Founded in 2001 and headquartered in Dalian, China, CBAK Energy Technology Inc. (Nasdaq: CBAT) develops, manufactures and sells rechargeable lithium-ion batteries currently applicable to household energy storage and Light Electric Vehicles (LEV), and is building production capacity targeting the Passenger Electric Vehicle (EV) markets. CBAT primarily operates in China, and has business exposures to Europe, South Korean, Israel and U.S. CBAT was listed on Nasdaq in 2006 as the 1st US-listed Chinese lithium-ion battery producer.
A leading cylindrical lithium-ion battery producer driven by ESG mission. With 20 years of operational experience in the battery sector garnering 75 patents, CBAT is the leading cylindrical lithium-ion battery manufacturer and energy storage solutions provider in China, having involved major projects spanning 6 national scientific/technical projects, 30+ provincial/municipal projects. CBAT is also committed to the development of new energy and environmental protection technologies, aligned with the current thriving global trend.
Strategic capacity expansion positioned to tackle growing energy storage and LEV/EV market demand. With global and China market size for lithium-ion batteries used in energy storage and new energy vehicles expected to grow rapidly for the next 5 years and beyond, CBAT is expanding its energy storage solution capacity at Dalian facility, targeting to reach 10 GWh by 2025. Its new Nanjing facility has just completed phase 1 expansion with an output capacity of 2 GWh focused on the EV/LEV market, targeting to reach 18 GWh by 2023 through phase 2 development. Overall, CBAT management envisions the Company's total annual production capacity to grow to 30 GWh in 2025 respectively to tackle the growing market size.
Clear growth roadmap with diverse product rollout and industry applications. The launch of special 26650 batteries built for ultra-low temperature and the rollout of upgraded model 26700 batteries, coupled with production capacity expansion in model 32140 and 46800 batteries to be complemented by Solid-State batteries, are collectively positioning CBAT as the top cylindrical Lithium-ion battery producer to capitalize the growing market demand from across energy storage, light-electric-vehicle and electric-vehicle markets.
Strong partnerships and solid client base. The consistent high product quality has enabled CBAT to form strong strategic partnership and build a solid client base globally, including strategic partnerships with VIESSMANN as its sole supplier in China, and with Schneider and Haier as the first step into the energy storage sector.
Synergistic vertical acquisition secured stable raw material supply and incremental revenues. CBAT completed its acquisition of 81.56% of equity interests in Zhejiang Hitrans Lithium Battery Technology Co., a critical supply chain partner to CBAT and a developer/producer of ternary precursor and cathode materials. With Hitrans' annual production capacity of 12,000 tons of NCM precursors and 8,000 tons of cathode materials, both expected to expand to 50,000 tons by 2023, this acquisition will add raw materials, operational services and material recycling capabilities to CBAT's existing production processes, and support the Company's production capacity expansion with reliable raw materials supply, meanwhile expanding its topline revenues to include raw materials sales starting as early as December 2021, and further strengthening CBAT's strategic position within the high-power lithium battery market and new-energy vehicle ecosystem.
High product quality with great consistency. CBAT applies superb quality control systems, and is certified by ISO9001, OHSAS18001, ISO TS16949, ISO14000 and China Quality Certification Centre. CBAT has built a track record where the average return-rate of goods delivered in 2020 was significantly below a threshold of 0.03%, the average monthly defect rate of key products delivered in 2020 was approximately 4.5%, below the goal of lower than 7%, and no safety incidents reported by its major clients for battery supply to EV projects. Such consistency of high product quality has enabled CBAT to build a solid client base, including SIEMENS, Haier, VIESSMANN, Dongfeng Motor, LEVDEO, Han Tang Electric Vehicle, and many others.
Technical advanced special battery launch built for ultra-low temperature. CBAT has launched its special 26650 lithium-ion battery, specifically designed for the ultra-low temperature environment ranging from -40 to -50°C, while the regular lithium-ion batteries cannot be recharged below 0℃, nor can the power be properly discharged below -20℃. With the launch of this special battery, CBAT can showcase its leading technical advantage in the global markets. This special 26650 battery is ideal for base station, unmanned aerial vehicle, aerospace vehicle and even military usage. CBAT's customers have been testing the samples, and the management is seeing growing demand for this special battery from China's Northern region, as well as from the aviation and aerospace industries.
Demonstrated high efficiency and price-to-performance ratio. CBAT's cylindrical lithium iron phosphate batteries have distinct advantages over prismatic batteries and ternary lithium batteries. Relative to prismatic cells batteries, cylindrical batteries are safety, easier to radiate heat and control temperatures, and enjoy higher production automation leading to 10-20% lower production costs; while compared to ternary lithium batteries, lithium iron phosphate batteries have higher temperature resistance, greater safety and stability, lower production price and better cycle performance.
Proven product innovation driven by strong R&D. CBAT invests in R&D, materials, production equipment and processes targeting to improve product safety and quality. The Company entered a three-year strategic agreement in January 2021 with JAC Motors, a top PRC vehicle manufacturer, to jointly develop certain cylindrical lithium-ion batteries catered to the auto industry, including model 46800 batteries, and entered partnership with Changxing Sino-Russian New Energy and Material Technology Research Institute (NEMTRI) to co-develop solid-state batteries. Built on the mature technology of 32140 large cylindrical batteries, CBAT already started the R&D of 46800 batteries in the 2nd half of 2021.
Business Overview
CBAK Energy Technology, Inc., formerly China BAK Battery, Inc., together with its subsidiaries are engaged in the manufacture, commercialization and distribution of a range of standard and customized lithium ion (Li-ion) rechargeable batteries, for the use in an array of applications across LEV (light electric vehicles such as electric bicycles, electric motors and sight-seeing cars,) EV (e.g. electric cars, electric buses, hybrid electric cars and buses), energy storage, uninterruptible power supply, electric tools and other high power quality control applications.
Products & Solutions
26650 Battery is CBAT's matured model with reliable performance Ideal for energy storage solution, currently the key cash flow generator for CBAT. With continued innovations, 26650 batteries specially designed for the ultra-low temperature environment has paved the way for CBAT's geographic expansion.
32140 Battery offers great solutions for the Light Electric Vehicles market, featuring 4X the capacity of regular batteries (Model 26650) and 20% lower in cost. 32140 Production line has completed, ready to partner with Chinese OEMs for new products.
46800 battery is the next-gen model targeting the Passenger EV market, able to power faster acceleration, reduce battery loss and prolong driving range at lower cost. This model is currently under testing, with production expected to start in 2023.
Product Comparisons
Model 26650 - The 26650 battery is developed on the basis of the 18650 battery, where "26" and "18" refer to the outer diameter of the battery. The 26650 battery has an electric charge capacity of 4-6Ah (depending on the type of chemical systems) and power energy of 10-20Wh, and given its small size and flexibility for battery-pack assembly, is particularly suitable for household solar battery energy storage devices (required 4-10KW) and domestic electric bicycle market (48-60V 10-20Ah), while not suitable for EV as it demands much higher energy power (usually 40-100KWh) which is better met with the Prismatic batteries (185-740Wh). If 26650 batteries were to be used for the EV, it would require a battery-pack comprised of many more single batteries and corresponding structural parts that that of the Prismatic batteries. Meanwhile the BMS (Battery Management System) involving more components would also increase accordingly, resulting in higher costs.
The Energy Storage market is mainly divided into three types: home, power station and base station energy storage. Although CBAT's 26650 battery is mainly used for household energy storage, the specially designed ultra-low temperature 26650 battery can operate efficiently in low temperature environments, work normally at a temperature of -40°C to -50°C, and can discharge at a rate of 60C at room temperature, and hence can be used in base stations, unmanned aerial vehicles, aerospace, and military industries in ultra-low temperature environments, making CBAT's strong technical advantages and manufacturing capabilities of ultra-low temperature batteries extremely competitive as the market's demand for ultra-low temperature batteries increases.
Model 32140 – The battery volume of a single 32140 battery is 3.2 times, while the power energy is 4 times that of a single 26650 battery, meaning that the energy density is increased. Compared to 26650 model, 32140 battery has better heat dissipation and a lower manufacturing cost (less structural parts and less complicated BMS than a battery-pack using 26650 batteries), more suitable for low-speed electric vehicles which typically require a battery with electric charge of 72V 100-120Ah.
Model 46800 - Compared with the 26650, the large cylindrical 46800 battery has higher energy density and lower battery-packing cost. It adopts CTC technology (Cell to Chassis) in integrating the battery directly into the chassis, with reduced number of battery cells and corresponding structural parts needed in the whole battery-pack to create higher energy density, simply the BMS and lower the overall packing cost.
Given that the height of the EV chassis is generally below 100mm, and the height of the 46800 battery is 80mm, the battery can be placed vertically on the EV chassis, which is the most suitable battery size for CTC technology. On the other hand, as the 32140 battery has a height of 140mm, it can only be placed flat on the EV chassis, where not only the packing design is complicated, the energy density is lower, and the cost is consequently higher.
Cylindrical 46800 vs. Prismatic Battery – Under the same type of chemical system, the energy density of Cylindrical 46800 batteries is 3-10% higher than that of Prismatic batteries. It is easier to automate the production and assembly of the battery-pack using 46800 batteries with higher consistency and longer service-life than using Prismatic batteries. And in terms of cost, since the degree of automation is high, the production cost is 10-20% lower than that of the Prismatic battery. The steel shell used in the 46800 is far stronger than the aluminum shell of the prismatic battery, 46800 batteries are also safer than the Prismatic batteries, by avoiding the leakage caused by the rupture of the aluminum shell and other potential problems.
46800 model adopts the CID safety design, where the circuit can be disconnected by itself under conditions such as external short circuit, while the Prismatic battery has no such safety design embedded. By using CTC technology in battery-packing process, the energy density of the whole pack can reach or even exceed that of the battery-pact using the Prismatic batteries.
Two Production Facilities
Dalian Facility - Focused on energy storage solutions:
Nanjing Facility – Focused on the EV/LEV markets
Lithium Battery and EV market Growth Projections
The global and China market size for Li-ion Batteries used in Energy Storage is expected to grow at a respective CAGR of 45% and 53% from 2020 to 2025.
Sales volume of new energy vehicles from outside-of-China and China is expected to grow at a respective CAGR of 41% and 35% from 2020 to 2025.
Compared with the traditional batteries, lithium batteries have the characteristics of complete charge and discharge, high capacity, energy saving and environmental protection, light weight, and no memory effect.
Currently, the lithium battery industry has three major markets:
Energy Storage customers have put forward stringent requirements on battery life and capacity, demanding the battery capacity of no less than 80% of the normal capacity after a service life of 10 years or following 8000 cycles. In 2016, customers demanded even higher requirements for battery capacity. For example, in 2016, customers demanded 3Ah for 26650, but this year, customers demanded 4Ah, but battery life is still the above-mentioned requirement.
Electric bicycle customers, electric vehicle customers, and low-speed electric vehicle customers also pay attention to battery temperature, and generally require that the 1C rate discharge battery pack's temperature does not rise above 60°C.
Besides battery energy density and costs, battery customers also pay attention to how the battery's discharge capacity performs under different temperatures, and how fast the capacity decay during the storage.
Cylindrical versus Prismatic Batteries
The degree of automation for cylindrical batteries is high, and the production cost is 10-20% lower than that of prismatic batteries. The cylindrical steel shell is far more resistant to deformation than the aluminum shell of the prismatic battery, avoiding liquid leakage and squeezed wiring harness leakage caused by the rupture of the prismatic shell during use. Additionally, as the CID safety design is adopted in cylindrical battery production, the battery can be disconnected by itself under conditions such as external short circuit, whereas the prismatic battery has no relevant safety design. Under safety failure conditions, such as a single battery exploding for some reason, a cylindrical battery does not necessarily cause the entire pack of batteries to explode, and even it does, it would take a long while for a single explosion to cause the entire pack to explode or burn, allowing the driver to escape, versus the case in prismatic-battery pack, the single explosion could cause explosion or burning of the whole pack quickly, given prismatic battery's larger energy (185Wh-740Wh). Prismatic battery also does not perform well under the low-temperature environment.
On the flip side, cylindrical batteries are disadvantaged compared to prismatic batteries. Due to the low capacity of cylindrical batteries, more batteries and structural parts are required for the battery pack, compared to the prismatic batteries. At the same time, the battery management system BMS will have more complex algorithms owing to the increased number of batteries needed.
In addition, as China domestic BMS algorithm is still below the level of Tesla, the battery life of cylindrical battery-pack is shorter than that of prismatic battery pack, despite that cylindrical battery has higher consistency. Meanwhile, due to the low energy density of the small cylindrical battery cells and the low utilization rate of the pack space, the energy density of the cylindrical battery pack is lower.
The use of prismatic batteries has become the mainstream in China, as the national subsidy policy is mainly based on the energy density of the battery pack. Nevertheless, with the advancement of material technology, large cylindrical battery technology and packing technology, the energy density of large cylindrical batteries has now reached or even surpassed that of prismatic batteries, and is expected to gain more adoption and traction in China and globally.
Tesla have been in favor of cylindrical batteries in recent years. Cylindrical batteries have achieved a large number of applications and developments, from 18650 at the beginning, to 21700 three years ago, and to 46,800 in the next few years. Similar to the development of prismatic batteries, cylindrical batteries development is also gradually towards larger sizes.
Competitors
Currently, Guoxuan Hi-Tech and Anchi Technology are two main 32140 batteries producers in China.
As to 46800, many domestic companies have deployed a plan to produce 46800 batteries; however only BAK Battery (BAK) has officially released the battery cell so far. BAK plans to build a new large cylindrical battery production line at its Zhengzhou plant, with mass production expected to achieve in the second half of 2022, and reach the planned maximum battery production capacity of 15 GWh each year.
Yiwei Lithium Energy stated that it has completed the strategic layout of large cylindrical batteries and will gradually promote large cylindrical batteries in 2023. Yiwei Lithium Energy plans to deploy two large cylindrical batteries, namely 46800 and 46950, expected to release a production capacity of 20 GWh in 2023, and reach 40 GWh in 2024.
Third Quarter 2021 Financial Highlights
Strong high power lithium batteries sales year-over-year growth. Absence of any opportunistic raw material trading gain, Q3-2021 revenue of approximately $9.6 million was almost entirely from the sales of high power lithium batteries (uninterruptable power supplies), representing a 51% year-over-year growth from high power battery sales in 2020. The notable year-over-year revenue growth is a testament to the strong demand for the Company's high-performance products, enabling CBAT to charge higher selling prices to pass on higher production costs.
Slightly lower gross margin due to price inflation in raw materials. Gross profit was $1.1 million, a decrease of 17% from $1.4 million in the same period of 2020. Nevertheless, efforts made to lock in certain raw materials supply previously has helped avoid a bigger blow from commodity price hikes in the quarter, and gross margin only declined by 1% to ~12% from the same period of 2020, mainly due to the increase in raw materials prices from inflation.
Operating expenses increased 339% year-over-year due to R&D and headcount investment geared for Nanjing facility expansion. CBAT registered an operating loss of $3.2 million, compared to operating profit of $0.4 million in the same period of 2020, mainly due to growing headcount and R&D expenses (up 307% Year-over-year) associated with the Company's Nanjing production facility, as well as the expiration of government's COVID-19 relief policy.
Net Income benefited from change in the fair value of outstanding warrants, where market price was lower than the exercise price, leading to reduced warrant expenses. GAAP net income increased to $20.0 million in the quarter, or $0.23 per ADS from $41,715 in the same period of 2020. The huge jump was attributable to the change in fair value of warrants of $23 million in the 3rd quarter.
Cash and cash equivalents were US$2 million as of September 30, 2021, down from $33.3 million as of June 30, 2021, mainly due to higher R&D spending of ~$2 million and Hitrans acquisition cash payment (deposit of ~$8 million and loans to Hitrans of ~$20 million as part of acquisition price.)
Production expansion as planned. Targeting to augment the Company's ability to supply and address growing and diversified batteries demands, CBAT's production capacity expansion went ahead as scheduled, despite the global energy shortage and commodity price hikes, meanwhile making important progress in R&D to further extend its product portfolio.
In the third quarter, CBAT added and started operating a new production line with an annual capacity of 0.4GWh of its new 26700 battery model, an upgrade of the original product 26650 batteries at Dalian facility. Compared to model 26650, 26700 battery has a bigger unit capacity while at a significantly lower cost, particularly suitable for the light-electric-vehicles. With the completion of a shakedown test for model 26700 batteries, CBAT is seeing positive responses from two-wheel light electric vehicle producers and energy storage sectors. Output from this new production line was ramped up in November, and the production in Dalian facility was supposed to last until Q2-2022 fulfilling the orders already received. However due to the new contamination measures adopted by the city Dalian due to Covid-19 variant, operation of this new line, along with its existing production lines in Dalian have been suspended for the time being.
Production capacity expansion in model 32140 and 46800 batteries was also being executed as planned. Together with the launch of special 26650 batteries built for ultra-low temperature and the upgraded model 26700 batteries are strategically positioning CBAT as the top Lithium-ion battery producer to capitalize on emerging opportunities in a broader market across energy storage and EV/LEV applications.
Special ultra-low temperature batteries secured certification. Dalian CBAK Power Battery is the world's first company to receive certification for the ultra-low temperature battery. In August 2021, CBAT secured the performance certification from the world's leading testing, inspection and certification company SGS for its special 26650 lithium-ion battery specifically designed for use in ultra-low temperatures, paving the road for the Company to expand into different markets and new applications. This model is already completed testing, ready for commercial production.
Acquired battery raw material supplier Hitrans Lithium Battery Technology Co. Following the closing of previously announced acquisition on November 29, 2021 upon completing asset transfer, CBAT now owns 81.56% equity stake in Zhejiang Meidu Hitrans, which has been a critical supply chain partner to the Company. With the acquisition closed, CBAT will start combining Hitrans' financials statements as early as December, 2021, further easing supply chain challenges while adding to the Company's topline revenues. Hitrans' capabilities in scientific innovation and new technology application will enable CBAT to lead new business developments and support R&D of high-performance products, together to seize growing opportunities in the burgeoning electric vehicle industry.
With increased production capacity, management is confident that the Company is on track for solid business growth through enhanced and expanded product offerings.
Experienced Management Team
Yunfei Li/Chairman, President & CEO
Weneu Wang, VP & Nanjing Facility General Manager since 2018
Xiujun Tian, Deputy General Manager & General Engineer
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| Last Trade: | US$0.95 |
| Daily Change: | 0.0021 0.22 |
| Daily Volume: | 334,739 |
| Market Cap: | US$84.990M |
November 12, 2024 August 09, 2024 June 14, 2024 | |
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