·Ningbo Huaxiang participated in the acquisition of Nissan battery

Recently, Ningbo Huaxiang announced that it intends to unite Jinshajiang Capital and is committed to the expansion of Nissan battery technology in China.
The announcement stated that Ningbo Huaxiang and GSR GO Scale Capital Advisors, Ltd (hereinafter referred to as “GSR CAPITAL Advisors”) and Beijing Century Jinshajiang Capital Investment Management Co., Ltd. (hereinafter referred to as “Jinshajiang Capital”) are based on the use of Nissan battery technology in China. Expansion of production and in-depth cooperation, signed a memorandum of cooperation (hereinafter referred to as "memorandum") in Shanghai on September 28, 2017.
GSR CAPITAL Advisors is a limited liability company established by Jinshajiang Capital and has obtained the exclusive license of Nissan Battery Technology for China's expansion. Jinshajiang Capital mainly cooperated with local governments and customers to negotiate with Nissan Power Battery Project in China.
GSR CAPITAL Advisors intends to establish a battery technology joint venture with Jinshajiang Capital (hereinafter referred to as “joint venture company”), of which GSR CAPITAL Advisors holds 40%, Jinshajiang Capital holds 60%, and Ningbo Huaxiang plans to increase capital by 100 million yuan. Acquired a 30% stake in the joint venture company. The above joint venture plans to establish AESC (China) Power Battery Co., Ltd. (hereinafter referred to as "AESC (China)"), and the joint venture company holds 30% of the shares (according to the registered capital of 2 billion yuan). In addition, Ningbo Huaxiang can also invest in AESC (China) through direct investment. The premise of the capital contribution is that the license granted by GSR CAPITAL Advisors and the joint venture company's Nissan battery technology obtained from GSR CAPITAL Advisors in China is continuously valid and exclusive.
GSR Electric Vehicle, LP (hereinafter referred to as “GSR Electric”) purchased the M&A Fund of Nissan Power Battery Company for GSR CAPITAL Advisors. Ningbo Huaxiang plans to subscribe for GSR Electric's share of no more than US$100 million, and participate in the Nissan Power Battery M&A project. It can also choose to participate in the premium after the project is delivered. In addition, GSR CAPITAL Advisors and Jinshajiang Capital agreed to give Ningbo Huaxiang a priority to use 10% equity in each of China's factories using Nissan Battery Technology.
Ningbo Huaxiang is a leading domestic and foreign automotive accessories company. Its products include instrument panel, door panel, mahogany trim and rearview mirror. Among them, the market share of mahogany trim is more than 50%, and the market share of rearview mirror is 25%. , ranked second. The company's customers include FAW-Volkswagen, SAIC Volkswagen, Changan Ford, FAW Toyota and other first-line vehicle manufacturers.
Previously, Ningbo Huaxiang had invested in auto parts related industries. For example, in 2011 and 2013, Ningbo Huaxiang successively acquired several German high-end car interior parts and manufacturers of natural fiber materials for vehicles, but until this year, Germany Huaxiang was still at a loss. Will Ningbo Huaxiang participate in the expansion of Nissan Battery in China, can it obtain the expected benefits?
On the one hand, the rapid development of new energy vehicles has become the world trend, and the world's major new energy vehicle manufacturers are continuing to expand. As the core component of new energy vehicles, power batteries account for 25%-50% of the total vehicle cost, and the value is extremely high. As the world's largest new energy vehicle market, China has a leading position in the production, sales and charging stations of new energy vehicles. At the same time, China's automotive power battery market also has huge room for development. In addition, in August this year, the Ministry of Transport and the Ministry of Housing and Urban-Rural Development jointly issued a document to encourage time-sharing of new energy vehicles. There is no doubt that China's automotive power battery market has great potential.
Nissan Battery is one of the world's leading power battery companies, and its technology is outstanding in the field of soft-pack lithium batteries. At present, Nissan AESC's batteries are used in Nissan Leaf, e-NV200 and Renault's models. In more than six years, the company's battery supply is close to 300,000 sets. Product consistency and reliability are obvious to all. . In recent years, Nissan AESC has been ranked among the top three in the global automotive power battery market. However, although Nissan AESC performed well in the global market, it has not yet entered the Chinese market. This time, Ningbo Huaxiang participated in the acquisition of Nissan batteries, and is expected to obtain the equity subscription priority of its domestic factories. In-depth intervention in technology and production will not only have the opportunity to obtain good revenue from the power battery business, but also form a good business with its original business. Good complementarity, such as vigorous development of new business such as battery structural parts, the development prospects are promising.
Ningbo Huaxiang also said in the announcement that “as the major automakers in Europe and the United States successively launched the timetable for the discontinuation of traditional fuel vehicles and the dual-integration policy of new energy vehicles introduced by China, the development of new energy vehicles has become a domestic host. One of the top tasks faced by factories and auto parts companies. While concentrating on the existing business, Ningbo Huaxiang actively deployed new energy vehicle-related businesses and actively explored including 'power battery connection lines' and 'cooling systems'. A package of professional automotive battery pack solutions including 'metal shell' and 'insulating shockproof material'. The signing of this cooperation memorandum is a collaboration between Ningbo Huaxiang and the battery factory and the main engine factory. Kind of try."
On the other hand, Ningbo Huaxiang's participation in Jinshajiang Capital's acquisition of Nissan's batteries is still in the intentional stage, and the follow-up cooperation is still unknown. In the announcement, Ningbo Huaxiang also stated that “this memorandum is the initial intention of the company to cooperate with Jinshajiang Capital. There is uncertainty in the smooth implementation of the cooperation matters stipulated in the memorandum. The formal implementation still requires further negotiation and signing the relevant formal cooperation agreement. ”
Also, if Ningbo Huaxiang officially participates in the investment in Nissan batteries in the future, the market risks faced should not be underestimated. Due to the promising prospects of China's automotive power battery market, all domestic power battery companies are planning to expand their production. Leading companies such as BYD, CATL and Guoxuan Hi-Tech are planning to reach a capacity of 15-20GWh between 2018 and 2020. . Therefore, the new production capacity will increase significantly in the next few years. It is estimated that by 2020, the output of China's automotive power battery will reach 141GWh, and the power battery industry's production capacity is basically in excess. The market competition will be extremely fierce. Overcapacity will accelerate the differentiation and adjustment of the power battery industry, and only companies with strong competitiveness can stand out. Nissan battery has no market foundation in China before, can it earn a place in such a fierce market environment? This is also the challenge that Ningbo Huaxiang should be treated with caution.

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