Double Credits Set Off Another Fever of New Energy Vehicles, and FESE Consolidates its Leading Posit

    According to the Measures on Credit Parallel Management of Average Fuel Consumption and New Energy Vehicles of Passenger Vehicle Makers issued by five ministries and commissions including the Ministry of Industry and Information Technology of PRC on September 27, the proportion of new energy vehicles’ credits is required at 10% and 12% in 2019 and 2020. GGII suggests that under the influence of the implementation plan of double credits policy and the opening up of stock's proportion of joint-venture automakers in China, joint-venture vehicle brands may also set off waves in the sector of new energy vehicles. With the popularity of joint-venture brands of new energy, power battery manufacturers will also usher in great opportunities and challenges, and the choice of new-energy joint-venture brands for power batteries will probably affect the market structure of domestic power battery manufacturers. In recent years, the Far East Smarter Energy Co., Ltd. (hereinafter referred to as “Smarter Energy”, stock code: 600869) has continuously increased investment in power batteries, improved comprehensive competitiveness from production capacity, technology, energy density and other aspects, and strengthened close strategic cooperation with domestic first-class automakers, boasting first mover advantage in the sector of power batteries.

    Regarding production capacity, Smarter Energy (600869) is able to produce 1.2 million 18650 Batteries daily, and has 3GWh of capacity at present. On this basis, Smarter Energy (600869) is actively expanding production capacity. This April it launched the “R & D and industrialization project of power storage lithium battery with annual production of 3GWh energy density” centering on 21700 Battery, an upgrade product of 18650 Battery. This project will build the first full-automatic production line of 200PPM and cylindrical 21700-5Ah in China. After the 6 production lines of 200PPM 21700-5Ah products of the general project reaches design capacity, the total production capacity will reach 10GWh per year, including that of the original 18650 production lines. It is noted that as a domestic leading manufacturer of 18650 Cylindrical Battery, Smarter Energy (600869) has not only deep rooted in cylindrical batteries, but also has carried out diversified product layout.

    By report, the Far East First New Energy Co., Ltd., a subsidiary of Smarter Energy (600869), hosted the Commencement Ceremony of 12GWh Lithium Battery Project at Smarter Energy Industrial Park of Gaocheng Town, Yixing City, Jiangsu Province in September. The project covers a planning area of over 1000 mu, and aims to build a domestic and foreign first-class automated and intelligentized production base of aluminum laminated batteries and quadrate lithium batteries by the end of 2018. The whole project will be completed and reach design capacity within 3 years. At that time, the Far East First New Energy will produce power batteries up to 12 GWh in annual production capacity, and reach a total output value of RMB 25 billion by 2021.

    Regarding energy density, Smarter Energy (600869) has enhanced the capacity of single cell by improving the performance of anode and cathode materials, using lightweight materials, optimizing structure and other measures. Currently, the specific energy of mass-produced single power batteries can reach 220Wh/kg, and the system energy density of battery packs can reach 140Wh/kg.

    As a supplier of new energy batteries for domestic first-class automakers, Smarter Energy (600869) has established strategic cooperation with JMEV, supplying JMEV with 10,000 sets of power battery packs in the first half of the year, and more than 10,000 sets in the latter half as estimated. Additionally, it has signed a cooperation framework agreement as the strategic supplier with Chery New Energy Automotive Technology Co., Ltd. According to the issued Catalogue of Recommended Models of New Energy Vehicles for Promotion and Application (2017, 1-7), Smarter Energy (600869) has successfully supplied matching power batteries for Jiangling Group, Dongfeng Motor, Zotye Auto, Chery New Energy, Shaanxi Tongjia, CSR Times, Shanxi Yuanye, Jiangnan Automobile, Shandong Kama, Ganzhou Special Automobile Works, Yichun Bus as well as other complete vehicle enterprises, among which include batteries for over 18 models of new energy vehicles.

    Currently, some foreign-owned automobile enterprises, including Volkswagen, Daimler, Ford and Renault-Nissan Alliance, have taken the lead in entering Chinese market as the spearhead of joint-venture camp of new energy vehicles. Under such background, a new round of power battery war will also be started. Smarter Energy (600869) with first mover advantage is expected to continue to consolidate its leading position in lithium battery relying on the strong R & D strength and advanced production technology, to be the first one to find favor with joint-venture brands of new energy.