The battle over the shape of power batteries is heating up. What are the advantages of Samsung SDI's big bet on square batteries?

According to South Korean media ETNews, Samsung SDI plans to invest about US$890 million to double the number of square battery production lines at its Hungarian factory by the end of this year and start building a second battery factory in Hungary to gain a dominant position in the European square battery market.

It is understood that Samsung SDI currently has four production lines in its Hungarian factory, all of which are square batteries. Once the new production line is completed, the factory will have a total of eight square battery production lines, and the production capacity will increase from 30 gigawatt-hours to 50 gigawatt-hours, equivalent to the installed capacity required for 1 million electric vehicles per year.

With this investment, Samsung SDI will also become the largest square battery manufacturer in Europe. Another square battery giant, CATL, is currently building a square battery production plant with an annual production capacity of 14 gigawatt-hours in Erfurt , Germany , which is expected to be put into operation in 2023 and mainly produce lithium iron phosphate or NCM ternary batteries.

The report pointed out that for Samsung SDI, such a high investment can be said to be very radical, because in the past few years, compared with its competitors, its expansion speed has been relatively conservative. This strategic adjustment will help the company prepare for more orders from major customers - Volkswagen , Audi and BMW .

Volkswagen's "battery version MEB" wants to turn to square head manufacturers. How is the layout?

For the power battery industry, Samsung SDI's expansion of its square production line also means that the battle between cylindrical, square and soft-pack power batteries has officially begun. In the middle of this month, the veteran automaker Volkswagen has sounded the clarion call in advance through the "battery version of MEB" platform.

Although according to the information revealed in the press conference, there is no definite explanation on what form of battery the "battery version of MEB" will use, foreign media including Reuters and Teslarati, and domestic industry think tank Gaogong Lithium Battery all believe that it is highly likely that the platform will use square batteries.

At the same time, combined with what Volkswagen said that by 2025, 80% of the company's batteries will be produced from this platform. Most industry media believe that this move will bring a new X factor to the current power battery market dominated by cylindrical and soft-pack batteries, and square battery manufacturers represented by CATL and Samsung SDI will also usher in greater opportunities.

According to the data of the top 10 companies in global power battery installed capacity in 2020 previously released by Gaogong Lithium Battery, CATL, LG Chem, and Panasonic ranked in the top three, and Samsung SDI and SKI ranked fifth and sixth respectively.

Among them, CATL focuses on square batteries, but its cylindrical LFP batteries have also been supplied to the domestic Tesla Model 3 ; LG Chem focuses on soft-pack batteries, which were previously supplied to Volkswagen. Its cylindrical NCA811 batteries have also been supplied to Tesla Model 3 /Y. At the same time, it has recently been reported that it plans to expand its cylindrical production line in the United States;

In addition, Panasonic is deeply tied to Tesla and focuses on cylindrical batteries; Samsung SDI and SKI focus on square and soft-pack batteries respectively, and both were previously suppliers of Volkswagen electric vehicles.

Behind the battle between square and soft pack, the competition between Chinese and Korean battery manufacturers is fierce

From this point of view, Korean manufacturers represented by LG Chem and SKI have more advantages in soft-pack batteries, while Chinese manufacturers led by CATL have already taken the lead in square batteries. According to a report by Automotive News, Volkswagen's switch from soft-pack to square batteries has brought a shock to its Korean suppliers.

According to reports, one of the reasons why Volkswagen decided not to use cylindrical or soft-pack batteries was to achieve a large-scale unified battery format. Another reason was to produce CTP battery packs, which can effectively reduce costs and increase energy density. CATL is one of the first manufacturers in the industry to adopt this battery pack packaging method.

It should be pointed out that the industry and institutions have previously pointed out that the three routes of cylindrical, square and soft-pack have their own advantages, and the absolute advantages are not obvious at this stage:

The production process of cylindrical batteries is mature, and they have advantages in production efficiency and consistency, but they have disadvantages in grouping efficiency due to the large number of monomers; square batteries have advantages in grouping efficiency and strong customization capabilities, but they have inherent disadvantages in safety due to their tight arrangement; soft-pack batteries have inherent advantages in cell energy density and safety because the shell is changed from metal to aluminum-plastic film, but they have disadvantages in consistency and deformation resistance, and ultimately the grouping efficiency is low.

At the same time, from the actual production situation, car companies have no significant preference for the shape of battery packs, and they develop and sell electric vehicles with batteries of different shapes. Even for the same electric vehicle model, car companies will use battery packs of different shapes. Currently, except for Tesla, which uses cylindrical batteries, most other car companies use multiple routes in parallel.

However, with Volkswagen's high-profile move to "abandon soft batteries and turn to square batteries", the competition over shape may open up another battlefield in the future power battery market.