In 2022, China's NEV sales market share exceeded 25%, which means that the penetration rate of NEVs in China has passed the stage with the fastest growth slope, and the market has also called out the slogan of “electrification” for investment opportunities in the NEV industry in the first half and “intelligence” in the second half.
However, in fact, due to the long NEV industry chain and delays in the timing of the explosion of some links, there is still a market in the “electrification” category that has not been fully exploited by the capital market but is already on the eve of an explosion. This is power battery recycling.
As a typical lithium battery post-cycle industry, the power battery recycling industry lags significantly behind the NEV industry chain. This is because NEVs are used for 4 to 8 years, and the battery capacity is less than 80% before entering the recycling stage.
Now that power battery decommissioning is approaching, the global power battery recycling market is about to explode. Under this industry trend, a large number of players have begun to pour into the power battery recycling market. Take China as an example. As of September 2023, the number of companies registered for “battery recycling” in China had reached more than 112,000, compared to only 3,400 in 2020.
Among the new players entering the power battery recycling market, Jin Jing Xinneng (01783) has a rapid layout. Starting from Hong Kong, it wants to build a huge global service system for lithium battery recycling and recycling that radiates the Southeast Asian, European, and American markets, and is expected to become a “leader” in the overseas power battery recycling market.
The “wave of decommissioning” of power batteries is approaching, and the long-term market size exceeds 100 billion
As far as the NEV industry as a whole is concerned, power battery recycling is a significant necessity because it has both environmental protection and economic benefits. From an environmental perspective, waste batteries have poor thermal stability, and also contain large amounts of heavy metals such as cobalt, nickel, and manganese, as well as toxic organic components such as fluoride electrolytes. In order to avoid environmental pollution problems, battery recycling is imperative.
In terms of economic benefits, power batteries are the “heart” of new energy vehicles, accounting for 30% to 40% of vehicle costs, and due to unbalanced distribution of lithium resources, this can lead to regional resource constraints. Different resource endowments and regional policies will make mining difficult and investment costs different, thus causing large fluctuations in lithium ore prices, which is not conducive to achieving global carbon neutrality. The recycling of power batteries can ease regional resource constraints to a certain extent, reduce raw material costs, and ensure the smooth operation of the industrial chain.
Currently, as the “wave of decommissioning” approaches, power battery recycling is becoming more and more urgent. According to the data, the theoretical life span of NEV power batteries is 4-8 years. Large-scale installation of NEV power batteries in China began in 2017, and it is expected that 2024 will usher in a power battery recycling period. It is worth noting that the power battery recycling period for other major NEV companies in the world will also be approaching one after another.
According to industry estimates, by 2030, China's power battery recycling market alone will reach 140.6 billion yuan, an increase of nearly 9 times over 2022. If you look globally, this would be a much larger market. According to forecasts, the global power battery recycling market will reach 300 billion yuan by 2030.
However, from an industrial perspective, the development of China's power battery recycling market is clearly different from that of major overseas countries. Developed countries and regions such as Europe, America, and Japan enacted laws and regulations relating to power battery recycling relatively early, the top-level design is perfect, the industrial system is relatively mature, and there are high requirements for the qualifications of new players entering the market. Therefore, competition in the overseas power battery recycling market is relatively moderate, and it is a real “blue ocean” market.
Looking at the domestic market, at present, the maintenance and traceability of power battery “ID cards” has not been smooth, and recycling policies have not been perfected. As a result, the number of small workshops in the industry far exceeds that of the regular army, thus showing a “small, scattered, and chaotic” competitive pattern, which has quickly made the domestic market “Red Sea”. In this context, most domestic players recycle power batteries through multi-channel distributed materials, but this is not only relatively risky but also expensive, so the gross margin level of domestic power battery recycling manufacturers is relatively low.
However, in terms of recycling strategies, there are very few single players in the market, whether at home or abroad, and the general trend is to choose “group” cooperation. Guosheng Securities said that considering the importance of broadening battery recycling channels, reducing recycling costs, and technological complementarity, it believes that in the future, the power battery recycling industry is more likely to form a business model of multi-party cooperation between battery manufacturers, car companies, and professional recycling agencies. The advantages complement each other, and multi-party cooperation may become mainstream.
Whoever gets the channel wins the world, “join hands” with Guoxuan Hi-Tech to enter the power battery recycling market
Among the many players entering the power battery recycling market, Jin Jing Xinneng is one of the companies with the fastest layout. Strong execution and resource integration capabilities have enabled it to rapidly expand its commercial footprint in the power battery recycling market.
In mid-2022, Jinjing Xinneng will accelerate its entry into Hong Kong's power battery recycling market. In terms of licensing, Jin Jing Xinneng actively cooperated with the government to formulate standards and regulations for the power battery recycling industry, and obtained Hong Kong's first full license for the disposal, transportation and export of power batteries in 2022. This is equivalent to obtaining the source of decommissioned batteries, and the approved total dismantling and treatment capacity is already at the leading level in the same industry in Hong Kong.
Judging from the market size, Hong Kong plans to stop registering fuel-fueled private cars by 2035. At that time, all cars are expected to be electrified. If we calculate the current total electrification of 650,000 private cars and 150,000 public service vehicles, then battery disposal and recycling in Hong Kong until 2035 will be a 10 billion dollar market.
Moreover, unlike players who “flock to the top” in the mainland market, Hong Kong is a real “blue ocean” market. With its significant first-mover advantage in terms of licenses, channels, etc., Jinjing Xinneng has accelerated the power battery recycling and recycling business and has become the largest leading enterprise in Hong Kong.
What has attracted particular attention from investors is that the world's leading NEV companies with names beginning with the letter “T” and other leading NEV manufacturers have identified Jinjing Xinneng as their service partner for battery recycling in the Hong Kong market. Targeting leading car companies ahead of time has formed a clear card slot advantage.
More than just Hong Kong, Jin Jing Xinneng is actively negotiating with the world's leading power battery companies and new energy vehicle companies to establish a global service system for battery recycling and recycling, thereby providing a driving force guarantee for the world's new energy development. At present, the expansion of Jinjing Xinneng's power battery recycling business in the European and American markets has made significant progress.
The Zhitong Finance App learned that on February 19, Jinjing Xinneng issued an announcement stating that it signed a memorandum of understanding with Hefei Guoxuan Hi-Tech Power Energy Co., Ltd. (hereinafter referred to as “Hefei Guoxuan”), a wholly-owned subsidiary of Guoxuan Hi-Tech, to jointly develop and promote power battery recycling business on a global scale. According to the cooperation framework, the two sides will establish joint research institutes in the US, Europe and Southeast Asia to focus on battery recycling policies; and jointly invest, establish and operate battery recycling businesses in Germany and the US. At the same time, there is a possibility of further cooperation between the two sides in the capital market in the future.
As can be seen from the announcement, Jin Jing Xinneng and Guoxuan Hi-Tech have reached an in-depth cooperation. The reason why Guoxuan Hi-Tech chose Jinjing Xinneng is naturally confident enough in its business strength.
Determined by the characteristics of the industry, whether at home or abroad, channels are the most critical core competitiveness of power battery recycling. In particular, in overseas markets where the industrial system is relatively mature, it may even be called “the one who gets the channel wins the world”: once you first open up a certain market, the cultivation of user habits is completed, and a monopoly pattern is formed, making it difficult for later players to disrupt it.
Industry insiders expect that Jin Jing Xinneng, as a new player in the power battery recycling market, if it wants to quickly establish channels in overseas markets, then it may seek cooperation with established local resource and energy recycling companies to quickly establish new channels with partner licenses and outlets to accelerate the localization of its own business, which is conducive to the rapid expansion of its overseas markets. If Jinjing Xinneng uses this strategy to build channels, then it will begin to set up channels after reaching an agreement with Guoxuan Hi-Tech. This means that the day until Jinjing Xinneng announces its cooperation with local companies may be imminent.
Furthermore, Jinjing Xinneng has now begun negotiations with the world's leading new energy vehicle manufacturers to jointly develop the Southeast Asian market. If relevant progress is gradually realized, Jinjing Xinneng will start in Hong Kong and officially form a huge lithium battery recycling and recycling service system covering the Southeast Asian, European, and American markets.
From this perspective, the expansion path of Jinjing Xinneng in the power battery recycling market is already very clear. In Hong Kong and Southeast Asia, Jinjing Xinneng is expanding the market by cooperating with the world's leading new energy vehicle manufacturers; in the European and American markets, Jinjing Xinneng has expanded the power battery recycling market through cooperation with battery cell manufacturers and building its own local channels. This cooperation with Guoxuan Hi-Tech is the first example of the cooperation model between Jinjing Xinneng and the battery factory.
Using the battery factory to go overseas “Dongfeng”, it is expected that it will quickly be copied from “1” to “10”
Jointly investing in, constructing, and operating battery recycling projects with Guoxuan Hi-Tech on a global scale gives Jinjing Xinneng room for imagination. After all, Guoxuan Hi-Tech, as the world's leading lithium battery manufacturer, has extensive overseas layout plans and achieved obvious results.
Guoxuan Hi-Tech's global layout began in 2021. After three years of accumulation, the company has now officially announced the construction of five overseas battery factories in Germany, Vietnam, Thailand and the United States. Among them, the Gottingen plant in Germany, with a total planned production capacity of 20 GW, and the Thai joint venture plant with a first PACK production capacity of 2 GWh/year have officially been put into operation; the Vietnam plant with an annual production capacity of 5GWH is expected to be put into large-scale operation in the third quarter of 2024; while the 1GWh PACK production line in Fremont, California, USA will launch the first product in December 2023. At the same time, Guoxuan Hi-Tech will invest in a new electric vehicle battery superplant that produces 10 GWh lithium-ion battery packs and 40 GWh lithium-ion battery cells in Illinois, USA. The total investment of the factory is 2 billion US dollars (about 14.7 billion yuan).
According to industry sources, Jin Jing Xinneng may later provide battery recycling treatment and field waste recycling services for Guoxuan Hi-Tech's Illinois plant. At the same time, the cooperation between the two sides may be extended from the Illinois plant to all of Guoxuan Hi-Tech's overseas plants. According to Guoxuan Hi-Tech's previous production capacity plan, the global battery production capacity will reach about 300 GWh by 2025, with 200 GWh in China and 100 GWh overseas. If the global cooperation between the two sides progresses smoothly, Jin Jing Xinneng will rely on Guoxuan Hi-Tech's rapid expansion overseas and will also achieve continuous growth in the battery recycling business.
In addition to the battery recycling business, the Memorandum of Cooperation signed by Jin Jing Xinneng with Hefei Guoxuan also involves energy storage business. According to the announcement, Jinjing New Energy and Hefei Guoxuan will cooperate on the business development, procurement, construction and execution of energy storage EPC projects on a global scale; at the same time, the two sides have jointly established Guoxuan Jinjing Low Carbon Research Institute in Hong Kong to jointly carry out joint research on new battery energy storage system (BESS) technology and business models.
It is worth noting that the in-depth multi-faceted cooperation with Guoxuan Hi-Tech is only the first step in Jinjing Xinneng's overseas business layout. The industry trend of domestic cell manufacturers going overseas has laid a solid foundation for Jinjing Xinneng's overseas expansion.
From an industrial perspective, almost all of the top ten manufacturers in China's power battery industry have announced plans to build overseas factories, thanks to the advantages of scale and market expansion needs. According to information on the overall situation of overseas factories built by domestic lithium battery companies compiled by Battery Network, at present, the number of overseas factories built by Chinese lithium battery companies has reached 32 (including cell and module PACK factories). Of these, 22 factories have announced planned production capacity, totaling more than 552.5 GWh. Looking at project locations, of the 32 overseas projects included in the statistics, 21 are in Europe and America.
Obviously, Jinjing Xinneng has grasped the new trend in the development of the lithium battery industry. The cooperation with Guoxuan Hi-Tech is the first commercial model for Jinjing Xinneng to serve the overseas expansion of domestic battery cell manufacturers, and has achieved a breakthrough from “0” to “1.” Taking advantage of the “Dongfeng” of domestic cell manufacturers to go overseas, Jinjing Xinneng will cooperate with more cell manufacturers in the future, which is expected to rapidly grow from “1” to “10,” further opening up the company's growth space.
summed
The times have created a boom, and the birth of any great enterprise is inseparable from the vast and turbulent industrial trend. Facing the “blue ocean” market that is about to explode in overseas power battery recycling, Jin Jing Xinneng has certainly made sufficient preparations. Its strategic layout to expand the Hong Kong and Southeast Asian markets with the world's leading new energy vehicle manufacturers and the joint battery factory to expand the European and American markets has laid a solid foundation for the company to build a huge global service system for recycling and recycling of lithium batteries starting from Hong Kong and radiating the Southeast Asian, European and American markets. While opening up room for the company's growth, it is also driving the accelerated fission of the company's internal value.
To measure the true value of Jinjing Xinneng's power battery recycling business, please refer to the American battery recycling company Redwood Materials (hereinafter referred to as “Redwood”). The company's development model is “the same” as Jinjing Xinneng. Redwood has now tied up with many of the world's leading battery companies and automakers, such as Volkswagen, Toyota, Ford, Volvo, Panasonic, and Envision Dynamics, thus establishing deep channels and accumulating a wide range of customers. It has received support from several major investors including Fidelity Funds, Goldman Sachs, and Amazon. After Series D financing of 1 billion US dollars in 2023, Redwood's post-investment valuation has exceeded 5 billion US dollars (about 35.5 billion yuan), while the current market value of Jinjing Xinneng is only 2.7 billion Hong Kong dollars, which also includes other businesses such as smart buildings and green transportation. In contrast, there is still plenty of room to explore the true value of Jin Jing Xinneng, which has become the “leader” in overseas power battery recycling markets.