Power Battery | Eyes on China's EV

Chongqing - "Battery" ranks as the second most searched keyword in overseas internet searches related to Chinese electric vehicles, according to the past 30 days' analyzed reports from Meltwater's data retrieval.

The China Association of Automobile Manufacturers reveals that batteries account for approximately 70% of the production cost for electric vehicles, with current averages ranging from 30% to 40%. This cost structure significantly differs from fuel-powered vehicles.

China's dominance in the EV market is highlighted by its substantial share of the global power battery market, which is largely attributed to its long-standing battery technology accumulation and cost control through localized supply chains.

An electric vehicle battery is a rechargeable battery used to power the electric motors of a battery electric vehicle or hybrid electric vehicle. (Photo/Canva)

China tops global power battery sales 

Recent data by South Korean research firm SNE Research indicates that Chinese manufacturers contributed to about 61% of global power battery shipments in the first quarter of 2023. Six of the top ten manufacturers were from China, including CATL, BYD, CALB, Gotion High Tech, EVE Energy, and Sunwoda.

CATL tops the list with 46.6 GWh installation capacity, surpassing BYD, which ranks second by more than double. While BYD's remarkable year-on-year growth of 115.5% demonstrates strong momentum. Traditional giants like LG, Panasonic, SKI, and Samsung jointly hold about 36% market share.

Notably, various global EV companies have established stable partnerships with Chinese battery suppliers: Tesla, for instance, primarily sources batteries from CATL for Gigafactory Shanghai. Starting from August last year, Gigafactory Berlin-Brandenburg also adopted batteries from BYD, a top competitor to Tesla.

BYD, which relies on entirely self-developed core technology, has surged ahead in the Chinese market. Its battery subsidiary, FinDreams Battery, is rapidly growing and becoming independent from the BYD automotive business. As of August 2023, FinDreams boasts over 20 production facilities across China. 

It is known from the company's source that the FinDreams Battery factory manufactures blade batteries, among which parts will be exported to Germany. Currently, BYD plans to make Chongqing's Bishan branch one of three R&D centers and the company's global headquarters.

Localization of the supply chain aids battery development

Localization of the supply chain significantly aids battery development in China. China lacks natural resources for battery materials but dominates the world's industrial capacity for refining cobalt, nickel sulfate, lithium hydroxide, and graphite, key components of power batteries.

Localization lowers production costs, which impacts Chinese battery companies to select and build factories. Looking at the registration places, many of them are gathered on China's east coast, while their factories are separated in wider regions of the country, mainly maintaining proximity to raw materials, energy sources, and labor. 

For instance, according to Tesla's official release, Gigafactory Shanghai achieves over 95% localization of car parts. While for FinDreams Battery, the company procures materials from many local suppliers and some key strategic partners. Choosing local suppliers might be out of the consideration of cost saving.

Blade batteries in FinDreams' factory. (Photo/Chongqing FinDreams)

Technology advancement is another key for China's battery companies to be globally competitive. An example of China's battery innovation is BYD's blade batteries, a lithium iron phosphate battery developed.

The innovative structure significantly increases space utilization, catching up in energy density with higher-density ternary lithium batteries. Blade batteries excel in safety, proven by passing notoriously rigorous nail penetration tests, according to FinDreams Battery.

Over the past decade, China-led companies like CATL and BYD have gradually replaced nickel-cobalt-manganese batteries domestically with improved lithium iron phosphate batteries due to their superior safety and cost-effectiveness.

Moreover, China's investment in solid-state batteries, particularly in electrolyte development, rivals that of Japan and South Korea. Despite industry consensus that commercialization might take three to seven years, solid-state batteries offer higher energy density, faster charging, and improved safety compared to current liquid batteries.

 (View other articles of the series: Rapid Growth丨Eyes on China's EV, Energy Saving | Eyes on China's EV)