According to a survey by EnergyTrend, a global market research firm under TrendForce, Chinese battery cell manufacturers, including new energy and Guangyu, have gradually emerged, with a more positive capacity expansion rate compared to Japanese and Korean battery manufacturers. However, the hidden concerns of Chinese battery manufacturers entering the mainstream supply chain reveal that the era of low profit in lithium batteries is approaching, and the gross profit of the lithium battery industry may further explore.

　　Supply chain diffusion leads to the rise of Chinese batteries

　　Lithium batteries have been popular in mobile phone products since 2000, and since 2004, South Korea has been catching up with the production of laptop batteries. In 2008, due to safety issues with Japanese batteries, it joined the Chinese battery supply chain, which led to the overall lithium battery supply chain evolving from being dominated by Japanese brands in the early days to a situation where Japan, South Korea, and mainland brands dominate.

　　In terms of the development threshold of lithium batteries, consumer products such as mobile phones and cameras only require a single battery cell as their power source due to their small size and low power consumption, and the battery module assembly process is simple. Overall, cost-effectiveness is the key to such applications, with the supply chain mainly consisting of three sources: Japan, South Korea, and China. On the other hand, in laptop products, due to the high power consumption of the system, multiple series and parallel battery cells are mostly used to achieve the required voltage and current values of the system, which raises the safety threshold. Currently, this type of market is still dominated by Japanese and Korean battery manufacturers.

　　The huge labor force and rapidly growing domestic demand market in China have rapidly cultivated the domestic lithium battery industry, covering consumer and power products from upstream battery materials (Materials), midstream battery cells (Cells) to downstream battery assembly (Packs).

　　At present, many important consumer devices choose China as their assembly base, which has led to many battery cells and battery assemblies also settling in China. Japanese and Korean battery factories have also established battery production bases in China, driving the yield improvement of China's battery industry. At present, with the slowdown in the expansion of polymer battery production, Chinese battery cell factories are still actively planning for capacity expansion. In the recent hottest Apple phone supply chain, new Chinese battery cell factories have also been added. Therefore, whether from the domestic demand market or the catalysis of their own brands, the potential for future development of Chinese battery cell factories cannot be underestimated.

　　In response to the gradually declining prices of battery cells, battery cell manufacturers have gradually shifted their business strategies and entered into battery assembly and processing, including Sony, Samsung, LG, New Energy, BYD, and others. Especially in square batteries and polymer batteries, they have fully occupied the supply role of single cell assembly.

　　According to Energytrend's survey, the current independent assembly and processing rate of cylindrical battery cell factories has reached over 50%, with some Japanese factories accounting for more than 70%. Square batteries are mostly used in mobile phone products, and almost 100% are assembled by battery cell factories; Due to the high degree of customization in polymer batteries, the application of a single battery cell is almost entirely independently assembled by the battery cell factory. Only applications with multiple series and parallel connections are handed over to the assembly factory for assembly and processing; Due to the fact that cylindrical batteries are mostly assembled in multiple series parallel forms, they are mostly assembled and processed by professional assembly factories.

　　Regardless of whether it is a single battery cell or multiple series and parallel applications, battery cell manufacturers, due to their mastery of key components, sometimes seek assembly orders by lowering the price of battery cells in order to enter the assembly supply chain. In the long-term development of supply exceeding demand, the price of battery cells also declines quarter by quarter. In the long run, the development of gross profit in the production, manufacturing, and assembly of battery cells is a vicious cycle, It also forces the relationship between battery cell factories and battery assembly factories to gradually evolve from the previous upstream and downstream relationship to a situation of cooperation and competition.

　　At present, the cylindrical price performance in the third quarter shows a downward trend in high capacity performance, objectively reflecting an increase in the proportion of high capacity usage, and the price also shows a reasonable normal trend of large volume price drops. In the polymer sector, the proportion of high capacity continues to rise, and many new tablet products that are about to be launched in the third quarter have abandoned multiple series and parallel models to increase product appearance features, and have switched to single larger capacity battery cells for configuration. The main consideration is still cost, and high capacity battery cells have become more competitive in price, with a quarterly decline of 3.3%, which is more severe compared to the previous quarter. The slowdown in the decline in low capacity performance also indicates a decrease in the proportion of terminal application usage, resulting in a slight decline in the price trend of battery cells.