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Just three years ago, AVIC Lithium was in deep trouble, losing as much as 700 million yuan and losing key customers such as Yutong Bus.

The change started in 2018. The new female leader has launched a vigorous reform, and has also changed the inherent playing method in terms of strategy, products, and other aspects. Since then, Avic Lithium's installed capacity of power lithium batteries has continued to enter the top ten in China, and the capital market has also taken a new look at it. This former power lithium battery head company has begun to show signs of recovery.

On September 12th, AVIC Lithium completed a new round of equity financing of 12 billion yuan, making it the largest single financing in the venture capital circle of Jiangsu Province this year.

In addition to original shareholders Changzhou Government, Xiamen Government, and industry, this capital increase also introduced state-owned capital such as Wuhan, Chengdu, and the National Manufacturing Transformation Fund. Upstream and downstream companies in the supply chain also participated in this round of financing.

Since its establishment in 2009, AVIC Lithium has completed two rounds of financing, with investors including GAC Capital, Xiaomi Technology, Chengfei Integration, etc.

The popularity of the capital market has also led to a continuous increase in the installed capacity of AVIC Lithium batteries.

According to the monthly data of power lithium batteries released by the Automotive Power Lithium Battery Industry Innovation Alliance of China, from January to August 2021, the cumulative installed capacity of AVIC Lithium reached 5 GWh, compared with 1.18 GWh in the same period last year, a year-on-year increase of 324%. The installed capacity of power lithium batteries surpassed LG New Energy, ranking third, behind CATL and BYD.

The key figure behind these achievements is Liu Jingyu, Chairman of AVIC Lithium. This legendary female leader with a master's degree in management from Northeast University of Finance and Economics and a combination of senior accountants, Chinese certified public accountants, certified appraisers, and certified tax agents has successfully brought AVIC Lithium into the first tier of the domestic power lithium battery circuit in less than three years.

From sustained to sustained high-speed rise, the reversal of AVIC Lithium cannot be separated from the legendary female leader. Liu Jingyu is also known in the industry as "Zeng Yuqun's most feared woman.".

The legendary female leader is here

Liu Jingyu experienced two high-profile moments when he was appointed in a crisis and led the company to turn losses into profits.

In 2013, Liu Jingyu was appointed as the director and general manager of Tianma Microelectronics Co., Ltd. She has transformed "profit oriented" into "customer oriented", winning orders from a series of customers such as Huawei, Lenovo, Yulong, and OPPO. From a loss in the first quarter to a brilliant performance at the end of the year. In just 10 months, Tianma Microelectronics has successfully ranked among the first echelons of the display industry, turning losses into profits.

At that time, the industry chain of the panel industry had not yet reached a particularly sound level in China, while the power lithium battery industry was different. Through nearly a decade of development, China's new energy industry chain has been very sound, with a strong industrial foundation.

In July 2018, Liu Jingyu resigned from all his positions at Tianma Microelectronics and moved from Xiamen, Fujian Province to Changzhou, Jiangsu Province to join AVIC Lithium as chairman and general manager. At that time, Avic Lithium was deeply in a sustained loss predicament. According to the annual report of Chengfei Integrated, the then controlling shareholder, Avic Lithium had losses of 330 million yuan and 700 million yuan in 2017 and 2018, respectively.

In her eyes, the power lithium battery industry in China is still a very good industry globally compared to the panel industry in the past, because there is no complete technological gap after all, and it has developed rapidly with the support of the government. The power lithium battery industry is far from entering a period of rapid development, and the future market is very large. She is very confident about this.

Although she has made significant achievements in the panel industry, facing a new industry, Liu Jingyu keeps in mind that the key word is "awe". "The birth and development of a new industry is bound to have a very fierce elimination, which may give everyone a feeling of anxiety. No one day's clothing, food, housing, and transportation is very calm and calm. Therefore, whether it's making materials, batteries, or new energy vehicles, I have a heart of respect and admiration, and it's not easy for everyone."

Originally, the technical level of the panel industry was very high and difficult to do, but after coming to the battery industry, she found that batteries were also very difficult to do.

"Nowadays, industry friends often say that they are in difficult situations, such as tight funds, financing difficulties, high accounts receivable, and insufficient production utilization. These have all had a significant impact on the company. I really feel 'very difficult, very difficult' in this industry," Liu Jingyu said.

In 2018, Avic Lithium, which had just undergone asset restructuring and senior personnel changes, experienced significant fluctuations in installed capacity data. In December 2018, the installed capacity of ten important customers, including Dongfeng, Jianghuai, and Chongqing Chang'an, all reached over 50MWh, making AVIC Lithium's annual installed capacity finally ranked ninth, barely entering the second tier in the field of power lithium batteries.

Wang Xiaoqiang, Deputy Secretary of the Party Committee and Head of the Policy Research Department of AVIC Lithium, told Chuangye Bang that Liu Jingyu regarded "continuous innovation" as the top priority of AVIC Lithium in the process of transformation. After taking over the company, he proposed that AVIC Lithium should take "continuous innovation and benefit mankind" as its mission, and formulated three major development strategies: culture and talent, product and technology leadership, and quality.

Subsequently, with reshaping the company's values and culture as the starting point, and focusing on building a core cadre team, Liu Jingyu proposed a customer-oriented "sincere, efficient, and win-win" company value system, vigorously advocating a culture of strivers, ensuring that the core team can understand and practice both cognitively and operationally.

At the same time, we will implement four major transformations in strategy, market, product, and customer, centralize the company's high-quality resources, determine target customer strategies, and comprehensively focus on the passenger car market.

At first, AVIC Lithium focused its business on the field of new energy commercial vehicles equipped with lithium iron phosphate batteries. However, in 2017, subsidies in the field of commercial vehicles gradually declined, and the requirements for the range of new energy vehicles were also increasing. The proportion of passenger vehicles in the sales of new energy vehicles was rapidly increasing, with lithium ternary batteries occupying a dominant position in the market. AVIC Lithium, which focuses on the commercial vehicle market, is suffering from market scale and market share is rapidly diluted.

Therefore, starting from August 2018, AVIC Lithium adjusted its market strategy, introducing its ternary lithium battery products to the market as soon as possible, deeply exploring the passenger car market, and signing a large number of orders with a number of domestic mainstream new energy vehicle companies, continuously improving the installed capacity and brand credibility.

Yuan Feng, the director and general manager of GAC Capital, told Chuangye Bang that CATL and AVIC Lithium are the two most important cooperation companies of GAC in terms of power lithium batteries. GAC Capital also made an equity investment in AVIC Lithium in 2020. "When selecting battery suppliers, we are more concerned with quality durability and cost, which is commonly understood as cost performance. AVIC Lithium batteries have more cost and supply advantages, and many models of GAC choose to cooperate with AVIC Lithium."

Liu Jingyu also pointed out that the philosophy of AVIC Lithium is that products without a certain cost performance ratio actually do not create value, not necessarily at a low price, but with a relative cost performance ratio. Only products with a high cost performance ratio can create value.

"AVIC Lithium is actually a very typical example, because GAC uses its batteries, enabling it to have better technology improvements and better processes. After AVIC Lithium became independent, GAC Capital's funding and brand endorsement enabled it to develop faster." Yuan Feng said.

In 2019, AVIC Lithium achieved a revenue of 2.67 billion yuan, turning losses into profits.

In 2020, the transformation effect of AVIC Lithium Battery was significant, rapidly achieving multiple vehicle models supporting first-tier automotive companies such as GAC, Chang'an, and Geely, becoming the core battery supplier for these automotive companies. In 2020, AVIC Lithium reached the fourth place in China in terms of installed capacity of power lithium batteries, increasing by two places compared to 2019. According to the data from the High Industry Research Institute (GGII), in December 2020, the installed capacity of AVIC Lithium Battery in China ranked second compared to BYD and LG.

"We believe that any developing company has limited resources, and we must maximize the use of limited resources to achieve the best company development results." Wang Xiaoqiang recalled that in the past two years, AVIC Lithium Electric has invested its advantageous resources in the passenger car market, striving to promote strategic transformation. "AVIC Lithium supports multiple models of passenger car customers to launch first, significantly increasing market share, and steadily ranking in the echelon."

While continuously making breakthroughs in the new energy passenger vehicle market, AVIC Lithium has not abandoned its layout in the field of new energy commercial vehicles.

In Wang Xiaoqiang's view, the resources, scale, and capabilities of AVIC Lithium have now achieved a leap compared to two years ago. Therefore, in early 2020, Liu Jingyu proposed a strategy of "restarting commercial vehicles", and established cooperation with commercial vehicle companies such as Xiamen Jinlv, Xiamen Jinlong, Zhongtong Bus, and Dongfeng Motor.

Under the leadership of Liu Jingyu, AVIC Lithium has become a dark horse in the power lithium battery industry.

Grab the cake from CATL

The rising China Aviation Lithium Battery has shown CATL potential threats.

According to the data of China Automotive Power Lithium Battery Industry Innovation Alliance, from January to August 2021, the installed capacity of AVIC Lithium Battery was 5GWh, accounting for only 6.6% of the total installed capacity, ranking third. The installed capacity of CATL is 37.9GWh, more than 7 times that of AVIC Lithium. The proportion of total installed capacity is as high as 49.7%, more than 8 times that of AVIC Lithium, ranking first.

At first glance, AVIC Lithium does not seem to pose a significant threat to the battery supremacy CATL, but in terms of competing for core customer resources, AVIC Lithium's counterattack has already begun.

In the first half of 2020, three spontaneous combustion accidents occurred on GAC Aion S models, and the lithium battery for one of the accident models has been confirmed as the 811 battery supplied by CATL. It is uncertain whether the remaining two accident models are both supplied by Ningde, but AVIC and Ningde each account for 50% of the total.

Although neither GAC nor Ningde have expressed any views, the three fires of Aion S have led CATL and GAC New Energy to move further away.

According to the data from the First Electric Power Research Institute, the installed capacity of AVIC Lithium Electric passenger cars in August was 271.1 MWh, with GAC New Energy as its largest customer, accounting for 95.4% of the installed capacity.

It is worth noting that the battery supplier of GAC New Energy's main models has gradually changed from CATL to AVIC Lithium, while the installed capacity of AionV in August was 75.8 MWh from Funeng Technology. In other words, GAC no longer uses CATL's lithium battery for power.

Not only are major customers being robbed, but there are also threats from production.

In 2020, AVIC's lithium battery production was 16GWh, and it is expected to increase the planned production by 178GWh in 2022-2023, with an expansion factor of 11.13 times the 2020 production.

While CATL will increase its planned output by 240GWh in 2022-2023, based on the installed capacity of 31.79GWh in 2020, the expansion multiple of CATL in 2022-2023 will be 7.55 times.

The operation of AVIC Lithium Battery was as fierce as a tiger, which forced CATL to "kill in pain".

In July 2021, CATL China Aviation Lithium Battery Patent Infringement. According to the official statement of CATL, the patents involved involve invention and utility model patents, and the suspected infringement of power lithium batteries has been carried on tens of thousands of vehicles.

AVIC Lithium also quickly counterattacked, saying that it adheres to independent research and development, and that the products it supplies to customers have undergone professional intellectual property risk investigations, making it certain that the products it produces do not own the intellectual property of others.

Just last month, AVIC Lithium announced that it would be launched in 2022. Once launched, its entire range of products may face a ban on sales. CATL is in trouble at this time, and its intention to block the listing of AVIC Lithium is self-evident.

Gu Guohong, co CEO of True Lithium Research, pointed out that the power lithium battery manufacturers represented by AVIC Lithium and Guoxuan Hi-Tech are gradually encroaching on CATL's market share, which will undoubtedly become CATL's eyesore and thorn in the flesh.

Therefore, creating a patent moat, strengthening core technology innovation, and high-quality patent layout will be the inevitable trend of development. CATL's patent for AVIC Lithium is neither the first nor the last. In the future, stiff commercial competition around the world will also involve intellectual property rights.

In March 2020, due to the determination that Tafel New Energy has obtained its explosion-proof technology patent for power lithium batteries, CATL transferred Tafel New Energy to the senior people of Fujian Province, claiming compensation of 120 million yuan for economic losses.

On August 26, 2021, the first instance result of the patent infringement case of CATL Tafel New Energy was officially announced, and Tafel New Energy was sentenced to compensate CATL for more than 23.3 million yuan.

In 2020, Tafel emerged as a new force in the domestic power lithium battery industry, ranking 11th in terms of installed capacity throughout the year. In 2021, Tafel went further, jumping to the 9th place in the power lithium battery installed capacity ranking in August, and has entered the second tier of the power lithium battery industry.

In Gu Guohong's view, the trend of CATL and AVIC Lithium will leave an important page in China's intellectual property history. It is said that CATL, a private company, challenged AVIC Lithium Battery, a central enterprise, and ended up with nothing. It is said that CATL bullies the small with the big. The market is about rules, and whoever loses under the rules will lose.

After all, the battlefield of power lithium batteries does not believe in tears.

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