Panasonic and Samsung, LG have different layout rhythm challenges for the future development of new energy

Following the wave of production of Korean power battery companies in China, Matsushita, Japan’s power battery company, appeared to usher in “SHOWTIME” in the Chinese market in 2017. Matsushita, which accounts for 40% of the global market for on-vehicle lithium batteries, announced that it will invest 100 billion yen to increase production in Japan, China, and the United States, which have lithium-ion battery production bases for pure electric vehicles. Among them, the second basement is planned to be built in the Dalian base in China, which will increase the scale of production by approximately one time.

Combined with the fact that Matsushita's Dalian base was put into production in April this year, and the fact that it announced the construction of a power battery plant in Jiangsu in May, Matsushita’s intention to overweight the Chinese power battery market was obvious. But this is not surprising.

According to statistics, domestic new energy vehicle production in the first three quarters of 2017 increased by 40.9%, which was 396,000 units, which led to a 42.1% year-on-year increase in domestic battery production, reaching 32.02 GWh. The output has exceeded the full year of 2016. Entering the fourth quarter industry peak season, the above data will also be greatly improved.

It is worth noting that in the face of China's vast market prospects, South Korea's power battery giants Samsung and LG have also deployed high-profile power battery factories in China, but the results are not satisfactory. So, what exactly is the meaning of Panasonic overweight? Will the opening of foreign companies launch new chapters in China, or just enter Samsung, LG's footsteps?

Panasonic and Samsung, LG layout rhythm differences

Most Korean-based battery power plants in China were put into operation in 2015. By contrast, Panasonic’s construction in China revealed the meaning of “no hurry.”

In October 2015, Samsung SDI invested 600 million U.S. dollars in Xi'an Battery Factory, which was officially put into operation. The plant has a battery cell capacity of 3.6 million pieces/year and can provide power for 40,000 high-performance cars (pure electric EV standards). According to the plan, by 2020, Samsung will also increase the plant cell core production capacity to 31.2 million pieces per year in several phases.

In the same month as the production of the Xi’an plant, Samsung has also established a joint venture with a Chinese company to build a Tianjin Power Battery Factory, which will produce round lithium-ion batteries, including energy-powered batteries for vehicles.

But in Xi’an or Tianjin, Samsung has encountered “Waterloo”. In March this year, it was revealed that the production line of the Samsung SDI China Xi'an plant has been idle for several months, and the corresponding re-expansion plan has also been suspended. In October, Tianjin Battery Factory was insolvent, and Chinese shareholders Tianjin Zhonghuan and Jingkai State Assets respectively transferred 10% and 20% of the equity held by Samsung Tianjin Battery Factory.

The situation of LG China Battery Factory is also not optimistic. The LG Nanjing New Energy Battery Factory, which was put into operation in October 2015, is expected to meet the requirements of over 50,000 pure electric vehicles (based on electric vehicles with cruising range of up to 320 kilometers on a single charge) and over 180,000 plug-in hybrids. Power demand for PHEVs. However, according to industry sources, the factory's production line has been largely idle, and LG intends to sell the project to SAIC.

In fact, Panasonic's intention to enter the Chinese market is no longer than the Korean battery company. As early as December 2015, Panasonic announced that it would cooperate with its Chinese partner to build its first Chinese automotive power battery plant in Dalian. The new plant is planned to invest a total of 50 billion yen to produce rectangular batteries for electric vehicles and plug-in hybrid vehicles. The annual capacity of the project can meet the needs of 200,000 electric vehicles. However, it is worth noting that the project was not officially put into operation until April this year.

One month after the Dalian plant went into production, Panasonic announced that it would cooperate with the Suzhou municipal government and other companies to build a power battery plant in Jiangsu for the production of ternary lithium-ion batteries. It is expected that it will produce about 100 million batteries each year.

Compared with the Dalian plant, the construction pace of Panasonic's Jiangsu plant has been significantly accelerated and it is expected that it will be ready for production in the second half of 2017.

The environment gradually favors Panasonic's expansion and faces challenges in its future development

As we all know, the new energy automobile industry in China is greatly affected by policy factors. In 2015, when the Korea-based power battery was put into production in China, the strength of the local power battery company was relatively weak. Against this backdrop, the government has successively issued a number of announcements, catalogues, and standards concerning new energy vehicles and power batteries, which have caused a great impact on foreign-funded battery companies.

The development of Korean-based power batteries in the Chinese market has been struggling gradually from its initial aggressiveness.

Matsushita’s layout in China has been somewhat slower, but it has not been much affected. The Panasonic's overweight layout in the Chinese market has a great relationship with the changes in the industry environment.

In the past two years, with the support of national policies, the gradual improvement of power battery technology standards and the increase in corporate technology research and development, the attributes of local power battery technology, production capacity, and quality have improved significantly. Ningde era and BYD have emerged as internationally competitive. Power battery companies, and have built a relatively strong industrial chain supporting system, stable and occupy the corresponding domestic market.

At the same time, China's new energy policy has emerged a new trend for the development of foreign-funded battery companies. The situation that foreign battery companies have difficulty entering the catalog has also been improved. Since the fifth batch of recommended catalogs issued by the Ministry of Industry and Information Technology, new energy vehicles powered by AESC, Sanyo and other Sino-foreign joint venture batteries have started appearing in the list of recommendations. The situation in which it is difficult for foreign battery companies to enter the list has become loose.

At this time, Panasonic's entry will not only pose a strong threat to the domestic power battery companies, but it may also trigger a "catfish effect."

It is worth mentioning that Panasonic’s expansion in China may also be related to Tesla.

The recent Tesla Model 3 was caught in "production hell", the main reason being that battery production could not keep up. According to the news, due to pressure from battery supply, Tesla executives also met with Samsung and LG executives and were interpreted by the outside world as a sign that Tesla is expanding cooperation in the external supply of lithium batteries.

Furthermore, Tesla’s rumors of building factories in China have continued this year. In October, the spokesperson of the Ministry of Commerce confirmed that Tesla is currently communicating with the relevant government departments of the Shanghai Municipality regarding the establishment of factories and the country intends to relax investment access in strategic emerging areas.

Panasonic's expansion of production capacity is imperative as a battery supplier that is deeply tied with Tesla. Combining the aforementioned fact that Panasonic will build a Sanyuan lithium battery factory in Jiangsu, Jiangsu is also around Shanghai, and many insiders speculate that the factory's preparation may be to match Tesla’s battery needs in China.

Of course, Panasonic's expansion of production capacity in China, in addition to Tesla, is also targeted at the huge Chinese power battery market, but this is facing the challenges of domestic domestic competitive companies.

It is understood that Panasonic had previously gained some orders from domestic auto makers for its superior performance of power batteries. For example, emerging makers of cars and homes, the battery products powered by the first generation of SEV products were produced from Panasonic. However, in the latest supply chain cooperation companies announced by the current car and home official website, Panasonic has not found traces, replaced by the domestic power battery leading enterprise Ningde era.

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