Despite the huge market potential in the future, the "profitability" of power lithium-ion Battery recycling is not optimistic up to now.
Several insiders told Gaogong Lithium Battery that since participating in the power lithium-ion Battery recycling industry, seeing the bright market prospect, the profit is not improving, and there is a feeling of doing "public welfare". If it were not for the large scale of power lithium-ion battery retirement in the future and the high pollution risk of power lithium-ion Battery recycling, it might have withdrawn from this market long ago.
Nowadays, this' public welfare 'is still ongoing. It is understood that most of the mainstream power lithium-ion Battery recycling companies have not yet achieved profitability.
However, industry insiders unanimously believe that with the expansion of the retirement scale of power lithium-ion batteries, coupled with technological progress, transportation, packaging, dismantling, and other costs have decreased, the future profit prospects will be better. Of course, in this process, there will be fierce market competition, and strong companies will stand out.
The investment boom in the power lithium-ion Battery recycling industry is growing. Gaogong Lithium Electric believes that it is necessary to sort out and review the issues related to the power lithium-ion Battery recycling industry.
01. Rapid investment leads to overcapacity
Reviewing the market of power lithium-ion Battery recycling in the past few years, the obvious problem is that the lack of practical profit considerations, the company swarmed together, leaving the power lithium-ion Battery recycling industry with excess production.
Bao Wei, general manager of Huayou Recycling, believes that the market share of the power lithium-ion Battery recycling business of each company is almost the same, and there is no absolute leader. In terms of layout, most of it is also out of taking on social responsibility for recycling and seizing the market in advance.
In addition, he also said that the current investment in the power lithium-ion Battery recycling industry has excess production and is overheating.
The reason is that from a data perspective, the cumulative scrapped power lithium-ion batteries in China from 2018 to 2020 will reach 120000-20000 tons, and it may reach 350000 tons in 2025. However, the current power lithium-ion Battery recycling company has built and planned a total treatment output of more than 500000 tons, far exceeding the actual needs.
Some insiders also reported that due to exaggerated market publicity and misunderstanding of policy guidance by some media, investment in the power lithium-ion Battery recycling industry was blind and a bit too radical, and was not guided by the real market demand. Furthermore, there is overcapacity, leading to some compliant companies not only not making money, but also losing money, relying on other aspects of operating profits to survive.
02. Low quantity and high price of power lithium-ion batteries under imperfect property rights
In addition to policy factors, the large-scale retirement of power lithium-ion batteries has not yet arrived and the recycling system is not perfect, resulting in a low quantity and high price of retired power lithium-ion batteries in the hands of compliant recycling companies.
On the one hand, the large-scale retirement trend of power lithium-ion batteries will not erupt until around 2021, resulting in a limited number of recyclable retired power lithium-ion batteries in the market, which is not enough for compliant companies to share.
On the other hand, due to the imperfect recycling system, some stakeholders are driven by commercial interests, and a portion of retired power lithium-ion batteries are flowing into the "small workshop" style market. The other part is sold to compliant recycling companies at higher prices through methods such as bidding at high prices
Therefore, for compliant recycling companies, on the one hand, the supply of retired power lithium-ion batteries is far from matching production, and on the other hand, the price of recovered power lithium-ion batteries is on the high side, which will inevitably lead to losses.
In addition, different power lithium-ion battery companies produce different types of power lithium-ion batteries in terms of materials, formulas, specifications, and construction. There are many battery models and scattered production, which also poses great difficulties for compliant companies to make profits through business models such as recycling and cascade utilization.
03. "Small workshops" make money, while compliant companies suffer losses
Due to being scattered near companies selling retired lithium-ion power batteries, "small workshops" have low transportation and labor acquisition costs. At the same time, due to the lack of environmental protection supervision, business qualification, and other responsibilities, the Fixed cost is not high, and the profit is high, so the ability to acquire waste power lithium-ion batteries through channels is strong.
However, it is worth noting that some of the retired power lithium-ion batteries recycled by "small workshops" may be sold as substandard and enter the power lithium-ion battery cascade utilization market, posing certain safety risks. There is also a part where the waste generated due to poor disassembly technology can cause serious environmental pollution.
Correspondingly, compliant companies invest heavily in environmental protection, equipment, factories, personnel, and other aspects. At the same time, the supply of retired lithium-ion batteries is scattered, resulting in high transportation complexity and shipping costs. To some extent, the Fixed cost of compliance companies is high, and sometimes recovery is not worth the cost economically.
On the one hand, the recovery company must have a certain scale to dilute costs, reduce Marginal costs, increase Marginal profit, and finally achieve overall profitability.
On the other hand, recycling companies should meet market demand, collaborate with upstream and downstream industries, take appropriate measures to reduce costs and increase efficiency, and enhance profitability.
The market leader of Huayou Recycling introduced that establishing recycling service outlets in 7 important cities across the country can effectively reduce the transportation and storage costs of recycling front-end. At the same time, he is willing to assume the main responsibility for the recovery and utilization of retired power lithium-ion Battery recycling for vehicle manufacturers.
There is also a flexible automatic disassembly production line for battery packs, which can improve the residual value of Battery recycling on the premise of ensuring safety and environmental protection.
However, it should be noted that the size of the battery pack is complex, the standards are not unified, the dismantling technology is difficult, and the scale may not increase for a while. For compliant companies, the path to profitability remains difficult.
04. Market response measures after heavy fog
In addition to policy, the most important thing to deal with the problem of power lithium-ion Battery recycling is the close cooperation between power lithium-ion battery factories, vehicle factories, and power lithium-ion Battery recycling companies in the market.
The power lithium-ion battery factory has the best understanding of battery structure and has the technical advantage of dismantling and recycling power lithium-ion batteries. In the process of battery design, we can fully consider the needs of cascade utilization and easy disassembly scenarios, establish contact with the power lithium-ion Battery recycling company in advance, and manufacture power lithium-ion batteries that are easy to disassemble. At the same time, complete full lifecycle management, strive to unify battery model standards and complete battery traceability labeling.
In terms of vehicle manufacturers, it is convenient to recycle power lithium-ion batteries, which can speed up the improvement of Battery recycling systems and reduce the acquisition cost of power lithium-ion Battery recycling companies. In addition, in the business model, both charging and swapping can be carried out to accelerate the cascade utilization of retired lithium-ion batteries.
Vehicle companies, battery companies, energy storage companies, and third-party recycling companies are all accelerating the deployment of tiered utilization of power lithium-ion batteries.
Chen Jinzhao, General Manager of Zhongtianhong Lithium, stated that due to customers' important concerns about retired power lithium-ion batteries, safety, range, charging convenience, intelligent monitoring level, and loss prevention.
Therefore, in the energy storage field of China's iron towers and home appliance networks, as well as in the application of low-speed electric vehicles, Zhongtianhong Lithium ensures the achievement of relevant requirements by loading chips, intelligently extracting and monitoring retired power lithium-ion battery parameter indicators.
Power lithium-ion Battery recycling company needs to increase technology investment, research on improving disassembly efficiency and economic benefits, and reduce Fixed cost expenditure. In addition, establish cost-effective recycling methods to help power lithium-ion battery companies and vehicle manufacturers bear a certain amount of recycling responsibility, and improve profitability through a win-win situation in the upstream and downstream industry chain.
Summary:
The prospect of the power lithium-ion Battery recycling industry is promising. However, for recycling companies, it is necessary to act within their capabilities and seek truth from facts to create a good urban "mine".
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