2025-12-15 01:55Key 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]