 180.5%. The domestic retail penetration rate of new energy vehicles in February was 21.8%, an increase of 13 percentage points from the penetration rate of 8.1% in February 2021.

The upstream price surge is fierce, but Credit Suisse's research team predicts that the global penetration rate of new energy vehicles will reach 73% by 2030, a significant increase from the previous prediction of 62%. Meanwhile, the agency predicts that global demand for electric vehicle batteries will also reach 280 million kilowatt hours (TWh) by 2030, a significant increase from the previously predicted 1.8 TWh, indicating that global battery demand from 2021 to 2030 will climb at a compound annual growth rate of 28%, which is truly astonishing.

According to recent interviews and research by reporters, it has been found that due to the significant increase in raw material prices such as lithium carbonate, the cost of power lithium batteries, which account for the largest part of vehicle costs, has sharply increased. Battery giants such as CATL and Guoxuan High tech have raised prices, transmitting the pressure to new energy vehicle companies, which in turn transmit the pressure to consumers. At present, it is a critical period for downstream car companies to seize market share, so even if the competition is fierce, even if the middle and downstream companies raise prices, it often falls under the category of "losing money and making a profit".

In addition to the surge in lithium prices, nickel prices have also received attention recently. However, Wang Bin told reporters that nickel supply is always in a surplus state, and even after removing Russia's export volume, it will still be in a relatively balanced state. "Nickel sulfide is used for the production of negative electrodes in batteries, accounting for 6% to 7% of battery costs. Therefore, nickel prices need to soar a lot in order to cause a slight increase in battery prices. Currently, it seems that the problem is not significant."

Wang Bin also believes that technological advancements in the past few years will drive a rapid decrease in battery costs, making new energy vehicles more popular. This trend will continue in the future, and short-term price increases will still be a minor episode.

In terms of technological innovation, he cited that on September 23rd last year, NIO Automobile announced the official launch of a ternary lithium iron standard endurance battery pack. This battery pack adopts a mixed method of ternary lithium formula and lithium iron phosphate formula. Compared with the old 70 kWh battery pack, it not only increases the capacity by 5kWh, but also improves the cycle life, and the mixed method reduces costs.

At present, lithium iron phosphate (LFP) and ternary lithium (NCM) batteries have an absolute advantage. Due to the inherent physicochemical properties of both LFP and NCM, there are obvious long and short plates. Among them, the advantage of LFP lies in its relatively high safety and low cost, but its performance is poor in winter; On the contrary, although NCM has the advantages of high energy density and better low-temperature performance in winter compared to LFP, its high activity also brings high safety risks. With the soaring price of lithium, the market share of LFP may rise in the short term and become the preferred choice for more car models. Ruixin currently predicts that the market share of LFP may reach 67% by 2025 (only 38% in 2020), and the global market share of LFP will also reach 15% by 2025, with only 0 in 2020.

In addition, technological innovations also include changes in battery pack design. Wang Bin stated that CTP (module free) technology can achieve a 30% cost reduction, while CTC battery systems can reduce costs by 5% to 10%. They may be launched in the second quarter of 2022. At the same time, in order to increase market share, vehicle manufacturers may control the price increase or offer discounts. Therefore, in the medium to long term, the judgment that the penetration rate of new energy vehicles will increase will not change.

Institutions are optimistic about upstream lithium resources and midstream materials

For investment institutions, most of them are still optimistic about the opportunities in the new energy industry chain in 2022, especially the upstream lithium resources and midstream materials.

Gu Jiayuan, Director of Equity Research and Fund Manager at Fulton China, told First Financial reporters that looking ahead to growth stock investments in 2022, many investors are concerned that the penetration rate of new energy vehicles will slow down after rapidly increasing to 20%. However, after experiencing a correction, the previously overvalued new energy vehicle sector seems to have shown allocation value again.

Last year's valuation was somewhat exaggerated because according to calculations, the compound increase in this track over the next five years was 30%. However, when it fell to today's level, it began to become more optimistic. Although some people began to worry about a slowdown in growth after the penetration rate of new energy vehicles rapidly increased to 20%, taking smartphones as an example, when the penetration rate of smartphones was between 20% and 50%, it was the time when the stock price and performance growth rate increased the fastest. The penetration rate of new energy vehicles is expected to increase to a higher level Horizontal, up to 100% is not ruled out. “

At the same time, unlike the photovoltaic industry that focuses on returns on the 2B end, the biggest difference in the 2C end new energy vehicle industry chain is that it focuses on products. "Electric vehicles provide a better user experience, and better products will create demand. Steve Jobs once said, 'We don't need to do market research because people don't understand what they want until they see good things.'" Gu Jiayuan said.

Guo Chen, a fund manager at Morgan Stanley, told reporters that the ability of new energy vehicle companies to launch more and more consumer goods that consumers are willing to pay for is one of the core factors driving the continuous increase in the penetration rate of the entire industry. The high price of crude oil may be a turning point for further promoting the development of new energy.

Gu Jiayuan stated that one of the most promising themes this year is the upstream lithium resources and midstream materials of new energy. Some people are worried that lithium prices are too expensive, but if we look at the world's largest lithium product supplier - Yabao in the United States, its average lithium resource price is not expensive, and some 200000 or even 500000 yuan are more single events or scattered orders. In fact, it is not so exaggerated. In addition, midstream materials and other materials will also have significant opportunities this year, such as high nickel ternary positive electrodes, which are important materials for electric vehicles and can increase battery energy Density. “