Will CATL's battery swap model unify the industry's battery standards?

CATL is in a stage of being "stared at by a pack of wolves", and the battery swap model may be a good "transition solution".

In the power battery market, CATL is currently the undisputed number one. According to statistics from relevant authoritative organizations, CATL's total global installed capacity in 2021 reached 96.7GWh, ranking first for five consecutive years, and its market share reached 32.6%, 12.3 percentage points higher than that of LG Energy, which ranked second.

But even a tiger is afraid of a pack of wolves, and CATL's future growth path may not be as smooth as before.

For example, the LG Energy mentioned above, which ranks second in global installed capacity, has always been CATL's main competitor. SK On and Samsung SDI, two battery companies from South Korea, are also very powerful competitors. Although these Korean battery companies currently have a lower global market share than CATL, considering that CATL's installed capacity is mainly contributed to the Chinese market, from the perspective of the international market, the competitiveness of these Korean battery manufacturers does not seem to be inferior to CATL, and may even surpass it.

In addition, Panasonic Group from Japan, with its deeply tied battery business with Tesla , has also occupied a 12.2% market share in the global power battery installed capacity. And from a technical perspective, its battery cell energy density is currently the highest in the world. The 4680 battery jointly developed with Tesla has attracted much attention and will also start expanding production this year, with obvious advantages in product energy efficiency.

There are also many domestic players eyeing CATL. BYD , which became famous for its blade batteries , also installed 26.3GWh of power batteries in 2021, a year-on-year increase of 167.70%, rising to fourth in the world. In addition, Guoxuan High-tech , Envision Power, Sinovation, and Honeycomb Energy, four domestic power battery manufacturers, all achieved varying degrees of year-on-year growth last year, and entered the fast lane of rapid growth.

As the global electrification wave continues to sweep, the penetration rate of new energy products in the entire market is gradually increasing, and the power battery industry is obviously immeasurable. However, the more the industry can see the future potential, the more intense the competition will be. If CATL still relies solely on the battery business in the future, the risk of being replaced and the possibility of being eaten up by other manufacturers will be too great.

Therefore, at this stage, CATL is in urgent need of developing new businesses to avoid a single profit model. Taking advantage of the trend of new energy innovation, CATL recently launched the chocolate battery swap brand EVOGO, claiming that it is compatible with 80% of the models developed on pure electric platforms that have been launched in the world and will be launched in the next three years, and transforming into a battery operator in one fell swoop, which sounds like a good idea.

If the "chocolate" battery swap model is successful, it will help CATL to have considerable room for profit. In the future, it will no longer be a simple battery supply and trading model, but will be able to directly make money from the peak-valley price difference and service fees of electricity. It can be simply understood as a substitute for the gas station function in the new energy era, and its profit directions and models are richer than those of gas stations.

But the question is, can this model succeed?

First of all, battery swapping itself is not too difficult from a technical perspective. AGV smart logistics vehicles that adopt the battery swapping mode have been very mature in recent years. CATL is not the first to adopt the battery swapping mode for passenger cars . Previously, NIO and BAIC New Energy in the industry have deployed models for battery swapping stations.

But the difficulty lies in that if the passenger car market wants to popularize the battery swap model, let alone who will support the cost of a large number of battery swap stations, how can a unified standard for battery swap be established? There is no precedent in the industry to solve this problem. Because this standard includes the appearance size of the battery pack, the current and voltage parameters of the battery, the battery energy management, status monitoring, etc.

CATL’s installed capacity market share is indeed large enough, and many battery cells are produced by CATL, but the battery technology standards used by each company are formulated with the participation of car companies, and CATL also needs to produce according to customer needs. Simply put, unless all new energy manufacturers use the same PACK, the standards cannot be unified at all. For this reason, even though NIO has rolled out more than 700 battery swap stations in China, it has never mentioned the realization of cross-brand battery swap services. This is also a serious problem that CATL, a leading power battery company, has to face.

In addition, as one of the core components of electric vehicles , major automakers do not rely entirely on battery companies for research and innovation in batteries. In recent years, they have developed many innovative technologies, including energy density, space utilization and safety. If you choose to join the CATL battery replacement system, not only do you have to choose CATL's batteries, but the entire three-electric system will be bound by "chocolate". In the past, suppliers developed batteries according to the requirements of the OEMs, but now the OEMs need to develop vehicles according to the requirements of suppliers. Whether the OEMs can accept the change of "identity" is also an unavoidable problem.

At the same time, as the core component of a single car, the power battery is also the focus of competition and publicity among major car companies. Its cost accounts for almost 40% of the entire vehicle. If car companies give up their own battery standards and use the universal battery standards formulated by CATL, they will inevitably lose a large part of their profit margins. It can be seen how difficult it is to get different brands to reach a consensus and realize cross-brand battery swaps.

Finally, let's imagine that if, if CATL really achieves this standard battery block that can be adapted to most new energy vehicles on the market, consumers will definitely be the beneficiaries. After all, the energy replenishment method is more convenient. It is likely that there is a battery swap station every few kilometers, and battery swapping is really as convenient as refueling. This is indeed a product that solves the pain points of new energy vehicles.

But what about the reality? In the short term, I am afraid that we can only be bearish, because this is not in line with the current development route of car companies for power battery technology, and more importantly, it is not in line with the interests of most car companies.

From another perspective, CATL’s launch of the battery swap model is more like a gimmick used to stimulate the stock price after a sharp drop in the stock price.

In the first trading week after the Spring Festival, CATL's total market value plummeted. In one week, its market value shrank by nearly 270 billion yuan. Compared with CATL's highest price of 692 yuan in the previous two months, it fell by nearly 30%. For a time, there were countless people on the Internet who were pessimistic about CATL. However, on the next Monday after the Chocolate Battery Swap Conference, CATL's stock price rebounded significantly after the opening, and the stock price returned to 500 yuan.

Therefore, there are still many unknown factors as to whether CATL's battery swap plan can subvert the energy replenishment model in the new energy market, and it is difficult for us to make a conclusion for the time being. But as a new story that is good for the stock price, it seems to be an effective "transition plan".