China's power battery internationalization "speed change"

The internationalization of customers, production capacity and technology, coupled with the zero-carbon transformation of product production, will continue to drive the global growth and development of Chinese power battery companies.

The internationalization process of China's power batteries has clearly accelerated.

The most obvious change is that since 2021, the overseas capacity construction of Chinese power battery companies has entered a substantial advancement stage:

◆ CATL's Thuringia base is expected to achieve a power battery production capacity of 14GWh in 2022;

◆ Envision Power plans to add three new power battery super factories in France, the United Kingdom and the United States;

◆ Honeycomb Energy settled in Saarland, Germany, and built two factories for battery cells and module PACK;

◆ Guoxuan High-tech acquired Bosch Group's Göttingen factory in Germany and established a European production and operation base;

◆ Farasis Energy and Turkish automaker TOGG jointly build a power battery factory in Turkey;

◆ EVE Energy purchased the target real estate and established a power battery manufacturing plant in Hungary.

The reason is that, on the one hand, the electrification growth rate in Europe has accelerated, becoming the next major battlefield for Chinese power battery companies. Data shows that the European new energy vehicle market continued to grow in 2021, with sales of 2.338 million vehicles, a year-on-year increase of 66%; the new energy vehicle market penetration rate in Europe in 2021 reached 16.5%, higher than China's 13.4%.

At the same time, sales of new energy vehicles in the United States exceeded expectations, with sales reaching 670,000 units in 2021, a year-on-year increase of more than 100%.

In terms of top-level planning, the EU proposed to achieve a zero-emission target by 2035, and the United States also proposed that new energy vehicles account for 50% by 2030.

Whether it is the electrification strategic goals of international automakers such as Volkswagen, GM, Ford, and Mercedes-Benz, or the top-level policy determination and subsidy support, they are all supporting the continued rapid development of electrification in Europe. It is expected that by 2030, the production and sales of new energy vehicles in the European and American markets are expected to match or even surpass the Chinese market.

On the other hand, China's leading power battery companies already have the hard-core strength to "go global". The increase in overseas fixed-point projects and orders, the transformation and leadership of China's battery innovation technology, and the initial formation of an international ecosystem led by Chinese material companies all indicate that China's power batteries have begun to lead the world.

The huge overseas market size, the internationalization of Chinese power battery companies' customers, production capacity and technology, coupled with the zero-carbon transformation of product production, will continue to drive the global growth and development of Chinese power battery companies.

Driven by changes in international markets

Indeed, with huge overseas orders in hand and the gradual release of demand for overseas production capacity delivery, this has become the most direct reason for the internationalization of Chinese power battery companies.

As a leading representative of Chinese power battery companies, CATL has increased cooperation with international automakers such as Ford, Fisker, Hyundai, Volkswagen, Daimler Trucks, Tesla, BMW, and ELMS since 2021. Its international supply speed and overseas capacity release speed are at the forefront of the industry. The release of battery production capacity at CATL's Thuringia base in 2022 will mark a new stage in CATL's international supporting supply.

After winning long-term contracts from PSA Group and Turkish company OTOKAR in Europe, Honeycomb Energy is accelerating the construction of its European factory in line with Great Wall Motor's internationalization strategy. In July 2021, Lyric Robot won the bid for a 16.3399 million euro (about 125 million yuan) lithium battery assembly line order for a European project from Honeycomb Energy, which also indirectly shows that the former's European factory has entered a substantive stage.

Envision Power has reached cooperation with Renault, Nissan, Honda and other international mainstream automakers, and won the Mercedes-Benz EQ series battery order, prompting it to plan to add three new factories in France, the United Kingdom and the United States, and release production capacity in line with the customers' mass production rhythm.

As the exclusive supplier of TOGG's first electric vehicle platform, Farasis Energy expects its procurement demand to be 30GWh in the next seven years, and will jointly build a power battery factory in Turkey with TOGG.

It can be seen that unlike the previous round of Chinese power battery companies obtaining international orders or project assignments, with the implementation of the electrification strategy of international automakers, achieving localized production of power batteries or local matching has become a significant feature of the internationalization of China's power batteries.

It is worth noting that since the beginning of 2022, driven by the pressure of carbon emission reduction and changes in the automotive industry, many international automakers have continuously revised their power battery procurement amounts, electrification investment targets and advancement speeds.

BMW's battery cell procurement volume increased from the original planned 12 billion euros to more than 20 billion euros (about 140.3 billion yuan); Stellantis Group released the "Dare Forward 2030" plan, aiming to sell more than 5 million pure electric vehicles worldwide by 2030; Hyundai Motor plans to invest approximately 19.4 trillion won (about 101.2 billion yuan) in electric vehicle-related businesses by 2030.

At the same time, Ford Motor Company independently split off its electric vehicle business and added another $20 billion (about RMB 127.3 billion) on top of its previous $30 billion investment; the Renault-Nissan-Mitsubishi Alliance released its 2030 development roadmap, planning to invest 23 billion euros (about RMB 161.8 billion) in the field of electrification in the next five years......

There is no doubt that the adjustment of international automakers' goals for promoting electric vehicles will stimulate the continuous growth of power battery demand and the substantial expansion of production capacity. Under the huge market demand, the internationalization process of Chinese power battery companies is expected to be further accelerated.

Technological innovation drives global change

Leading global technological innovation is also helping China's power batteries to "speed up" their internationalization.

As some of the companies that have built factories overseas the fastest, Chinese power battery companies such as CATL, CATL, and Envision Power have begun to demonstrate increasingly strong innovation capabilities, leading new energy vehicles into a new stage of development from battery technology to product production.

From the perspective of product technology, CATL will launch the third-generation CTP battery technology in April, which is called "Kirin Battery" internally. The energy density of LFP and ternary system will reach 160Wh/kg and 250Wh/kg respectively. The energy density is 13% higher than 4680.

At the same time, CATL's 1000km higher energy density heat-free diffusion technology will be mass-produced in 2023.

The product concept of Honeycomb Energy's short-blade battery is to adopt a long and thin design with high compatibility, adapt to different scenarios and platforms, and meet the needs of high assembly rate, low cost and high safety.

Its short-knife battery has also passed a series of safety performance tests such as overcharging, impact, vibration, falling, and short circuit, and has successfully passed the puncture test.

From the perspective of the product production process, facing global competition, Chinese power battery companies are also initiating a zero-carbon transformation in power battery production.

For example, CATL has established a sustainable development committee, which takes carbon emissions of materials as an important consideration when purchasing, and will continue to strengthen its requirements for its suppliers in terms of material carbon reduction. At the same time, it has also stepped up the implementation of energy-saving projects, increased photovoltaic power generation, and conducted training on carbon footprints in the supply chain. 

The power battery factories planned and built by Envision Power in the UK, France and the United States all adopt Envision's zero-carbon technology solutions, which will not only meet Europe's strict carbon emission requirements but also help Chinese lithium battery industry chain companies solve Europe's strict carbon emission requirements.

Honeycomb Energy has also announced the creation of an AI smart ecological alliance to improve efficiency, enhance quality and conduct carbon traceability through technologies such as artificial intelligence, advanced analysis and edge/cloud computing. 

Looking at the new round of changes in power batteries, Chinese battery companies have broken through the limitations of traditional technologies, from systematic and continuous technology and product innovation to the implementation of zero-carbon industrial production. This will enable Chinese power batteries to continue to gain a "first-mover" advantage in the internationalization process.