Recently, the Ministry of Industry and Information Technology released a list of the first batch of companies that meet the "Industry Standards and Conditions for the Comprehensive Utilization of Waste Power Batteries for New Energy Vehicles", including Guangdong Guanghua Technology Co., Ltd. (hereinafter referred to as "Guanghua Technology"), Jingmen GEM New Material Co., Ltd. (hereinafter Referred to as "Jingmen GEM"), Hunan Bangpu Recycling Technology Co., Ltd. (hereinafter referred to as "Hunan Bangpu"), Quzhou Huayou Cobalt New Material Co., Ltd., Ganzhou Highpower Technology Co., Ltd. (hereinafter referred to as "Ganzhou Highpower"), etc. 5 companies.

  The production and sales of new energy vehicles are already in the "explosive period", and the recycling of used power batteries is still in the stage of "crossing the river by touching stones". According to EVTank research data, it is estimated that China's power battery recycling volume will reach 422,000 tons in 2022, and the scale of the echelon utilization and recycling and dismantling market will reach 13.1 billion yuan. However, the overall decommissioning of power batteries in 2018 has not yet reached a scale, which will have an impact on corporate profits.

  Wang Jingzhong, vice chairman of the China Battery Industry Association, said that at the early stage of the industry's development, certain thresholds must be set for enterprises to enter the market to avoid pollution to the environment by simply disposing of waste batteries for profit.

  The battery recycling industry is in the early stage of outbreak

  In recent years, under the influence of policy support and other factors, the rapid development of new energy vehicles has promoted the accelerated layout of the power battery market. It is understood that the domestic battery output in 2014 was 3.7GWh, and the installed capacity of power batteries in 2017 was 36.2GWh.

  Based on this, the power battery recycling market may usher in new opportunities. The "Power Battery Recycling Industry Report (2018)" issued by the China Battery Alliance and Beijing Green Smart Energy Technology Research Institute shows that retired power batteries will be recycled in a way that first implements cascade utilization and then implements resource recycling. According to estimates, the battery recycling market size will reach about 6.5 billion yuan in 2020, of which the cascade utilization market size is about 4.1 billion yuan, and the recycling market size is 2.4 billion yuan.

  Many companies have increased their layout to meet the market. It is understood that Guanghua Technology began to enter the field of lithium battery production in 2017. In October 2017, a 150-ton/month battery recycling demonstration line was built in Shantou, Guangdong. In May 2018, Guanghua Technology established Zhuhai Zhongli New Energy Technology Co., Ltd. with its own funds to carry out the cascade utilization, recycling, dismantling and remanufacturing of lithium batteries.

  GEM recently signed a contract with the Ningde Municipal People's Government to plan the construction of Ningde New Energy Materials Industrial Park and Ningde Circular Economy Industrial Park. Jingmen GEM also established a joint venture with Yongqing Technology Co., Ltd. The initial target is 50,000 tons of ternary precursor materials for power batteries and 20,000 tons of ternary cathode materials for power batteries.

In addition, many "players" have entered the game through mergers and acquisitions. CATL completed the acquisition of   Guangdong Bangpu Recycling Technology Co., Ltd. (hereinafter referred to as "Bangpu Cycle") in 2015. Hunan Bangpu is a subsidiary of Bangpu Recycling; Xiamen Tungsten Industry and BAIC New Energy each hold Ganzhou Highpower’s 47% shares and 4.47% shares. Yang Qingyu, director of the research department of the China Battery Alliance, said that some material companies, vehicle companies, and power battery companies have been in the power battery recycling business for one to two years, but most of them only occupy one or two parts of the multiple links.

  GEM said that the environmental protection and new energy industries are entering a period of rapid development, and there will be a large number of potential competitors entering this field through project investment, mergers and acquisitions, and seeking cooperation and joint ventures, which will further intensify industry competition.

  Guanghua Technology mentioned that the company's lithium battery material recycling business belongs to the company's new business field. In the past two years, a large number of large central enterprises, local state-owned enterprises and private capital have entered the waste treatment field. In addition, Guanghua Technology stated that the current industrialization and market concentration of waste treatment are relatively low.

  Wang Jingzhong said that 2018 is the battery recycling year rather than the outbreak year. At present, the number of new energy vehicle batteries reaching the end of life is still relatively small. Yang Qingyu also said that the current power battery recycling industry is in the early stage of its outbreak, and the overall decommissioning volume in 2018 has not reached a scale.

  Industry norms are the top priority

  In the early stage of the industry's outbreak, the recycling and utilization of used power batteries was still in the stage of "crossing the river by touching stones", and the gradual improvement and advancement of relevant management standards was required.

  At the beginning of 2018, seven ministries including the Ministry of Industry and Information Technology jointly issued the "Interim Measures for the Management of Recycling and Utilization of Power Batteries for New Energy Vehicles" to encourage cascade utilization and recycling, and promote the innovation of power battery recycling models. Emphasizing the implementation of the extended producer responsibility system and requiring automobile manufacturers to bear the main responsibility for the recovery of power batteries, the measures have been implemented on August 1, 2018.

  On September 5, the Ministry of Industry and Information Technology released the list of the first batch of companies that meet the "Industry Standards for Comprehensive Utilization of Waste Power Batteries for New Energy Vehicles".

  From the current point of view, the Ministry of Industry and Information Technology has temporarily announced 5 companies that truly meet the requirements of the industry standards, and the industry standards may still need to be improved. Data show that there are many small recycling workshops in the existing power lithium battery recycling channels, and the recycling channels are not standardized or cause great trouble to the development of the industry.

  Take the development of the lead-acid battery recycling industry as an example. In 2011, the China Battery Industry Association submitted to the relevant departments the "Recommendations on the Deposit System for the Recycling of Used Lead-acid Battery" mentioned that 80% of the recycling share was occupied by informal small enterprises at that time. It is understood that in order to reduce weight and freight, there are small workshop owners who choose to pour acid before transportation, which is easy to allow a large amount of acid to enter the groundwater system and soil to form pollution.

  Public information shows that although lithium power batteries do not contain heavy metals such as lead and cadmium, there are still heavy metals such as nickel, cobalt, and manganese in the electrolyte, and the electrolyte and fluorine-containing organic matter are also polluted. For example, lithium hexafluorophosphate in the electrolyte of lithium power battery is easily hydrolyzed in the air environment to produce phosphorus pentafluoride, hydrogen fluoride and other harmful substances, which have a strong corrosive effect on humans, animals and plants, so special attention should be paid to the treatment of solvents and lithium hexafluorophosphate.

   Wang Jingzhong said that the power battery recycling industry needs thresholds and standards from the beginning. "Enterprises either do not deal with it or deal with it all-round. It is to avoid that enterprises only deal with some profitable materials for profit, which will pollute the environment."

  Cost and profitability are temporarily difficult to balance

  Nowadays, for most companies, the layout of power battery recycling is "precautionary". At present, the industry is not scaled up and the investment in layout is large. Many companies need to solve the balance between investment and income at this stage.

  According to the data, the revenue of Guanghua Technology and GEM in the new energy battery materials business grew rapidly in the first half of the year, but their gross profit margins both declined slightly. In addition, more funds are spent in the process of expanding the layout.

  Recently, Guanghua Technology released the 2018 semi-annual report, which mentioned that the operating income of lithium battery materials was 99,378,900 yuan, an increase of 101.49% year-on-year; and the gross profit margin was 27.31%, a year-on-year decrease of 2.18%. In addition, the report mentioned that the new investment in the current "Technology Center Upgrading and Reconstruction Project" and the "14,000 Tons of Lithium Battery Cathode Material Construction Project" has increased by approximately 111 million yuan.

  GEM also mentioned in the 2018 semi-annual report that the operating income of new energy battery materials was 4,04278,110,000 yuan, a year-on-year increase of 98.70%; the gross profit margin was 22.95%, a year-on-year decrease of 3.26%. Recently, the joint venture established by Jingmen GEM and Yongqing Technology signed a power battery ternary cathode material project investment agreement with the Fu'an Municipal Government. The total investment of the project is about 1.85 billion yuan.

  In addition, in the first half of 2018, GEM increased its financial expenses and management expenses to varying degrees. It is understood that the company has increased interest-bearing liabilities in order to meet the funds needed to expand the scale of production and operation. Financial expenses are 303 million yuan, an increase of 36.79% over the same period last year; administrative expenses are 466 million yuan, an increase of 65.24% over the same period last year. , The main reason is the increase in salary, depreciation and amortization caused by the company's increase in R&D investment and the expansion of production capacity.

  Yang Qingyu said that it is difficult for some companies to make profits, first of all because the scale of the industry has not yet come up, and the price fluctuations of lithium battery materials and the long recycling cycle of cascading utilization also affect the profits of enterprises. Yang Qingyu mentioned that the five companies recently released by the Ministry of Industry and Information Technology are relatively standardized and are basically profitable companies.

  Wang Jingzhong said that large-scale scrapping needs to wait until two years later, and many companies are facing a situation of "not having enough food". "Power battery recycling and processing needs to meet the quantity requirements to be profitable." In addition, some companies nowadays have high processing technology costs, it is difficult to coordinate costs and benefits, and it is easy to cause losses.