Soft pack batteries are "finished"? Global automakers will turn to square batteries!

SNE Research, a Korean new energy vehicle battery market research organization, held the two-day NGBS 2022 (Next Generation Battery Seminar) at COEX in Seoul from April 13 to 14.

At the meeting, James Oh, executive vice president of SNE Research, revealed that the company recently held a meeting with Korean battery companies. Global automakers currently prefer square batteries, so they are urging Korean battery partners to invest more energy and resources in the research and development and production of square batteries to replace the current soft-pack batteries.

Of course, the change in technology route is based on the premise that Korean battery companies and car companies negotiate a new round of orders for 2024-2025.

In addition, James Oh also revealed that Korean battery prices are very likely to rise by 2024 or 2025. Although Korean battery companies have not yet disclosed how much the price will increase, he predicts that companies using lithium, nickel, cobalt and manganese may increase the price of battery packs by 40% before 2025.

Soft pack VS square

Lithium batteries are classified according to packaging form, mainly into three types: cylindrical batteries, square batteries, and soft-pack batteries.

Domestic and foreign battery companies have different layouts of the three packaging forms of cylindrical, square and soft-pack: Japan's Panasonic mainly takes the cylindrical route; South Korea's LG Energy Solution and SK On mainly take the soft-pack route, and SKI mainly takes the square route; Chinese companies such as CATL and BYD mainly take the square route.

In comparison, soft-pack batteries are less safe than square batteries. The former are more likely to produce internal stress and expansion force due to expansion, causing changes in the internal structure of the battery.

At the same time, Liu Jincheng, chairman of Yiwei Lithium Energy, just revealed not long ago: "The system cost of soft-pack batteries is two to three thousand yuan more expensive than other battery systems."

In general, it is reasonable for car companies to prefer square batteries, which also means that square batteries are likely to become one of the main technology routes worldwide. Does this mean that soft packs will soon be replaced by square batteries? What impact will it have on global battery companies?

Global car companies using soft pack batteries

Although Korean battery companies are urged to pay more attention to the research and development and production of square batteries, it does not mean that soft-pack batteries are "dead". We can find out from three aspects: domestic car companies, international car companies and battery companies.

As for domestic automakers, mainstream automakers began to increase the supply of soft-pack batteries in 2021. Among them, BYD began to use soft-pack lithium iron phosphate battery modules (called "small blades") in DMI hybrid models, that is, the battery cells are packaged in soft packs and the blade batteries are packaged in hard aluminum shells.

At the same time, in a public event in November 2021, BYD made it clear that the "big blade" batteries of pure electric vehicles in 2022 will also gradually adopt the "soft pack + hard shell" secondary packaging solution.

In addition, NIO began to use soft-pack batteries in 2021, and the number of models equipped with soft-pack batteries by Xpeng Motors is also increasing. One of the versions of Lantu Motors' first MPV "Lantu Dreamer", which started pre-sale on April 7 this year, is equipped with a ternary soft-pack battery provided by Farasis Energy .

As for foreign car companies, many hot-selling models of car companies including Daimler, Mercedes-Benz, Nissan, Renault, Volkswagen, Hyundai, Volvo, etc. are also mainly powered by soft-pack batteries.

Therefore, the replacement of technology routes will not happen overnight, and soft packs will not be replaced by square packs soon. Both car companies and battery companies need a buffer transition period.

Impact on global battery companies

The above has introduced the packaging technology routes of domestic and foreign battery manufacturers. Although they all have their own main routes, they are not all "rigid" and unchanging. After all, a rich product range can better adapt to diverse and changing market demands.

Chinese battery companies

Although CATL mainly focuses on the square route, it has also begun to focus on the layout of soft-pack batteries. BYD's large blade + small blade adopts the "soft pack + hard shell" secondary packaging solution.

Guoxuan High-tech has also begun to focus on the layout of soft-pack batteries. Last year, Honeycomb Energy unveiled its passenger car hybrid L400 product, which uses a lithium iron phosphate battery solution. The industry speculates that it also uses a packaging mode similar to "soft pack + hard shell".

Another company that cannot be ignored is Farasis Energy, the "king of soft-pack batteries". Its future product planning will still use ternary soft-pack batteries as the main technical route. Its current product research and development focus is on the next-generation ternary soft-pack high-nickel battery (ie, semi-solid-state battery) and the 800VTC super-charging and super-pressure technology platform.

Korean battery companies

Currently, Samsung SDI is the only Korean manufacturer with the production technology for square batteries, and the current single cell energy density is about 220-250Wh/kg. Its capacity expansion in 2021 has become more active, and it will increase investment to expand battery production capacity in Xi'an, China, Malaysia and Hungary, and plans to build a third standard square cell battery plant.

SK On (SKI's battery subsidiary) focuses on the production of soft-pack batteries, but at the beginning of this month, according to Korean media reports, industry insiders revealed that it has completed the research on square battery equipment and production lines. The company plans to establish a trial production line within this year and then invest in large-scale mass production.

LG Energy Solution is still focusing on the soft-pack route, but does not rule out the possibility of exploring the square route. After all, it has begun to deploy lithium iron phosphate batteries last year and is expected to build a pilot line as early as this year.

Japanese battery companies

Panasonic mainly focuses on the cylindrical route and has previously been supplying Tesla alone , with a conservative willingness to develop customers. Since 2020, Tesla has successively introduced LG Energy Solution and CATL, and Panasonic's share in Tesla has gradually been eroded. When Tesla's share decreased, there were no other customers to make up for the lost market share.

Panasonic then cooperated with Toyota to build a factory and produce square batteries. However, there is no more public information about the joint venture factory.

It is not difficult to see that global power battery companies are basically building diversified technology routes to adapt to the needs of OEMs, whether it is packaging form, material route, or final product form.

In terms of packaging form, soft-pack batteries and square batteries have their own advantages and disadvantages. Soft-pack batteries can be designed with different capacities and sizes, and are flexible in application, but they are more prone to swelling than square batteries. In addition, soft-pack batteries and square batteries also face a common problem, that is, the product shapes and specifications are different, and no consistent development path has been found.

In this regard, it is not yet to the extent that square batteries will replace soft packs, but it also reveals an important guide to the industry: global automakers may prefer square batteries in the future.