Recent data shows that from January to September this year, the production and sales of new energy vehicles increased by 40.2% and 37.7% respectively compared to the same period last year. With ongoing policy support, the new energy vehicle industry is poised for even greater growth. The entire supply chain is experiencing robust development, with upstream raw material sectors expected to maintain their momentum. In the mid and lower parts of the supply chain, including electrical systems, battery technology, and control units, there are signs of recovery or further improvement. Raw Material Prices Continue to Rise Several companies listed on the New Third Board, such as Ronghui Lithium, BJJ, Jinyuan New Materials, Jinchuan Technology, Sino First, Jiayuan Technology, Jinli Permanent Magnet, and others, are involved in producing raw materials for new energy vehicles. These include lithium carbonate, lithium hydroxide, cobalt sulfate, osmium tetroxide, electrolytic copper foil, and permanent magnet materials. In the first half of this year, these companies saw significant improvements in performance. Data indicates that the seven companies achieved a revenue of 3.05 billion yuan, up 62% year-on-year, while net profit attributable to shareholders reached 706 million yuan, up 288% year-on-year. This growth was largely driven by strong downstream demand and high product prices. For instance, Ronghui Lithium reported continued demand for lithium batteries and high lithium carbonate prices, which contributed to its strong financial results. Cobalt companies also experienced remarkable growth. Jinchuan Technology, for example, reported a net profit of 447 million yuan in the first half of the year, a 2545.63% increase from the same period last year. The company attributed this to rising cobalt metal prices and increased production of nickel-cobalt-manganese precursors. Similarly, Jinyuan New Materials saw a net profit increase of 835.34%, driven by growing demand from the new energy sector and rising cobalt prices since 2017. However, not all companies saw the same level of growth. BaiJerui, which produces lithium salts used in new energy vehicles and consumer electronics, only saw a 5.88% year-on-year increase in net profit. This was due to high raw material prices and strategic pricing adjustments for long-term customers. Industry analysts believe the outlook for new energy vehicles remains positive. Cobalt, a key component in power battery cathodes, is seeing increasing demand, with prices up about 60% so far this year. Although recent adjustments have occurred, prices are still expected to rise in the fourth quarter, positively impacting related companies. Positive Prospects for Ternary Materials The cathode materials used in power batteries play a critical role in battery performance and carry high value. Companies like Anda Technologies, Betrix, Tianli Lithium Energy, Ousai Energy, Gold Lithium Technology, and others produce these materials. In the first half of the year, the performance of ternary material companies grew rapidly, while lithium iron phosphate companies faced some declines. Data shows that the 12 companies achieved operating revenue of 4.944 billion yuan, up 49% year-on-year, and net profit of 560 million yuan, up 26.3%. However, there were notable differences between ternary and lithium iron phosphate companies. Seven lithium iron phosphate companies, including Anda Technologies and Zhuo Neng Materials, saw their profits decline, with three suffering losses. The main reasons included price reductions for lithium iron phosphate and rising costs of raw materials like battery-grade lithium carbonate. In contrast, five ternary material companies, such as Shanshan Energy and Zhenhua Xincai, saw impressive growth. Shanshan Energy's revenue increased by 88.99% year-on-year, while net profit rose by 166.68%. Zhenhua Xincai’s revenue surged by 168%, and net profit jumped 564%, driven by increased customer demand and higher sales of power ternary materials. Industry sources attribute the shift in demand to policy changes. The 2017 new energy vehicle subsidy policy raised energy density requirements, favoring ternary materials. As a result, the future of ternary materials looks promising, with increasing market penetration. Wet Diaphragm Shortage Expected Companies like Jinli Group, Nuomemi Technology, Huiqiang New Materials, Yingbolai, and Xucheng Technology are engaged in diaphragm production. Their overall performance remained stable and showed rapid growth in the first half of the year. Data shows that these five companies achieved revenue of 238 million yuan, up 28% year-on-year, and net profit of 42.7 million yuan, up 32%. While most companies saw growth, some experienced declines. Jinli Group, for example, saw a 2494% increase in net profit, driven by improved production efficiency and higher gross margins. However, Asahi Technology, another diaphragm producer, saw a 39.28% drop in net profit. This was attributed to reduced demand from downstream battery manufacturers due to policy changes and lower subsidies. Industry analysts believe that wet diaphragms face supply constraints, creating a favorable market for companies with advanced manufacturing technologies. Despite challenges, the sector is expected to remain strong in the coming years. Battery Companies Face Profit Margin Pressure Ten companies, including Weining Power, Shanmu Xinneng, Dingxin Open Source, Hui Nengxia, Heidis, Xinghai Energy, Sisheng Energy, Tianfeng Power, and Table Energy, produce new energy vehicle batteries. In the first half of the year, they achieved total revenue of 1.675 billion yuan, up 65% year-on-year, but net profit only rose 31%. Gross profit margins also declined significantly, with many companies reporting drops of over 6 percentage points. Tianfeng Power, for example, saw revenue increase by 67.87%, but net profit only rose 2.24%. The company cited pressure from low-margin battery sales and price competition. Weining Power also saw a decline in net profit despite revenue growth, due to rising raw material costs. Analysts suggest that rising raw material prices, especially for cobalt and lithium, are squeezing profit margins. While battery companies are seeing revenue growth, cost increases are outpacing gains, leading to lower net profits. However, with the second half of the year being a peak season for new energy vehicle sales, gross margins may rebound. Electrical Control Industry Faces Turning Point Companies in the electrical and electronic control sector, such as Dadi Hezhong, Zhonglian Chuangxin, Micro-motor, Depuda, Dewei Xineng, Hengjiu Li, Ruiyang Technology, and Yikong Electronics, saw mixed results in the first half of the year. Revenue dropped by 15% year-on-year, and net profit fell sharply, with some companies turning from profit to loss. Dadi Hezhong, for instance, reported a net loss of 19.31 million yuan, down from 55.94 million yuan in the same period last year. The company attributed this to lower new energy vehicle production and sales due to policy changes. Micro-motor also saw a sharp decline in net profit, down 93.67% year-on-year, due to rising material costs and a cooling of the new energy auto industry. Industry insiders believe the impact of policy changes is temporary, and the second half of the year is expected to bring stronger demand. Companies like Depuda anticipate a surge in production and sales, leading to improved performance. Charging Pile Companies Show Diverse Performance Seven companies, including Guochong Charging, Sunrise Electric, and Hengrui Electric, are involved in charging pile business. In the first half of the year, revenue reached 966 million yuan, up 25% year-on-year, but net profit fell 73% to 13.9 million yuan. Anhewei, for example, saw a 15.71% increase in revenue but a 603.6% drop in net profit, due to lower gross margins on major projects and ongoing investments in new charging stations. Hexin Ruitong also reported a loss, citing delays in project deliveries and increased operational costs. Guochong Charging, however, saw a 166% increase in net profit, although revenue slightly declined. The company has been focusing on charging station construction and expects profitability to improve in the second half of the year. Overall, the charging pile sector faces challenges, but long-term prospects remain bright. With the expansion of the new energy vehicle market, the demand for charging infrastructure is expected to grow, offering more opportunities for competitive companies. Lv 3Ph Asynchronous Motor,Three Phase Asynchronous Motor,3 Phase Asynchronous Motor,Asynchronous Motor 3 Phase Yizheng Beide Material Co., Ltd. , https://www.beidevendor.com