Batteries: Guoxuan to ramp up NCM battery business with VW

On 16 July, Hefei Guoxuan Battery Materials, a subsidiary of Guoxuan High-Tech (also referred to as Gotion High-Tech), signed an agreement with the managerial committee of Hefei Lujiang Hi-tech Industrial Development Zone to build a high-nickel ternary cathode materials plant. With a production capacity of 30ktpy, the cathode materials plant is scheduled to start test operations in early 2023.

In May 2020, German automaker Volkswagen confirmed an investment in Guoxuan, becoming the Chinese company’s largest shareholder with a 26.47% stake. Almost immediately, Guoxuan announced its plan to raise roughly RMB7.3Bn (US$1Bn) by issuing a non-public issuance of stocks. The majority of the fund was scheduled to build the high-nickel ternary cathode material plant, as well as a lithium-ion battery plant with an annual production capacity of 16GWh.

In H1 2020, Guoxuan’s net profit fell by 89-91% compared with a year earlier, to RMB30.5-39.5M (US$4.4-5.6M). This was caused mainly by the Covid-19 pandemic and the resulting decline in downstream demand.

Roskill View

Guoxuan is the third largest lithium-ion battery manufacturer in China, relying primarily on LFP technology for its batteries. In 2019, Guoxuan was operating around 2GWhpy of effective NCM battery manufacturing capacity, far below its 10GWhpy of LFP battery capacity. Since 2015, however, Guoxuan has strategically build up capacity in the field of NCM batteries.

The company notes that vertical integration of its supply chain has been a core strategy of Guoxuan, with particular emphasis on self-supply of cathode materials. By 2020, Guxuan had covered multiple stages of the NCM lithium-ion battery supply chain, including NCM precursor materials, cathode materials, and batteries. The 30ktpy cathode materials plant based in Hefei, together with the 16GWh battery project, represent the next steps for Guoxuan to build market share in the NCM cathode and battery industries.

Guoxuan: Milestones of NCM battery development

Source: Roskill, public announcements

While LFP has been gaining increasing attention in the EV market, Roskill expects that nickel-based cathode will continue to be the go-to option for more automakers offering driving ranges in excess of 400-500km or high performance vehicles, since nickel-based cathodes have higher energy density (gravimetric and volumetric energy density). Guoxuan’s investment in NCM cathode materials goes well with the power battery market trend, which could provide opportunities for lower cost, improved quality control, and enhanced market competitiveness for battery products. Despite a significant decline in revenue in H1 2020, Guoxuan’s new NCM cathode materials project is regarded as a positive sign for the market.

Roskill’s NEW Lithium: Outlook to 2030, 17th Edition report will be published in August. Click here to download the brochure for the report, or to access further information. Reports are also available for Nickel and Nickel Sulphate.

Roskill’s Lithium-ion batteries: Outlook to 2029, 4th Edition report was published in May 2020. Click here for more information.





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