Ningde Times v. AVIC Lithium Battery: Patent War? It’s actually an offensive and defensive battle

From the perspective of the industry, this incident seems to be a patent dispute between two power battery companies, but in fact, it may be the “cake” of the Ningde era that AVIC Lithium Electric has won.

Under the haze of “battery shortage”, competition in the power battery industry has intensified. 

Recently, according to many media reports, CATL is suing AVIC for patent infringement of lithium battery. According to Ningde Times, the patents involved in the case involved invention and utility model patents, and the power batteries suspected of infringement have been mounted on tens of thousands of vehicles. 

According to CBN citing related persons from Ningde Times, the company has filed an indictment for this patent infringement case and the case has been accepted. 

As the other party to this case, AVIC Lithium Battery also quickly responded. The official quickly stated that it insisted on independent research and development, and that the products it provided to customers had passed a professional intellectual property risk investigation, and they were convinced that the products produced did not infringe on the intellectual property rights of others. 

Perhaps in order to further prove that it was not involved in the case, AVIC Lithium also added: “It has not received the relevant documents.” 

AVIC Lithium’s statement on the "Ningde era patent litigation", screenshots are from the official public number of AVIC Lithium 
AVIC Lithium’s statement on the “Ningde era patent litigation”, screenshots are from the official public number of AVIC Lithium 

Although the case has not made any new progress so far, it has become a focus of attention in the industry. After all, in the industry’s view, this incident seems to be a patent dispute between two power battery companies, but in fact it may be AVIC Lithium Electric. The “cake” of the Ningde era. 

This view is not groundless.

Since the establishment of new energy vehicles as a major special plan by the State Council in 2002, AVIC Lithium Battery was established with the development and manufacturing of power batteries as its main business. However, due to the difficulties of restructuring and unfavorable policies after its establishment, AVIC Lithium Battery began to fall behind after its establishment in the Ningde era. 

This gap has not been changed in the subsequent development, and even the AVIC lithium battery has been reduced to the second echelon under the squeeze of giant companies such as the Ningde era. However, as the “battery shortage” gap began to appear in the new energy automobile industry last year, AVIC lithium battery once again saw hope of breaking through. 

Under the “gap” of unbalanced battery supply and demand, AVIC lithium battery began to accelerate. This year, while stepping up to expand its own production capacity, on the other side, it has begun to negotiate with some auto companies to facilitate cooperation. At the beginning of last month, AVIC Lithium Battery announced that it will open an IPO next year. 

Under such acceleration, AVIC lithium battery not only quickly approached the Ningde era in terms of installed capacity this year, but also successfully snatched the two major customers of GAC Agan and Changan Automobile from the Ningde era . Therefore, in the industry’s view, CATL has to use patent litigation to suppress the threat of AVIC lithium battery. 

Because of this, behind this battle of property rights is a breakout battle of AVIC lithium battery. So, what chance will AVIC lithium battery have in this war? 

1 Patent war? It’s even more of an offensive and defensive battle 

This time the Ningde era has provoked a patent war, and there is a high probability that it is anxious. 

On the power battery track, the Ningde era can be regarded as a “latecomer”. As early as 1995, after BYD and other first batch of companies were established, the domestic power battery industry began to develop, and even around 2010, there were already many players on this track. 

The Ningde era was established when the industry was approaching the “red sea stage.” Although the market was slow to enter, with the emergence of new energy policy subsidies, the Ningde era quickly grew into the “first brother” of the industry by seizing the dominant route. 

As the so-called “overwhelmingly cold”, the status of the “first brother” of the Ningde era is also being challenged, and this challenger is the AVIC lithium battery. 

According to statistics from the China Automotive Power Battery Industry Innovation Alliance, in the ranking of domestic power battery companies in the first half of 2021, CATL ranked first with 25.76GWh, and BYD and LG Chem ranked second and third with 7.65GWh and 4.72GWh respectively. . 

Behind them are the second-echelon battery manufacturers represented by AVIC Lithium. Among them, AVIC Lithium ranked fourth in installed capacity with 3.63GWh. From this point of view, CATL’s total installed capacity in the first half of this year was almost 7 times that of AVIC’s lithium battery, and the latter has almost no chance to threaten the former.

The domestic installed capacity of power battery manufacturers in the first half of 2021, the data comes from the China Automotive Power Battery Industry Innovation Alliance, connected travel mapping
The domestic installed capacity of power battery manufacturers in the first half of 2021, the data comes from the China Automotive Power Battery Industry Innovation Alliance, connected travel mapping

But in terms of grabbing customer resources, AVIC Lithium has caught up. 

According to public information, GAC passenger cars have always been a common customer of CATL and AVIC lithium batteries. In terms of supply, CATL has also been pressing AVIC lithium batteries. According to the statistics of Gaogong’s lithium battery, the installed capacity of GAC’s battery supplied by CATL in 2019 is 1136.56GWh, and that of AVIC’s lithium battery is 595.34GWh. The former is nearly twice that of the latter. 

But last year, this situation has reversed. According to public data, CATL will supply 824.69GWh of power batteries for GAC passenger cars in 2020, while AVIC lithium battery has achieved a supply of 2033.65GWh. 

In fact, the “replacement” of AVIC lithium battery for the Ningde era continues. According to the report from Dianchehui, among the 63 vehicle models that GAC Passenger Vehicle’s new energy brand Aian Automobile declared for listing in the first half of last year, 30 of the battery suppliers were CATL.

However, starting from the second half of last year, GAC Aian’s new models have not been equipped with any power batteries produced in the Ningde era. In the latest batch of new energy vehicle recommendations this year, GAC Aian has not declared a model equipped with Ningde era batteries for 12 consecutive months, but the battery supplier list has the name of AVIC Lithium.

According to data from the Advanced Industry Research Institute, AVIC Lithium has become the main supplier of power batteries for GAC Aian. Last year’s quota reached 61%. Under the situation of tight battery supply and demand this year, the agency predicts that this supporting share will be Will further increase to 72%. 

Such substitutions also occurred in the supply of Changan Automobile. 

Like GAC passenger cars, Changan Automobile also chose AVIC lithium battery while choosing Ningde Times as its battery supplier. The only difference is that in terms of installed capacity in 2019, AVIC lithium battery has surpassed the Ningde era. The installed capacity of the two was 785.44GWh and 592.43GWh respectively. 

By last year, the advantages of AVIC lithium battery compared to the Ningde era continued to expand. According to the statistics of Gaogong Lithium Battery, the installed capacity of AVIC Lithium Battery for Changan Automobile in 2020 is 459.21GWh, compared with only 109.3GWh for CATL. 

Ningde Times and AVIC Lithium Battery Supply Changan Automobile Power Battery, the data comes from Gaogong Lithium Battery, connected travel mapping 
Ningde Times and AVIC Lithium Battery Supply Changan Automobile Power Battery, the data comes from Gaogong Lithium Battery, connected travel mapping 

GAC E’an and Changan Automobile have basically stable in the top ten in terms of their sales in the domestic new energy vehicle market. According to data from the Passenger Association, in the sales ranking of new energy car companies in May this year, Changan Automobile and GAC Ian ranked 5th and 6th with 11,049 and 8,437 respectively.

This means that in the past two years, AVIC Lithium has successfully snatched two major customers from the industry’s “one brother” Ningde era. 

The AVIC Lithium Power accomplishes this precisely because of the overlap with the technical route of the Ningde era. 

According to a person familiar with the situation, China Aviation Lithium Battery may have mastered the technology of the Ningde era in the early days. In this regard, according to the Daily Economic News quoted a source in the power battery industry, “AVIC Lithium has recruited many Ningde era employees, including production management personnel and technical positions, and technical disputes are inevitable.”  

It can also be seen in the “White Paper on the Lithium Secondary Battery Industry” released by Wisdom Bud that both AVIC Lithium Battery and CATL belong to the field of square shell batteries in terms of their technical routes. The focus of the litigation patents is likely to focus on the battery, battery module or battery pack structural components.  

Ningde era and AVIC lithium power battery related patent situation, picture source wisdom bud 
Ningde era and AVIC lithium power battery related patent situation, picture source wisdom bud 

This may mean that in the early days, AVIC lithium battery may have mastered some of the technology of the Ningde era through personnel mobility. However, with the growth of AVIC lithium battery in recent years and even robbed its own customers, Ningde era chose to use technology patent litigation at this time. , To suppress the competitor of AVIC lithium battery. 

For this reason, the patent battle between CATL and AVIC lithium battery is actually an offensive and defensive battle between the two battery manufacturers. For this game, AVIC lithium battery may have to pay no small price- if the Ningde era wins the lawsuit, AVIC lithium battery may face a ban on the sale of all models. 

But as far as AVIC lithium battery is concerned, it will not stop to break through and challenge the Ningde era. 

2 How did AVIC lithium batteries fall behind? 

In the domestic power battery field, AVIC lithium battery can be said to be one of the pioneers. 

As early as 2007, when the domestic new energy automobile industry was still in the making, a company called Sky Energy (Luoyang) Co., Ltd. was established in Luoyang, which was also the predecessor of AVIC Lithium. According to the company’s data, this company was mainly founded by the China Air-to-Air Missile Research Institute under the Aviation Industry Corporation of China (“AVIC”).

Luoyang Base of AVIC Lithium Battery 
Luoyang Base of AVIC Lithium Battery 

Although it seems to be the “national team” to deploy the lithium battery industry, it encountered a lot of obstacles at the beginning of its establishment. “At that time, when we were discussing the lithium battery project, most people were opposed to it, but my attitude towards it was firm.” Wang Chongling, the former general manager of AVIC Lithium Battery, once told the media. 

Wang Chongling’s persistence is largely due to his seeing the country’s emphasis on the new energy automobile industry. 

First, in September 2001, the country launched the “863” plan, especially setting electric vehicles as a major special plan, which means that the development of my country’s electric vehicle field has officially started. Five years later, at the “Eleventh Five-Year” 863 Plan Energy Conservation and New Energy Vehicle Major Project Demonstration Meeting, the state once again confirmed the importance of developing the new energy vehicle industry. 

After seeing the policy dividend, Wang Chongling set the main business direction as lithium power batteries and began to develop. In December 2007, Sky Energy began to renovate its plant and equipment purchases; in April 2008, Sky Energy began production. 

On September 14, 2009, under the joint investment of China Aviation Industry Corporation and China Air-to-Air Missile Research Institute, Sky Energy officially changed its name to AVIC Lithium, and the lithium iron phosphate battery route was the main research and development direction. 

Subsequently, AVIC lithium battery entered a period of development dividends.

Beginning in 2009, led by the Ministry of Science and Technology, Ministry of Finance, Development and Reform Commission, Industry and Information Technology, a new energy vehicle demonstration project called “Ten Cities and Thousand Vehicles” was officially launched, that is, through financial subsidies, it is planned to take 3 years In about time, 10 cities will be developed each year, and each city will launch 1,000 new energy vehicles to carry out demonstration operations, involving public transportation, rental, official affairs, municipal administration, postal services and other fields in these large and medium-sized cities. 

After the start of this project, AVIC Lithium Battery soon received a large order. In the first half of 2009, AVIC Lithium received the tender notice for the Shanghai World Expo one year later, and needed to select the power battery suppliers used in the tour floats. 

According to Wen Canguo, Minister of Lithium Battery Application Engineering Department, AVIC Lithium Battery Application Engineering Department recalled to the media. At that time, under the competition of safety mileage, acceleration and other aspects, AVIC Lithium finally won, and will be responsible for powering 24 floats during the World Expo one year later. The battery is exclusively supplied. After this battle, AVIC lithium battery has attracted much attention in the industry. 

As the fame spread, the order volume also increased, and AVIC lithium battery also encountered problems at this time. According to Wang Chongling, at that time, AVIC Lithium had already cooperated with some car companies, but car companies put forward higher requirements on AVIC lithium battery, “for example , what technical indicators should be achieved at what stage”, but for AVIC lithium battery that started from military industry, it is Inexperienced. 

At that time, Wang Chongling and others came to Sichuan Chengfei Integration Technology Co., Ltd. (hereinafter referred to as “Chengfei Integration”) to increase the capital by 1 billion yuan. In exchange, AVIC Lithium Battery also formed a battery cell to a battery pack. Production base and R&D capabilities. 

Due to the growth in power battery R&D and production capacity, AVIC Lithium Battery has also cooperated with more than 20 companies including FAW Group, Dongfeng Motor and SAIC Motor. According to the annual report data at that time, the proportion of lithium battery revenue in the total revenue of AVIC lithium battery has risen to about 95%. 

At the same time as the development of AVIC’s lithium battery is in full swing, a battery manufacturer in Guangdong has also been established, which is the Ningde era. 

Picture source Ningde era official public account 
Picture source Ningde era official public account 

Although the Ningde era was established, it may not have paid attention to the AVIC lithium battery at that time. At the beginning of the establishment of the CATL, it chose a “heterogeneous” route- instead of choosing the lithium iron phosphate battery generally recognized by the market, it chose the more expensive ternary lithium battery. 

Three years after the Ningde era entered the market, the development of the domestic power battery industry has also accelerated with Tesla’s strong entry. 

According to Gaogong’s lithium battery data, there were only 40 domestic power battery companies in 2013, and this number increased to 78 in 2014. With the introduction of the “white list” policy by the Ministry of Industry and Information Technology in 2015, power battery factories in Japan and South Korea were “expelled”, and the development of the domestic power battery industry reached a stage of rapid development.

The development of AVIC lithium battery also entered the fast lane in those two years. According to the financial report of Chengfei Integration, the parent company of AVIC lithium battery, between 2014 and 2016, the proportion of its power battery revenue in total revenue rose rapidly from 44% to 63%. 

However, in 2017, the state began to provide policy subsidies for new energy vehicles, and set battery energy density as a key indicator. In order to obtain high subsidies, many new energy vehicle companies gradually abandoned low-energy density lithium iron phosphate batteries and turned to Invest in ternary lithium batteries with higher energy density. 

Affected by this, Chengfei Integration suffered its first loss in 2017. According to Wind data, that year, Chengfei Integration achieved operating income of 1.943 billion yuan, a year-on-year decrease of 13.47%; net profit was -257 million yuan, a year-on-year decline of 230.1%; and in the first quarter of the following year, such losses continued, net The profit is still -45 million yuan. 

For such a continuous decline, Chengfei Integration blamed the reason for the “decline in the gross profit margin of the lithium battery business.” As a result, Chengfei Integration decided to sell AVIC Lithium Battery, and AVIC Lithium Battery completed the change of ownership in 2019. 

At the end of June of that year, Chengfei Integration issued an announcement stating that since June 21 of that year, Changzhou Sands Technology Investment Co., Ltd. (hereinafter referred to as “Changzhou Sands”) has obtained control of AVIC lithium battery. It is worth noting that Changzhou Jinsha is an indirect 100% holding company for the People’s Government of Jintan District, Changzhou City. 

At the same time that AVIC lithium battery was in the dilemma of changing owners, the entire power battery also experienced a route change from lithium iron phosphate to ternary lithium, which was accompanied by a reshuffle of the industry. Affected by this, the number of companies in the domestic power battery industry has also dropped rapidly from 217 in 2016 to 69 in 2019. 

The number of domestic power battery companies from 2013 to 2019, the data comes from high-tech lithium batteries, and online travel mapping  
The number of domestic power battery companies from 2013 to 2019, the data comes from high-tech lithium batteries, and online travel mapping  

In the process of changing owners, AVIC Lithium’s business not only failed to develop normally, but also missed the critical period of adjustment of the battery route. In contrast, the Ningde era saw rapid development in those two years. So that when the change of ownership is completed, the industry structure has been formed, and the AVIC lithium battery has also fallen behind.

According to the report data released by the Foresight Industry Research Institute in May this year, the pattern of the domestic power battery industry in 2020 has shown a “pyramid” distribution: the first echelon is firmly guarded by CATL and BYD; the second echelon is the AVIC lithium battery. The battery factory represented by Guoxuan Hi-Tech. 

With the occurrence of the “battery shortage” of power batteries in the new energy automotive industry, AVIC Lithium has seen an opportunity to break through, and made an attempt to steal customers from the Ningde era and plan an IPO. For AVIC lithium battery, what is the chance of winning in this breakthrough battle? 

3 What is the odds of winning in the breakout battle? 

To discuss the odds of winning, we must first look at how many “ammunitions” AVIC lithium battery has. 

Beginning in 2019, AVIC Lithium Battery, which was once in a declining trend, began to reform. First, the power battery route was changed from the previous lithium iron phosphate to the focus on the development of ternary lithium, and the supporting model was changed from commercial vehicles to passenger vehicles. 

According to public data, in 2018, 70% of the installed capacity of AVIC lithium battery was in the commercial vehicle field, and only about 30% in the passenger vehicle field. However, after entering 2019, its installed capacity in the commercial vehicle field only accounted for the total installed capacity. Of 0.15%. 

The effect of this adjustment is also significant. In 2018, the installed capacity of AVIC’s lithium battery passenger car sector ranked 9th in China with only 0.71GWh. By 2019, the installed capacity increased to 1.49GWh, ranking sixth in the installed capacity that year. 

Last year, the installed capacity of AVIC lithium battery increased to 3.55GWh again, which won the fourth place in installed capacity. In April of this year, AVIC lithium battery surpassed LG Chem to rank third with an installed capacity of 0.78GWh, further approaching the Ningde era and BYD giants.

AVIC Lithium Battery's domestic installed capacity in 2018-2020, the data comes from public data, and online travel mapping 
AVIC Lithium Battery’s domestic installed capacity in 2018-2020, the data comes from public data, and online travel mapping 

The increase in installed capacity has a lot to do with the supply of more car companies. 

According to statistics from the CBEA organization, as of the end of last year, AVIC Lithium’s car companies have included GAC, Changan, Jinkang, Shanxi New Energy, Dongfeng, Geely and many other new energy passenger car companies. Among them, GAC and Changan are installed. The car company with the largest volume contribution has more than 30,000 vehicles supporting power batteries. 

It is precisely because of the increase in installed capacity that it has also attracted the attention of many capitals.

According to reports from the Electric Association, as of the end of last year, AVIC Lithium’s shareholders had increased from six companies including Chengfei Integration to 35. According to Tianyan Check data, the newly added shareholders include Sequoia Capital, Xiaomi Yangtze River Industry Fund and other institutions. 

With the increase in installed capacity, car company customers and capital attention, AVIC Lithium is not satisfied with this. 

With the “battery shortage” in the new energy automobile industry since last year, a fact that cannot be ignored has appeared in front of the industry-even giant players like the Ningde era cannot fully satisfy the fast-growing new energy automobile industry. 

According to statistics from the Prospective Industry Research Institute, the installed capacity of the top three domestic power battery companies accounted for 73.38% of the overall share in 2019, and this figure fell to 73.13% last year. 

Online travel has also been in the ” Battery Shortage”, can the second echelon of power batteries grab the cake of the Ningde era? “In the article, through analysis, it is believed that this “battery shortage” will be an opportunity for the second-echelon battery factory such as AVIC Lithium to break through. 

AVIC Lithium Battery naturally saw this opportunity, and starting this year, the replenishment of “ammunition” has accelerated. 

As a battery manufacturer, the first thing to increase is naturally the production capacity. In May of this year, AVIC Lithium Battery and Xiamen Torch High-tech Industrial Development Zone signed an agreement, and the two parties reached a cooperation on the expansion project of new 30GWh power battery. 

The renderings of the Xiamen AVIC Lithium Battery Manufacturing Base, sourced from AVIC Lithium’s official website
The renderings of the Xiamen AVIC Lithium Battery Manufacturing Base, sourced from AVIC Lithium’s official website

At the end of May, AVIC Lithium Battery reached cooperation agreements with Wuhan Economic Development Zone and Chengdu Economic Development Zone, respectively, to plan to build a 20GWh Wuhan base and a 50GWh Chengdu base. So far, AVIC Lithium Battery has been installed in Luoyang, Henan, Changzhou, Jiangsu, and Fujian. Xiamen, Chengdu, Sichuan, and Wuhan, Hubei have five major battery bases. 

“If the scale is not up, how can we take the lead?” Liu Jingyu, chairman of AVIC Lithium Battery, said at the AVIC Lithium Battery Global Partner Conference in early June this year. Immediately, the AVIC lithium battery production capacity target was put forward. The planned production capacity in 2022 will reach 200GWh, and the company’s planned power battery production capacity will exceed 300GWh in 2025. 

In addition to supplementing production capacity, auto companies cooperating with AVIC Lithium Battery continued to increase this year. 

In March of this year, according to a report from Gaogong Lithium Grid, AVIC Lithium Battery has officially become the main supplier of power batteries for Wuling Hongguang MINI EV. Supplier upgrade. 

In addition, the cooperation between AVIC Lithium and GAC is no longer limited to the supply of batteries for its new energy brand Aian. This year, AVIC Lithium has also successfully become the main supplier of power batteries for GAC Toyota and GAC Honda. At the same time, AVIC Lithium has also reached a partnership with Daimler-Benz’s Smart to supply batteries. 

As for the battery itself, GAC Aeon launched the “magazine battery” in mid-March this year. According to sources familiar with the matter cited by the First Electric Network, this new battery may be the Ni55 power battery of AVIC Lithium. This also means that AVIC lithium battery has also made new progress. 

Although AVIC lithium battery has accelerated its layout in terms of production capacity, car-enterprise cooperation and battery research and development, and has also won the favor of many capitals, in this breakthrough battle, AVIC lithium battery has a small chance of winning. 

“At present, AVIC lithium battery seems to have threatened the Ningde era, but in fact, the gap between AVIC lithium battery and giants such as Ningde era and BYD is still very large, and it will not be able to achieve a smooth breakthrough in a short time.” Liu Ming, an executive from a domestic head power battery manufacturer, spoke to Lian. Line travel representation. 

Because in many aspects of the accelerated layout of AVIC lithium batteries, the Ningde era also has greater advantages. 

In terms of production capacity, CATL has successively invested in two major battery plant projects in Sichuan and Jiangsu last month, with a total investment of 42 billion yuan. According to its plan, its power battery production capacity can be increased to 450GWh by 2025. In contrast, in four years, the production capacity will be 150GWh higher than the AVIC lithium battery. 

Ningde Times v. AVIC Lithium Battery: Patent War? It's actually an offensive and defensive battle

In terms of battery supply cooperation between car companies, according to incomplete statistics on connected travel, car companies that have established cooperation with AVIC Lithium Battery basically have cooperation with Ningde Times. As for battery research and development, an insider from CATL revealed to Netease Automobile in March this year that a zero-attenuation battery has been developed, which can achieve zero-attenuation within 1500 cycles. It is a truly “long-life battery”. 

For now, although I don’t know what the Ningde era’s litigation will ultimately lead to, and what impact it will have on both parties. However, it is foreseeable that AVIC Lithium Battery will find ways to continue its upward climb. After all, on the increasingly fierce power battery track, after missing this opportunity, there may be no next chance. 

(At the request of the interviewee, Liu Ming is a pseudonym in the text.) 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/ningde-times-v-avic-lithium-battery-patent-war-its-actually-an-offensive-and-defensive-battle/
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