Behind the skyrocketing market value and soaring wealth, CATL’s performance and revenue have both declined, and its total liabilities continue to rise.
There is a story that is said to be widely circulated. According to Wang Xing, CEO of Meituan, the words "Gamble is Stronger" were once hung in the office of CATL Chairman Zeng Yuqun. A partner once curiously asked Zeng Yuqun, Don’t Fujian people “win only if they love to fight”? Zeng Yuqun's answer is quite concise: "Spelling is not enough. It is physical work, while gambling is mental work."
Although hearing is false, seeing is believing. However, this businessman who was born in Lankou, Ningde, Fujian, did win the bet on the power battery field in recent years.
Among the top 25 billionaires listed in the 2020 China Automobile Rich List released by Forbes China, the number one is no longer Li Shufu, the actual controlling shareholder of Geely Automobile, who has always monopolized the top spot. This year, Zeng Yuqun topped the list with US$15.8 billion, followed by Li Shufu and Great Wall Motors' actual shareholder Wei Jianjun, with US$15 billion and US$8 billion respectively.
Not only that, in addition to Zeng Yuqun, Ningde Times also brought three senior executives including Huang Shilin, Pei Zhenhua and Li Ping to the list. The three of them are worth a total of US$14.7 billion, which ranks them among the others.
However, behind the skyrocketing market value and soaring wealth, CATL's performance and revenue have both declined, and its total liabilities continue to rise.
“If we are not number one in the world, we have no value in existence.”
In the past decades of entrepreneurship, Zeng Yuqun has always made the impossible possible and made things possible. The possibilities become endless. But when the sales volume of electric vehicles in Europe is trying to surpass China step by step, and competitors such as LG Chem are struggling to catch up, what possibilities are left for CATL?
How deep the foundation is, how high the wall is?
If you want to see the future, you must first understand the past.
In 1999, Amperex Technology Limited (ATL), established by Zeng Yuqun and Xinke executives Chen Tonghua and Liang Shaokang, was registered and established in Hong Kong.
ATL’s positioning is to make polymer soft-pack batteries with flexible sizes. Since then, Zeng Yuqun purchased the polymer lithium battery patent license from Bell Labs in the United States. By improving the technical problem of bulging mobile phone soft-pack batteries, ATL successfully stood out in the wave of development of the domestic mobile phone industry after 2000, with shipments of 1 million batteries.
Ten years have indeed been a lesson. In 2011, the new energy bus market began to take shape. However, due to national regulations at the time, foreign-funded companies were unable to produce power batteries (ATL was sold to a Japanese company TDK Group).
Zeng Yuqun decided to go a step further and make the power battery team completely independent. In the same year, under the leadership of Zeng Yuqun and others, Ningde Times was established in Zeng Yuqun’s hometown of Ningde, Fujian.
At this time, Ningde was just a small town that few people knew about, but it was Zeng Yuqun who used this name to promote this small town to the world.
At the beginning, CATL was still a joint venture, with 15% of the equity owned by ATL. In 2015, ATL transferred this 15% stake to Ningbo Lianchuang. After the equity transfer is completed, ATL will no longer directly or indirectly hold the equity of CATL. Although the earliest registered capital was only 1 million yuan, the fledgling CATL jumped onto the historical stage of power batteries in just two "battles".
In 2012, BMW wanted to find a Chinese battery supplier partner for its new energy vehicle brand Zino. Although it has just been established, CATL has a lot of experience in lithium battery research and development due to its relationship with ATL. On the other hand, ATL's long-term supply experience for Apple is very convincing to BMW.
With technical foundation and high-end brand endorsement, CATL won this big order from BMW. The cooperation with BMW has benefited CATL a lot. It is precisely because of BMW's stringent technical requirements that in turn prompted CATL to continuously improve its battery production and testing levels.
After cooperating with BMW, CATL has completed the entire process of power battery research and development, design, development, certification and testing, and has also accumulated experience and brand endorsement for its subsequent development. This was the only Chinese company at that time that entered the power battery supply chain of a multinational automobile company.
Subsequently, the CATL market was quickly opened up. At the same time, on the “technical route”, CATL also has the upper hand.
At that time, some people considered that the technical difficulty of ternary lithium batteries was high, the patents were controlled by Japan and South Korea, and lithium iron phosphate batteries were easier to break through. Wang Chuanfu, the founder of BYD, also agreed with this view, "BYD only makes vehicle-mounted iron phosphate batteries. Lithium batteries have a future in the world and in China." BYD, which has a large number of lithium iron phosphate battery patents, has easily made up half of the world with lithium iron phosphate batteries.
Unfortunately, it backfired. Due to changes in subsidy policies, BYD had to follow the market trend after losing its leadership position. Zeng Yuqun, who was the first to choose ternary lithium batteries with high density, small size but poor stability, has already taken the lead.
In just a few years, many domestic car companies such as SAIC, BAIC, Changan, Geely, Great Wall, and Dongfeng have established cooperative relationships with it. According to data from power battery research organization SNEResearch, CATL’s power battery installed capacity ranked first in the world for three consecutive years from 2017 to 2019; in August 2020, the global power battery installed capacity was 10.8GWh (gigawatt hours), CATL’s The installed capacity of 2.8GWh once again ranked first in the world, with a market share of 25.9%.
However, just when it was riding high, several incidents related to the spontaneous combustion of the star product NCM811 battery made CATL a little depressed; at the same time, LG Chem also gave CATL a boost in terms of installed capacity. Huge pressure; in the past, lithium iron phosphate batteries were suppressed by ternary lithium batteries for a long time. It was not until BYD launched the "blade battery" with higher endurance and safety in March this year that the battery market pattern began to undergo a series of subtle changes. changes.
As the saying goes, the deeper the foundation, the higher the wall. How high can the wall be built in the Ningde era?
The sweet and sour feeling of being chased
Having an opponent is a good thing, it can push you forward, but if the opponent is too strong, you don’t know whether it is joy or sorrow.
According to the financial report, old rival LG Chem’s third quarter sales were 3.14 trillion won, operating profit was 168.8 billion won (approximately 990 million yuan), sales and Operating profits both hit record highs.
LG Chem stated that the reasons for achieving its best performance in history are: the launch of new electric vehicles by major European customers, increased sales of cylindrical batteries, expanded supply of IT products, etc. It is reported that LG Chem is developing a new type of cylindrical battery. The energy density of the new battery is five times that of the previous one and the power is six times that of the previous one.
In September this year, LG Chem stated that it would separate the battery business. After being approved by the extraordinary shareholders’ meeting held on October 30, LG Chem will officially separate the battery business from December 1. A new company will be established, tentatively named "LG ENERGY SLOLUTIONS" (LG Energy Solutions).
Faced with LG’s prosperity, CATL did not give a perfect answer.
Its third quarter financial report shows that the company’s revenue in the third quarter reached 12.693 billion yuan, a year-on-year increase of 0.8%, and the net profit attributable to shareholders reached 1.42 billion yuan, a year-on-year increase of 4.24%. However, compared with 2019, the growth rate of CATL's revenue and profits has declined very obviously. In 2019, CATL's revenue growth rate was 54.6%, and its profit growth rate was 34%. In the third quarter financial report, CATL’s revenue growth rate fell by 53.8%, falling to half of 2019.
The main reason for the decline is that the domestic battery market has undergone tremendous changes in the past two years.
Affected by the new subsidy policy, the profitability of battery companies continues to decline. Secondly, the price increase of upstream raw materials such as metal cobalt and lithium has further increased the operating costs of battery companies. According to data from Lieyun.com, due to market shortages, the price of metallic cobalt raw materials has increased by more than 230% from 2015 to 2018.
In addition, as well-known battery companies such as LG, Samsung SDI, and Panasonic return to the Chinese market, the already tight supply of upstream raw materials has become even tighter, making competition among battery companies more intense.
In addition, although since 2014, CATL has successively established subsidiaries in Germany, France, the United States, Hong Kong and other countries and regions, and has begun to look for new business growth points in overseas markets, but With the frequent efforts of LG and Samsung SDI, CATL's expansion in overseas markets has been hindered.
In 2017, Zeng Yuqun wrote in an internal letter: The ancients said that one is born in sorrow and dies in happiness. People who have no long-term worries must have immediate worries. Negative and short-sighted behavior will eventually lead to failure in career and life, and collective short-sightedness will affect the company's progress and ultimately cause the company's failure.
So soon, CATL began to face challenges one after another.
“CATL will mass-produce batteries that ‘do not catch fire but only emit smoke’ by the end of the year.” On September 29, Zeng Yuqun said at the 2020 World New Energy Vehicle Conference that the battery will be used in some applications by the end of the year. on the car model. Zeng Yuqun said that this new battery will directly solve the problem of incompatible high energy density and stability of batteries. "Even if one battery cell catches fire, the entire battery pack will only emit smoke. This is a direct solution to the pain point."
Although to the outside world, this is undoubtedly Zeng Yuqun's response to several spontaneous battery combustion incidents this year. But more importantly, as the domestic battery industry enters the knockout stage, CATL has also begun to seek a new way to break the situation by integrating the industrial chain and opening up new markets.
New stories are needed
How long can the Ningde era hold up?
This is no longer a question, but a must-answer question. After all, car companies can never put all their eggs in the same basket. Volkswagen China CEO Feng Sihan once said that Volkswagen will consider multiple suppliers for its upstream layout of new energy. Although it has a stake in Guoxuan Hi-Tech, it is not the only battery supplier.
“The cooperative relationship between battery companies and vehicle companies is also changing. It is impossible for battery companies to control vehicle companies. Vehicle companies will also manufacture batteries and will not completely use batteries from CATL. It may also use part of it," Cui Dongshu, secretary-general of the Passenger Transport Association, said. He believes that power batteries will be like engines, and as a core component, more and more car companies will choose to produce them independently in the future. In fact, more and more domestic car companies have begun to do this.
BMW also said that although it does not produce batteries, it needs to "take the core technology into its own hands." To this end, it has built its own battery R&D center in Munich, and the battery cell production is handed over to Ningde It takes time to complete, but the leadership is in your own hands.
So CATL has accelerated its pace of transformation in recent years. According to incomplete statistics from relevant media, since 2018, CATL has invested in 34 companies, of which at least 6 are involved in energy storage systems, accounting for 10% of the total. That’s nearly a fifth. On an annual basis, the number of companies deployed by CATL in the field of energy storage systems is increasing year by year.
CATL’s 2019 financial report shows that its main products include new energy vehicle power battery systems, energy storage systems and lithium battery materials. CATL's energy storage system products include battery cells, modules/boxes and battery cabinets, which can be used in power generation, transmission and distribution, and power consumption. Financial report data shows that CATL’s energy storage system revenue accounted for approximately 0.6% and 1.3% of CATL’s total revenue in the same year in 2018 and 2019 respectively.
In addition to the energy storage system that has been deployed, since 2020, autonomous driving and vehicle-electricity separation have become new investment directions in the CATL era.
CATL’s investment in autonomous driving is biased towards the commercial vehicle field. For example, Henan Yuexin Times New Energy Technology Co., Ltd., a joint venture established in the first half of 2020, is mainly engaged in the research and development of electrified unmanned mining trucks and unmanned mining technology; Yingche Technology, which CATL recently invested in, focuses on automatic Drive truck network operations.
In terms of vehicle and electricity separation, Ningde Times established Wuhan Weineng Battery Asset Co., Ltd. with NIO and other shareholders in August this year to explore the development of the "vehicle and electricity separation" business model in the new energy automobile industry.
Obviously, these are important bargaining chips for CATL’s next game. It is worth mentioning that as one of the “GEM” companies, CATL’s name once appeared in the Ant Group’s prospectus.
It was reported that CATL planned to invest 787 million yuan to participate in Ant Group’s strategic placement, accounting for approximately 0.037% of Ant Group’s shares.
At the same time, Ant Group also defines CATL as "a large enterprise or its subsidiary enterprise that has a strategic partnership or long-term cooperation vision with the issuer's business operations." Although Ant Group was stopped when it was only "on the verge of a successful listing", there have been contacts between the two.
In July last year, CATL and Ant Financial had already cooperated in the field of vehicle-electricity separation. *** jointly invested in Haro Power Exchange, a subsidiary of Haro Travel, to test the replacement of two-wheeled vehicles. electricity market. Currently, CATL holds 21.68% of the company’s shares, making it the second largest shareholder.
In September this year, Ant Group joined forces with CATL, as well as Yuyue Medical, Nanyang Commercial Bank, Cathay Pacific, Qianfang Technology and China Huarong to launch the establishment of Chongqing Ant Consumer Finance Company. Ant Group is a large Shareholders, invested 4 billion yuan, holding 50% of the shares, and Ningde Times held 8% of the shares.
There is no doubt that CATL has begun to accelerate its business expansion, cooperate more with upstream and downstream industries and take risks. Only in this way can it ensure its leading position in the market.
The past always reminds people of the Ningde Times IPO reception in June 2018. Zeng Yuqun once sang a song "Broad Sea and Sky" by Beyond with excitement: "Chasing in the wind and rain, parting in the fog. There is no clear trace, the sky is vast and the sea is vast, you and I can change."
After many great changes in the battery industry, CATL can only find a place in the global competition by being one step ahead of others. But amid all the unknowns, how can we usher in rapid growth? No one knows.
Text/Pino
This article comes from the author of Autohome Chejiahao and does not represent the views and positions of Autohome.