Key Takeaways from the Expert Call on Overseas ESS Market Industry Overview - The discussion focused on the overseas Energy Storage System (ESS) market, particularly insights from Mr. Echo Che of Envision AESC, an unlisted company [1] Demand Outlook - Global ESS installation is projected to reach approximately **360 GWh** in 2026, representing a **35% year-over-year increase** from **125 GWh** in 2025 [2] - Key growth drivers include the **United States**, **Australia**, and the **Middle East**, while **Europe** is expected to grow at a slower rate of less than **10%** due to supply chain challenges [2] - In the **Middle East**, countries like the **UAE** and **Egypt** are planning significant deployments, with expected installations of **35-45 GWh** by 2026 [2] - The **U.S.** is anticipated to contribute **60-80 GWh**, with **AIDC** (Artificial Intelligence Data Centers) accounting for **15-20 GWh** [2] - Drivers for AIDC-related storage include: - Need for grid access due to high peak loads - Backup power requirements increasing from **4 hours** to **6-8 hours** - Policy incentives [2] Competitive Landscape - **Tesla** leads the U.S. market with a **40% market share**, attributed to strong technical capabilities and localized production, though it faces challenges due to higher pricing [3] - **Sungrow** follows but faces risks from policy and localization requirements [3] - **Fluence** ranks among the top three, leveraging its U.S. manufacturing base but struggles with cost control [3] - In battery cell production, **CATL** dominates with a **40% market share** in North America, driven by LFP technology and production scale, but faces growth challenges due to non-China supply chain requirements [3] - Korean companies like **LGES** are expected to gain market share due to local manufacturing and ITC credits, despite currently lagging in safety performance compared to Chinese firms [3] Price Outlook - Prices for ESS are expected to trend downward, with system integration expansion achievable in **2-3 months** [4] - In the U.S. and EU markets, ESS system prices could be **30-50% higher** for non-China producers compared to Chinese ones, particularly in AIDC applications where price sensitivity is lower [4] - The Middle East market is competitive, with pricing approaching that of China due to cost sensitivity and large project sizes [4] - By 2026, pricing pressure in the Middle East is anticipated as tier 2 Chinese battery makers enter the market, intensifying competition [4] Company Valuations and Risks - **Contemporary Amperex Technology-A (CATL)**: Price target based on **2026E EPS of RMB 20.0** with a PEG of **1.0x**; risks include weaker EV sales and battery installation, higher production costs, and market share loss [6] - **Fluence Energy Inc**: Valuation based on free cash flow, earnings, and discounted cash flows; risks include product quality, tariffs, and industry concentration [7] - **Sungrow Power Supply Co Ltd**: Price target of **RMB 233.96** based on a **25x FY26E P/E**; risks include lower-than-expected solar installations and energy storage growth [8] - **Tesla, Inc.**: Price target based on DCF, with risks including production delays and investment in autonomous driving [9] Additional Insights - The report emphasizes the importance of understanding the competitive dynamics and pricing pressures in the ESS market, particularly as new entrants emerge and existing players adapt to changing market conditions [4][3]