Asia and Global Semiconductor and Tech Research

Andrew Lu

Former Head of Asia ex-Japan Semiconductor and TFT-LCD/Touch Research at Barclays and Citi Bank, Former Head of Technology at 國金證券

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Thematic (Sector/Industry)

United states It / Thematic (Sector/Industry)

<ul><li>Over US$100bn industry by 2026E: By assuming BEVs to have 13% of global automotive industry shares at battery cell cost of US$80/KWh and 95KWh per BEV, we estimate over US$100bn market size for rechargeable battery industry by 2026E at a CAGR of over 30% if battery supply can meet up with 13mn BEVs demand in 2026E.</li><li>Technology, cost, and capital intensive: Similar DRAM/NAND industry, the key vendors lead in the highest Wh (Watt hours) per Kg (battery density), the lowest price in US$ per KWh (Kilo Watt hours), and cash flow for the scale (US$4bn investment for 30 GWh capacity).</li><li>Panasonic leads and LG Chem follows: Driven by 0.5mn BEVs in 2018 and 1.0 mn in 2020, Tesla and <a href="https://www.smartkarma.com/entities/222" target="_blank" data-smartkarma-citation="entities:222:1">Panasonic</a> lead to build a Gigafactory with 35GWh cell battery capacity by 2018 at Sparks, Nevada by spending US$4.5-5.0bn. LG Chem is aiming to build 18 GWh battery pack capacity in 2018 for 0.3mn EVs for GM, Volvo, Renault, Group PSA, and Daimler AG. </li><li>The most aggressive one in China-CATL: In 2016, CATL was ranked No. 3 with 6.72 GWh after Panasonic (8.5 GWh). CATL plans to increase its lithium-ion battery capacity by seven times to 50 GWh until 2020. However, if CATL could not penetrate global EV vendors which sell EV outside of the China, the aggressive capex plan could be overstated.</li><li>What vendors have internal cash flow to spend? We like Panasonic and LG Chem over others due to their larger design wins with the key vendors and stronger operational cash flow for their heavy capex. Between BYD and CATL, we like CATL more than BYD due to CATL's core technology competence and more diversified customers than BYD's integrated model. </li></ul>

Over US$100bn industry by 2026E: By assuming BEVs to have 13% of global automotive industry shares at battery cell cost of US$80/KWh and 95KWh per BEV, we estimate over US$100bn market size for rechargeable battery industry by 2026E at a CAGR of over 30% if battery supply can meet up with 13mn BEVs demand in 2026E.Technology, cost, and capital intensive: Similar DRAM/NAND industry, the key vendors lead in the highest Wh (Watt hours) per Kg (battery density), the lowest price in US$ per KWh (Kilo Watt hours), and cash flow for the scale (US$4bn investment for 30 GWh capacity).Panasonic leads and LG Chem follows: Driven by 0.5mn BEVs in 2018 and 1.0 mn in 2020, Tesla and Panasonic lead to build a Gigafactory with 35GWh cell battery capacity by 2018 at Sparks, Nevada by spending US$4.5-5.0bn. LG Chem is aiming to build 18 GWh battery pack capacity in 2018 for 0.3mn EVs for GM, Volvo, Renault, Group PSA, and Daimler AG. The most aggressive one in China-CATL: In 2016, CATL was ranked No. 3 with 6.72 GWh after Panasonic (8.5 GWh). CATL plans to increase its lithium-ion battery capacity by seven times to 50 GWh until 2020. However, if CATL could not penetrate global EV vendors which sell EV outside of the China, the aggressive capex plan could be overstated.What vendors have internal cash flow to spend? We like Panasonic and LG Chem over others due to their larger design wins with the key vendors and stronger operational cash flow for their heavy capex. Between BYD and CATL, we like CATL more than BYD due to CATL's core technology competence and more diversified customers than BYD's integrated model. 

Andrew on Tech: Rechargeable Battery - The Next US$100bn Industry /Part 1