CITIC SEC: Solid-state batteries may face the risk of technological disruption. It is recommended to focus on two investment themes.

CITIC SEC released a research report stating that solid-state batteries are facing technical bottlenecks such as solid-solid interface contact, and are still in the early stages of industrialization. Currently, China mainly chooses the progressive development route of solid-liquid hybrid batteries, but needs to guard against the disruptive risks that may come from the aggressive all-solid-state technology route. Through quantitative calculations of the value of equipment in each process of solid-state batteries and based on qualitative and quantitative analysis, it is recommended to focus on two investment themes: 1) whole line equipment suppliers; 2) core equipment suppliers. The main points of view of CITIC SEC are as follows: Solid-state lithium batteries: Next-generation battery technology with high safety and energy density The fundamental characteristic of solid-state lithium batteries is the use of solid-state electrolytes instead of liquid electrolytes, which have outstanding advantages such as high safety and energy density, hence they are recognized as the mainstream direction of battery technology development. Depending on whether they contain electrolyte, solid-state batteries are divided into solid-liquid hybrid batteries and all-solid-state batteries; according to different solid-state electrolytes, they are mainly divided into three major routes: polymer, oxide, and sulfide. The industrialization of all-solid-state batteries faces many challenges at the material/interface/electrode/cell level, with the solid-solid interface contact issue being the main bottleneck. Japan, South Korea and Western countries started researching solid-state batteries earlier, focusing mainly on all-solid-state batteries, while China, driven by market demands, chose solid-liquid hybrid batteries as a transitional technology. Progressive route: Solid-liquid hybrid batteries using in-situ solidification technology Solid-liquid hybrid batteries retain a small amount of electrolyte, which can effectively solve the solid-solid interface issue, and also have improvements in safety and energy density, with the potential to commercialize first. According to the statistics of the China Automotive Power Battery Industry Innovation Alliance, by the first half of 2024, a cumulative installed capacity of 2154.7 MWh has been achieved. Solid-liquid hybrid batteries can gradually introduce solid electrolytes in various ways based on traditional liquid batteries, with in-situ solidification technology becoming the mainstream technology adopted by many domestic companies. Through in-situ solidification technology, the progressive manufacturing of all-solid-state batteries is expected. Process analysis: Manufacturing processes of all-solid-state batteries need to adapt to material and structural changes The manufacturing process of all-solid-state batteries mainly includes the manufacture of electrodes and solid-state electrolyte films in the front end, as well as the assembly and formation of battery cells in the middle and back ends. 1) Electrode and electrolyte film manufacturing: Divided into wet and dry processes, the wet process currently has higher feasibility in mass production, while the dry process, with advantages such as low energy consumption, low cost, and high energy density, is expected to gradually become mainstream. 2) Battery cell assembly and formation: Oxide and sulfide all-solid-state batteries need pressurization treatments to improve solid-solid interface contact, so soft pack stacking is expected to become the mainstream process, leading to new battery cell assembly processes such as integrated stacking, isostatic pressing, and bipolar architecture, with higher pressure requirements in the formation process. Equipment analysis: Changes in front, middle, and back end equipment pose challenges to large-scale manufacturing The changes in the manufacturing process of all-solid-state batteries require corresponding equipment. 1) Front end equipment: Dry equipment including dry mixing equipment, fiberizing equipment, granulating equipment, and film-forming equipment will gradually replace wet equipment, with the addition of electrolyte thermal composite equipment. The roller compaction equipment will take on additional processes (film forming, thermal composite, negative electrode lithium supplementation, etc.), requiring higher technical standards, and is expected to see an increase in both quantity and price. 2) Middle and back end equipment: Injection equipment is eliminated, stackers replace winding machines as the dominant equipment, isostatic pressing equipment and high-pressure formationistic equipment become essential. However, due to the long duration of pressurization for individual battery cells, continuous production is difficult to achieve, posing challenges to large-scale manufacturing. Further quantitative analysis estimates that the investment amounts for equipment for 1 GWh of liquid/hybrid/ all-solid-state batteries are 120 million/150 million/250 million yuan respectively, with significant increases in the absolute value and proportion of the value of front-end equipment for hybrid and all-solid-state batteries. Market space: It is estimated that by 2030, domestic investment in solid-state battery equipment will reach nearly 20 billion yuan The key penetration areas for solid-state batteries include high-end power batteries, consumer batteries, and eVTOL batteries. The Battery and Energy Management team of the research department of CITIC SEC estimates that by 2030, global solid-state battery shipments will reach 556 GWh, while the China Industry Research Institute predicts that domestic solid-state battery shipments will reach about 251 GWh in 2030, mainly for solid-liquid hybrid batteries, with the penetration rate of all-solid-state batteries possibly less than 1%. However, with the development of solid-state battery technology, equipment demand is expected to grow first. According to the "White Paper on the Development of Solid-State Lithium Battery Technology", the planned domestic capacity for solid-state batteries has already reached several hundred GWh, which will strongly drive investment in solid-state battery equipment. It is estimated that by 2030, domestic investment in solid-state battery equipment will be around 17.81 billion yuan. Risk factors: Uncertainties in technological development, market demand falling short of expectations, insufficient synergy in the upstream and downstream industrial chains, risks of substitution by other new battery technologies, unforeseen policies, and intensified international competition.