On the one hand, the subsidy for downstream new energy vehicles has dropped sharply, and on the other hand, the price of upstream raw materials has risen, and the power lithium battery industry with excess production has fallen into the throes of structural adjustment.

Data show that in January 2017, the sales of new energy passenger vehicles were 5,400, a sharp drop of 61% year-on-year. Cui Dongshu, secretary-general of the All-China Passenger Car Federation, believes that the sharp drop in sales of new energy vehicles in January is related to the introduction of the new subsidy policy around New Year's Day and the review of the new energy vehicle promotion catalog.

The subsidy decline is the key word of the new policy of new energy vehicles in 2017. According to the "Notice on Financial Support Policies for the Promotion and Application of New Energy Vehicles from 2016 to 2020", the subsidy standard for new energy vehicles from 2017 to 2018 will be reduced by 20% on the basis of 2016, and the subsidy standard from 2019 to 2020 will be based on the basis of 2016. down 40%.

The reporter learned that due to factors such as the sharp decline in subsidies for new energy vehicles, new energy vehicle manufacturers have begun to force lithium battery manufacturers to lower their prices. The data shows that in early February 2017, the price of power lithium batteries for the ternary route and the lithium iron phosphate route both dropped by more than 15% compared with December 2016. As new energy vehicle manufacturers are still in the adjustment period, at present, the overall start-up of power lithium battery companies is flat, and the order volume has dropped by more than 20% year-on-year.

The sharp price reduction of power lithium batteries is also related to the excessive production caused by the large expansion of production. According to the latest data from the Advanced Industrial Research Institute, the new domestic power lithium battery output in 2016 was 2.8 times that of 2015, while the output only increased by 82% year-on-year.

The price reduction of power lithium batteries has also led to a decline in the prices of the four major materials. For example, the price of wet-process separators in early February 2017 fell by about 9% compared with December 2016, and the price of electrolytes fell by 7%.

However, the prices of cathode materials ternary materials and lithium cobalt oxide have risen sharply. The data shows that on February 8, 2017, the price of 4.35V lithium cobalt oxide has risen to 260,000 yuan / ton, an increase of 18% compared with December 2016; in the same period, the price of power-type ternary material 523 was 155,000 to 160,000 Yuan/ton, an increase of more than 5% compared with the end of the year.

Lithium cobalt oxide is an important raw material for ternary materials. The price of ternary materials and lithium cobalt oxide can rise against the market, which is closely related to another key word in the new policy of new energy vehicles in 2017, that is, subsidies are linked to the cruising range of power lithium batteries. The better the battery performance, the more subsidies. The number of manufacturers of primary lithium-ion batteries has increased significantly, driving the demand for ternary materials. At the same time, half of the global cobalt resources come from Congo, Africa, but Congo’s cobalt production is easily subject to geopolitical influences. Data show that in 2016, Congo’s cobalt production fell by 7.35% year-on-year.

The first quarter is a traditional off-season for the auto market. Industry insiders predict that the prices of power lithium batteries and the four major materials will fluctuate greatly in the next month or two.