According to incomplete statistics by reporters, a total of 13 listed companies invested 43.5 billion yuan in power batteries from January to July this year. Among them, BYD's 15 billion yuan expansion project for lithium batteries and the research and development of pure electric vehicles are the largest, followed closely by Wulong Electric's 9.3 billion yuan investment in power battery projects.

　　Jian Liang, an analyst at CCID Consulting Automotive Industry Research Center, stated in an interview with reporters that it is expected that the investment in power batteries will exceed 100 billion yuan in 2015; However, due to the need for a certain period of time for new production capacity, short-term production capacity is still insufficient. In the future, with the increase of power battery production capacity, it is predicted that domestic lithium power batteries may reach supply-demand balance by 2017.

　　Production capacity in short supply

　　Xiao Han, a researcher in the new energy industry at China Investment Consulting, said that the investment boom in power batteries to some extent reflects the high enthusiasm of consumers for purchasing new energy vehicles, and the market is in short supply.

　　As of July this year, the cumulative production of new energy vehicles has reached 98900 units, a three fold increase compared to the same period last year. The demand for power batteries has exceeded 6500MWh, which is 54.76% higher than the annual production of power batteries in 2014, which was about 4200MWh.

　　"The production capacity growth rate of power batteries cannot keep up with the production growth rate of new energy vehicles," Jian Liang told reporters. According to the production capacity design and production line construction of domestic electric vehicle enterprises in 2014, there is currently insufficient production capacity of power batteries, resulting in a supply shortage.

　　According to data provided by Forward Industry Research Institute, it is expected that the sales of electric vehicles in China will reach 220000 units in 2015, a year-on-year increase of 162%. The demand for power lithium batteries is about 12500MWh, with a production value of approximately 25 billion yuan.

　　"With the increasing promotion of new energy vehicles this year, power batteries will enter a stage of tight supply, and there will be huge demand in the future. There will be no risk of overcapacity in the short term," Xiao Han pointed out.

　　It is worth noting that among the 13 listed companies counted by the reporter, there are also non power battery enterprises, such as Dongyuan Electric, which mainly deals with transmission and distribution electrical products, steel structure products, etc. In April of this year, Dongyuan Electric Appliances acquired 100% equity of Guoxuan High tech from 9 enterprises and 43 natural persons for 3.35 billion yuan. The company paid 490 million shares to the counterparty as transaction consideration through the issuance of shares.

　　Guoxuan High tech's products mainly include lithium-ion power battery packs, battery cells, and lithium iron phosphate cathode materials, among which battery packs account for more than 98%, second only to BYD and Tianjin Lishen based on 2014 sales.

　　In addition, many automotive component companies have entered the field of power batteries, such as Dawn Corporation, which specializes in automobiles and components. In June of this year, Shuguang Co., Ltd. raised 617 million yuan to acquire and increase its capital in Yineng Electronics, entering the new energy vehicle power battery market.

　　Jian Liang analyzed to reporters that the current increase in production capacity comes from the expansion of existing power battery enterprises (such as Lishen, Guoxuan, BYD, etc.), the transformation of small battery enterprises and traditional lead-acid enterprises (such as Camel and Tianneng) towards power batteries, and the extension of some vehicle enterprises (such as Lifan and BAIC) towards upstream batteries.

　　According to data from the Ministry of Industry and Information Technology, in the first half of this year, battery manufacturing enterprises above designated size in China completed a cumulative increase of 0.4% in their main business revenue year-on-year, achieving a total profit increase of 27.3% year-on-year. Among them, lithium-ion battery manufacturing enterprises completed a cumulative increase of 17.4% in their main business revenue year-on-year, achieving a total profit increase of 72.8% year-on-year.

　　As of now, multiple listed power battery companies have disclosed their mid year performance, among which Shanshan Group's net profit in the first half of the year was 611 million yuan, a year-on-year increase of 413.79%; Dongyuan Electric Appliances achieved a total operating revenue of 890 million yuan in the first half of the year, a year-on-year increase of 152.99%; Realized a net profit of 219 million yuan, a year-on-year increase of 214.16%.

　　Difficult to solve battery technology challenges

　　Although the growth rate of new energy vehicles is accelerating, a survey shows that about 70% of consumers believe that the current level of battery technology is the main obstacle to purchasing new energy vehicles. In fact, the lifespan, endurance, battery safety, and charging efficiency of new energy vehicles have always been the four major concerns for consumers when purchasing cars.

　　Xiao Han pointed out that battery technology is the most core technology for car companies to develop new energy vehicles, and the influx of capital can promote the progress of battery technology in China; But if companies only focus on short-term returns on investment and do not pay attention to technological breakthroughs, these problems will still be difficult to solve, and the uneven quality of batteries in the industry will still exist. Focusing on core technology research and development, manufacturing high-quality power battery products is the key to solving problems.

　　Journalists have found that in the first half of this year, major enterprises have increased their investment in the field of power batteries to accelerate their entry into the new energy vehicle market. However, they have focused more on expanding production capacity and invested less in technology research and development.

　　Jian Liang believes that compared to leading foreign companies, there is still a significant gap in domestic power battery technology. In addition, domestic research and development mainly focuses on process improvement, with limited forward-looking and fundamental research and development, making it difficult to develop and manufacture high-quality power battery products. Therefore, these issues are still difficult to solve in the short term.

　　It is worth noting that power batteries currently account for a relatively high proportion of the cost of new energy vehicles, generally accounting for one-quarter to one-third of the cost of new energy vehicles, and some even accounting for half. A person from a lithium battery company told reporters that, taking BAIC New Energy EV200 as an example, the cost of batteries accounts for almost half of the total vehicle cost.

　　However, according to data obtained by journalists in the industry, the current price of domestically produced lithium-ion batteries is 2-2.5 yuan/Wh, with low-end batteries costing about 2 yuan/Wh and high-end batteries costing about 2.5 yuan/Wh. Korean power battery manufacturers such as LG and Samsung have reduced their costs to below 1.8 yuan/Wh.

　　With the influx of a large amount of capital, the rapid increase in production capacity of power batteries and market competition may further intensify, leading to a downward trend in lithium battery prices.

　　Jianliang analysis shows that the main factors contributing to the decline in power battery prices are market competition, economies of scale, decline in equipment and raw materials, and progress in production processes and technology. The competition in the power battery market intensifies market differentiation. Small and medium-sized enterprises and new entrants may lower prices and sacrifice profits in order to seize market share, leading to a decrease in overall power battery prices. Meanwhile, advantageous enterprises can achieve economies of scale by expanding production, which will further reduce battery costs and also lead to a decrease in prices.