A Look at the Asian Companies Looking to Dominate the Global EV Battery Market
Although electric vehicles make up just a small percentage of all cars on the road, automakers are gearing up to build millions of EVs over the next decade and Asian battery suppliers are lining up to secure lucrative contracts with them.
Currently most of the world's lithium ion batteries are produced by a Asian suppliers. Leading companies include South Korea-based LG Chem and Samsung SDI, China's Contemporary Amperex Technology Co. Limited (CATL) and BYD, as well as Japanese firm Panasonic.
The battery makers are looking to dominate the market for electric vehicle (EV) batteries by expanding their production capacity in Europe, China and the United States.
Some European carmakers, like Volkswagen and BMW are concerned that won't be enough batteries for all the EVs they plan to launch in the coming years.
In November 2018, Reuters reported that Germany earmarked 1 billion euros ($1.2 billion) to support a consortium looking to produce electric car battery cells and plans to fund a research facility to develop next-generation solid-state batteries.
The goal of the investment is to reduce the dependence of German carmakers on Asian battery suppliers, as well as protecting German jobs at risk from the shift away from combustion engines. Some of these job cuts have already been announced.
Last week, Audi announced it was reducing its workforce around 10% by 2025 in order to save money to fund the development of new electric models.
Here is a quick look at some of the world's leading EV battery makers, their automotive customers and expansion plans.
CATL is the world's biggest EV battery maker. Its customers include automakers Volkswagen, Daimler, Volvo and Japan's Toyota Motor Corp and Honda Motor Co.
CATL emerged as a major player in China's battery market boosted by Beijing's policy of only subsidizing vehicles equipped with Chinese-made batteries in the world's biggest EV market. However, Beijing is phasing out EV subsidies next year.
CATL is building its first overseas plant in Germany and is considering a U.S. factory, although its U.S. plans are still uncertain.
In Sept 2019, German automaker Daimler announced that CATL will supply lithium-ion battery cell modules for a wide range of Daimler Trucks & Buses' global electric truck portfolio to be introduced in markets from 2021. The batteries will be used for the all-electric Mercedes-Benz eActros, the Freightliner eCascadia and the Freightliner eM2 trucks.
Jia Zhou, President of CATL, said in a statement "CATL is committed to drive new energy innovations throughout the world. Providing highly efficient and reliable solutions to electrify commercial vehicles is an essential element for the overall development of the e-mobility market. Our global partnership with Daimler Trucks & Buses is an important step forward to realize our shared vision of a more sustainable society in the near future."
Headquartered in Ningde, China, CATL has more than 24,000 employees around the world with subsidiaries in Beijing, Liyang (Jiangsu Province), Shanghai and Xining (Qinghai Province), as well as in Munich Paris and Yokohama, Japan. CATL's North American subsidiaries are located in Detroit and Vancouver.
CATL claims to be the world's biggest battery maker.
Japan's Panasonic is the exclusive supplier to electric automaker Tesla. The batteries are built in a joint venture between the two companies at Tesla's Nevada gigafactory which is owned and operated by Tesla.
Panasonic said it's investing around another $1.6 billion in the factory to ramp up production to 35 GWh from its current production of around 30 GWh to meet growing demand, a production goal Tesla chief executive Elon Musk was aiming for by 2020.
However, Panasonic is not following Tesla to China. The company's president Kazuhiro Tsuga told reporters on Friday, November 22 that if Tesla wants a local supply of batteries for its new electric vehicle plant in Shanghai, the U.S. automaker will have to rely on Chinese manufacturers.
Tsuga said Panasonic has "no plans to produce auto batteries in China." Tsuga made the remark at a presentation to investors about the company's business plans.
"It's up to Tesla to decide whether it will use batteries we produce at the Gigafactory or those made by Chinese companies," he said.
In April 2019, Chinese media outlet Nikkei revealed that Panasonic was freezing its investment in Tesla's Nevada Gigafactory. Although the two companies continue to work together, Panasonic was reportedly looking to reduce their interdependence.
Panasonic also produces EV batteries in Japan, China and plans to shift some of its plants to a new joint venture with Toyota. Panasonic also supplies batteries to Honda and Ford Motor Company.
Elon Musk once described Panasonic's technology as "the best in the world."
China's BYD, which is backed by famed U.S. investor Warren Buffett, is also one of the world's biggest EV battery makers, producing them in-house primarily for its electric buses. BYD said last year it was considering cell production in Europe, however the company has not confirmed any concrete plans for a new plant there.
The South Korean firm was an early industry leader in the EV battery space, winning a contract to supply batteries to General Motors for the Chevy Volt hybrid in 2008. BYD also supplies Ford, Renault, Hyundai, Volkswagen and Volvo.
BYD is investing 3.3 trillion won ($2.8 billion) to build and expand production facilities near Tesla's new factory in Shanghai. It has a joint venture (JV) in China with Geely Automobile Holdings, the parent company of Swedish automaker Volvo. BYD is also in discussions with other automakers, including Audi, about joint ventures in major markets.
The firm is considering building a second U.S. factory in addition to its facility in Michigan and is expanding its plant in Poland.
Samsung SDI an affiliate of South Korean tech giant Samsung Electronics, has EV battery plants in South Korea, China and Hungary, which supply customers such as BMW, Volvo and Volkswagen.
Samsung SDI is investing about 1.2 billion euros ($1.3 billion) to expand its factory in Hungary though the EU is investigating whether Budapest's financial support complies with the bloc's state aid rules.
Samsung started production last year on the Hungary plant, which will produce enough batteries for 50,000 EVs a year.
Also this month, Samsung SDI signed a 2.9 billion euros ($3.2 billion) deal with BMW to supply the automaker with EV battery cells. Under the deal, BMW will purchase Samsung SDI-made battery cells from 2021 to 2031.
In Sept, 2019, Germany's Economics ministry said it is making 1 billion euros ($1.10 billion) in subsidies available to help enhance and preserve the automotive value chain in Germany and Europe as the German auto industry produces more electric vehicles. Part of the initiative is to lessen the reliance on Asian battery suppliers.
"Germany and Europe need to develop and build competitive, innovative and environmentally sustainable battery cells," German economy minister Peter Altmaier said in a statement on Friday.
SK INNOVATION CO LTD
South Korean energy company SK Innovation (SKI) has begun production for EV batteries. The company supplies batteries to Volkswagen, Daimler and Kia Motors, as well as Jaguar Land Rover and Ferrari.
SKI is one of the world's biggest petroleum companies and its investing around $3.9 billion to build three plants in the United States, China and Hungary, with a goal of expanding its annual production capacity to 33 GWh by 2022.
SKI currently operates one battery factory in South Korea, with a capacity of 4.7 GWh annually. It set up a joint venture with Chinese automaker Beijing Automotive Industry Corporation (BAIC) in August 2018 and another Chinese partner.
SKI is in talks with Volkswagen about another battery JV and is building a $1.7 billion factory in the U.S. state of Georgia, not far from Volkswagen's Chattanooga, Tennessee assembly plant.
Sourcing Raw Materials for EV Batteries
One major challenge for European lithium-ion battery producers is establishing access to the necessary raw materials, such as nickel, lithium and cobalt, said Bo Normark, industry strategy executive at InnoEnergy to Power Technology, a news website covering the global energy industry.
Normark told Power Technology that China already has an early lead in securing the supply of raw minerals used in EV batteries. China has an aggressive timeline in place and aims to have at least 10% of all cars produced by local manufacturers electric by 2020.
China currently has control of around 85% of global supply of cobalt, a key ingredient in lithium-ion batteries. The metal acts as the cathode stabilizer and helps stop batteries overheating.
"China was smart by securing battery mining resources very early. We could have done the same in Europe," said Normark.
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