Power battery offensive and defensive battle | Fighting for 2025, the war is heading to a new track

Looking at the new energy vehicle industry, whether it is policy directions, market data or future layout trends within the industry, they all verify the development prospects of the new energy vehicle and power battery industries.

Unlike industry insiders who have confidence and aspirations for the new energy market, most consumers are still on the sidelines or even skeptical about new energy vehicles.

The "China New Energy Vehicle Market Insight Report 2021" jointly released by the China Electric Vehicle 100 Forum and other organizations shows that when people buy new energy vehicles, they are most concerned about the five major factors of battery life, appearance, safety, cost, and charging, and the "battery life" factor ranks first.

If the conventional performance of traditional fuel vehicles is used as a benchmark, when people are faced with the increasingly declining range of new energy vehicles, hard-to-find charging stations , long waiting times for charging, and even occasional safety incidents of spontaneous combustion, it is difficult to have higher confidence in this fledgling consumer product.

The energy density of the power battery pack of new energy vehicles and the energy efficiency of the whole vehicle are the key to competing with the performance of fuel vehicles. The power battery has also become the key to make up for the shortcomings of new energy vehicles and win the hearts of users.

User demand, market demand, and the increasingly fierce competition in the field of new energy power batteries have caused this battery-themed competition to spread to new tracks.

A person familiar with CATL told EoAuto that the current cooperation between global automakers and CATL is based on orders CATL won in 2016 and 2017. At present, everyone is working hard to win orders after 2025.

"In this process, the next generation of technology reserves, mass production capabilities , and localization capabilities have become the key to this round of international competition and will also determine how far the future road can be paved."

Chinese manufacturers take the lead

Unlike other industries, since power batteries were originally a sub-segment of lithium batteries, and China had formed a complete manufacturing industry chain in the 3C lithium battery field very early on, when a new round of automotive power battery wave came, China appropriately grasped the first-mover advantage of power batteries.

In the field of power batteries, China has a home advantage in manufacturing. Therefore, Chinese power battery manufacturers have ambitions to go global at an early stage of industrial development.

In the first quarter of 2022, the penetration rate of new energy vehicles in China reached 19.3%, and the penetration rate of pure electric vehicles reached 16.7%. According to industrial development practices, new energy vehicles, whose penetration rate is about to reach 20%, are about to enter a stage of explosive and rapid growth.

The global carbon neutrality goal is undoubtedly the biggest driver of the electric vehicle market. With the growth of sales, the market pie is expanding, and upstream industry players of global electric vehicles are collectively entering the blue ocean market.

The power battery segment, which accounts for a large proportion of the total vehicle cost and has insurmountable technical barriers, is also following the rule that the bigger the water, the bigger the fish.

A variety of species, each with its own competitive strength, have grown in this expanding "reservoir," and competition will soon reach a fever pitch.

For the two power battery manufacturers with the top two market shares in the world, CATL and LG Energy Solution, the competition between the two for fixed-point orders from global automakers after 2025 has reached a state of almost "close combat".

Although LG Energy Solution once failed in China due to battery safety issues, its inherent advantages and development momentum in overseas markets forced CATL to be on high alert.

On January 27, 2022, LG Energy Solution was listed on the Korea Stock Exchange, hoping to use capital to expand production capacity and layout the market, catching up with CATL, which has a first-mover advantage in capital. On March 24, LG Energy Solution said it plans to invest approximately US$1.4 billion to build a second wholly-owned power battery factory in Arizona, the United States.

Based on the inherent advantages of Korean companies in overseas markets, LG Energy Solution has won over overseas car manufacturers such as Tesla, Germany's Volkswagen, and the United States' General Motors. Orders and production capacity have progressed in tandem, which has also prompted CATL to put the construction of a factory and expansion of production in North America on the agenda.

Although CATL remains highly vigilant against LG Energy Solution, it has a historical advantage in the process of expanding its overseas business.

First of all, CATL’s predecessor, ATL (Amperex Technology Limited), was a lithium battery manufacturer with overseas customers such as Apple, Microsoft, and Nokia as its main customers. After it was wholly owned by Japan’s TDK Group, ATL was also injected with the genes of Japanese precision manufacturing.

In the early days, almost all departments of CATL, including industrial manufacturing, quality, and after-sales, were built to match the BMW model. CATL invited engineers from BMW to come to China for hands-on "teaching", and in terms of corporate structure, production and manufacturing, it also has a German style.

It is precisely these "hybrid" genes that have enabled CATL to accumulate "college entrance examination papers" from all over the world throughout the years in the process of expanding its overseas business, thus acquiring "answering skills" that most Chinese companies do not have.

Three "innovations" of power batteries

In the field of power batteries, the optimal solution to competition is differentiated innovation.

For power battery manufacturers that rely on major breakthroughs in single-point technology to achieve progress, and for power battery giants that have already achieved a broad global presence, innovation can have completely different paths.

In the field of power batteries, Qingtao Energy has relied on more than ten years of experience in the field of solid-state batteries. In recent years, it has successively received strategic support from three automobile companies, namely BAIC, SAIC and GAC, and has become a partner of local automobile companies in the field of solid-state batteries.

Li Zheng, co-founder and general manager of Qingtao Energy, told EoAuto that innovation in power batteries can basically be divided into three levels in terms of technology.

The first is material system innovation, which is the core innovation of power batteries, such as solid-state batteries and sodium-ion batteries.

The most important advantage of sodium-ion batteries is their cost advantage. Using them to replace lithium iron phosphate can reduce the cost of positive electrode materials from 40% of the entire vehicle to 17%. If the positive and negative electrodes of sodium-ion batteries are converted from copper foil to aluminum foil, further cost savings can be achieved.

However, the low energy density of sodium ions limits their application to low-speed vehicles. If they want to be used in a more sophisticated way, they need to be combined with other metals to complement each other's advantages so that they can "shine and generate heat".

The second is process innovation, such as the dry electrode technology advocated by Musk. The one-piece die-casting technology included in this innovation makes its battery still a liquid lithium battery, but the change in process procedures can help improve the production qualification rate of the battery and reduce costs.

The next is system integration innovation, that is, innovation in battery shape and grouping. A typical innovation is BYD's blade battery, which is thinner and flatter, and can help improve the overall safety and other performance of the battery pack, while also bringing a lot of possibilities for pack innovation.

These three levels of innovation have a logical relationship in terms of the degree of disruption and can complement each other.

The shallower the innovation is at the technical level, the shorter its disruption cycle is and the faster it can be realized. Although innovations at a deeper technical level require higher costs, they are not easily disrupted by other innovations.

Li Zheng frankly said that in his eyes, there is no distinction between good and bad innovation, and each company has different positioning and the disruption cycle it can bear. However, if the innovation of the entire industry forms a trend, and manufacturers can learn from each other, the overall level of the power battery industry will be improved.

Qingtao Energy, where Li Zheng works, has been committed to the innovation of the material system of power batteries - the research and development of solid-state batteries since its establishment in 2014. Regarding power battery innovation, Li Zheng and his team have also explored an industrialization path that is suitable for it.

2014 was a watershed year. Before that, Li Zheng and his team had been based in university laboratories, conducting horizontal research projects in cooperation with a Japanese car company and completing the demonstration of solid-state battery technology route.

After Qingtao was founded in 2014, the entire team basically determined the technical direction of solid-state batteries. By drawing on previous manufacturing experience, while further iterating the technology, it further explored industrial capabilities and commercialization.

If small and medium-sized manufacturers represented by Qingtao Energy are more seeking differentiated breakthroughs in highly segmented fields such as solid-state batteries, then giant manufacturers like CATL use computing power, algorithms and data to form a unique R&D and innovation closed loop based on electrochemistry.