Consumers are flocking to pick up cars at the end of the year, and automakers are "blocking the door" to grab batteries! He Xiaopeng: I've had drinks with the bosses of battery manufacturers! Some say "now is the time to leverage connections."

“In the past week or two, I have had drinks with all the bosses of our battery manufacturers!” On the evening of November 6th, XPeng Chairman He Xiaopeng expressed his feelings about the current capacity situation of power batteries in an interview with a reporter from the Daily Economic News.

According to the reporter, in the fourth quarter of this year, the capacity supply of power battery manufacturers in China is tightening, with capacity utilization rates reaching high levels. Car companies are taking various measures to "snatch" batteries, whether they are ternary lithium or lithium iron phosphate batteries.

Sun Shaojun, founder of Car Fans, stated: “Recently, supply chain allocation has become a major issue, especially with core suppliers like CATL. The demand time for various brands is particularly tight, and now it’s all about connections.” In addition, some media reported that procurement personnel from several Chinese car companies gathered at CATL's headquarters sales office to "block the door" in hopes of securing battery capacity. In response, the reporter sought confirmation from CATL but had not received a comment by the time of publication.

Policy Adjustments Stimulate Order Growth, Consumers Rush to Pick Up Cars by Year-End

Some analysts believe that the continuous increase in new energy vehicle sales, optimistic market expectations for the future, and the traditional sales peak season in the fourth quarter, along with the impending reduction of the purchase tax exemption policy, have collectively ignited a "battery hoarding" war among car companies.

Data from the China Association of Automobile Manufacturers (CAAM) shows that from January to October this year, the production and sales of new energy vehicles in China reached 13.015 million and 12.943 million units, respectively, a year-on-year increase of over 30%; in October, the monthly sales of new energy vehicles for the first time exceeded 50% of the total new car sales. CAAM stated that the halving of the new energy vehicle purchase tax next year will lead some consumers to purchase cars in advance, ushering in a new round of consumption peaks in the market.

Due to policy adjustments and the year-end sales peak season, many new energy brand stores have recently seen a significant increase in customer traffic and order volume, with the vast majority of consumers hoping to pick up their cars before January 1, 2026, which also poses a challenge to the supply of power batteries. In this regard, Zhang Jinhui, a senior researcher at Xinluo Information, told reporters: “Everyone (car companies) is busy pushing for deliveries. Because the purchase tax will be halved next year, the battery production lines corresponding to popular models with good orders are tight.” Mo Ke, founder of Zhenli Research, added that this situation is tied to battery suppliers for car companies that hold ample orders.

An anonymous industry analyst told reporters: “The reduction of the purchase tax incentive mainly brings pressure on the consumer side, but companies will reflect market expectations in advance. For companies, it is not a ‘cost issue,’ but a ‘demand rhythm issue.’ Once the market expects ‘prices will rise next year,’ companies will actively increase their shipping rhythm to seize the sales window.” “The expectation of the reduction of the new energy vehicle purchase tax incentive has led some car companies to accelerate their delivery rhythm. However, the purchase tax is not the main driving force; what companies are really concerned about is the approaching year-end settlement period, and early registration and confirmation of delivery help improve financial performance and cash flow,” the industry analyst added In addition, some new cars have exceeded sales expectations after their launch, while battery production capacity has not expanded simultaneously, exacerbating the supply-demand tension for power batteries. Reports indicate that unlike the overall shortage of power batteries from 2021 to 2022, the current supply constraints are concentrated on high-nickel system high-end products, many of which are popular models recently launched.

Liu Yuncheng, a senior analyst at global technology market research and consulting firm Omdia, told reporters: "Domestic high-nickel batteries (NCM/NCA) are mainly used in high-end pure electric and plug-in hybrid models (especially long-range mid-to-large vehicles), and are sensitive to the purity and price fluctuations of upstream nickel sulfate and lithium hydroxide. Recent fluctuations in international raw material prices and long safety verification cycles have led to a tight supply of high-nickel batteries in the short term."

Hot Demand in the Energy Storage Market Forms "Reverse Siphon" in the Industry Chain

Industry insiders believe that the surge in demand for lithium batteries in the energy storage market is another key factor contributing to the "tightening of power batteries" again. "Domestic passenger car power batteries are mainly lithium iron phosphate (LFP) batteries. Although the production capacity of lithium iron phosphate cells is large, the concentration of energy storage projects has led to a temporary squeeze on automotive resources," Liu Yuncheng told reporters. "The current issue with lithium iron phosphate is that while the total amount is sufficient, many production lines have been diverted to energy storage."

Regarding the performance of the energy storage market, Zhang Jinhui told reporters: "The energy storage market has overall exploded this year, with the global energy storage market exceeding expectations, and each production line is operating at full capacity." Another securities analyst analyzed that the actual performance of the energy storage market has deviated from the predictions made at the beginning of the year, as the earlier capacity reserves were not laid out on such a scale.

According to research statistics from the High-tech Industry Research Institute (GGII), in the third quarter of this year, China's energy storage lithium battery shipments reached 165 GWh, a year-on-year increase of 65%; in the first three quarters of this year, the total shipment of energy storage lithium batteries in China reached 430 GWh, exceeding 30% of the total expected for the entire year of 2024, with the total annual shipment expected to reach 580 GWh, a year-on-year increase of 67%.

It is reported that energy storage mainly uses lithium iron phosphate batteries, and a listed company primarily engaged in lithium iron phosphate business revealed during an investor research activity that in the third quarter of this year, the company's sales of lithium battery cathode materials increased significantly year-on-year, with continuous enhancement of market competitiveness. Among them, the lithium iron phosphate business has seen both production and sales booming and achieving profitability, with sales increasing significantly year-on-year.

It is worth noting that battery manufacturers' raw material procurement usually follows the "T+3" model, meaning materials and orders are locked in three months in advance. In the middle of this year, some battery companies anticipated a rise in energy storage demand and thus increased their procurement of lithium iron phosphate materials for energy storage, which has also led to difficulties in expanding production for some popular models using lithium iron phosphate batteries in the short term.

"The current heat in the energy storage market has formed a 'reverse siphon' in the power battery industry chain. Due to the short project cycles and fast cash flow of energy storage projects, some manufacturers prioritize adjusting their production lines to energy storage specification cells (such as 280Ah, 300Ah large cells); "The power battery side relies more on customization and has a long verification cycle, leading to a situation where car manufacturers face a reduction in available battery cells in the short term," Liu Yuncheng stated.

As we enter the fourth quarter and even next year, the demand for energy storage remains highly certain. According to analyses from multiple institutions, the global energy storage installation growth rate next year is expected to be between 40% and 50%. Dongxing Securities stated in their research report that battery production scheduling in October further increased by 10%, with the peak season stepping up, and they expect a slight increase in production scheduling in November, maintaining a high level of prosperity, with energy storage demand exceeding expectations.

In this context, some analysts believe that popular models equipped with lithium iron phosphate batteries may still find it difficult to expand production in the short term, and this situation will persist for a while. In response, the aforementioned industry analyst told reporters: "Similar situations occur every year in the fourth quarter; the current shortage of power batteries is a short-term issue."

Reporter of this article | Sun Lei Editor | Cheng Peng, Yu Tingting, Du Bo, Source: Daily Economic News NBD Auto, Original title: "Consumers Rush to Pick Up Cars at Year-End, Car Manufacturers 'Block Doors' to Grab Batteries! He Xiaopeng: I've Drunk with Battery Factory Bosses! Some Say 'Now is the Time to Leverage Connections'"

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