Chinese Battery Maker CATL Says its Ready to Build a 1.2 Million Mile EV Battery with a 16 Year Lifespan
One of the biggest challenges for automakers is building electric vehicles that can deliver ranges of over 400 miles with batteries that last the lifetime of the vehicle. Unlike gas-powered vehicles with mechanical engines, electric cars equipped with more reliable electric motors can travel a million miles or more, given that their batteries can last just as long.
Now Chinese battery maker Contemporary Amperex Technology Limited (CATL), says its ready to build an EV battery with an expected lifespan of 1.2 million miles or 16 years before its needs replacement, Bloomberg reported this week.
In an interview at the company's headquarters in Ningde, southeastern China, CATL Chairman Zeng Yuqun says that the company is ready to build it.
"If someone places an order, we are ready to produce," said Zeng to Bloomberg, without disclosing if any contracts for the long-life battery have been signed. The longer life battery is expected to cost around 10% more than the EV batteries being used today, said Zeng.
CATL is one of the biggest suppliers of batteries to the auto industry. The company has already formed a strategic partnership with German automaker Volkswagen to supply the batteries for millions of EVs the automaker plans to build over the next decade.
In addition, an EV battery with a million mile plus warranty could be a big selling point for automakers, luring new customers to switch to fully-electric vehicles that might last much longer than their fossil fuel counterparts.
Electric automakers Tesla for example, the company considered to be the world's leader in the electric vehicle segment, currently offers just an 8 year or 150,000 mile battery warranty for the Model S and Model X, with a minimum of 70% retention of the battery capacity during the warranty period, so CATL's battery can offer much better long-term performance.
In addition, the long-life EV batteries can be used for second life purposes, including being installed in another electric vehicle, or connected to the grid.
Concerns about expensive to replace batteries losing charge retention is one factor holding back consumer adoption of EVs. Last year, Tesla Chief Executive Elon Musk said that replacing the Model 3 battery will cost between $5,000 and $7,000. However, Tesla has steadily improved its battery technology since the Model S was introduced in 2012.
In a Twitter post on April 13, 2019, Musk wrote about the Model 3, "Model 3 drive unit & body is designed like a commercial truck for a million mile life. Current battery modules should last 300k to 500k miles."
Rival General Motors last month said it is nearing the million mile mark with its new batteries.
CATL is Positioning Itself to Become a Major EV Battery Supplier
As the auto industry transitions to electrification, CATL is positioning itself to be a leading global supplier of batteries. The company is pouring money into research-and-development to improve battery technology.
CATL inked a two-year deal in February to supply batteries to Tesla. Previously, Tesla primarily mainly worked with Japan's Panasonic Corp. and South Korea's LG Chem to produce EV batteries. The lucrative deal with CATL followed months of negotiations, with Tesla Chief Executive Officer Elon Musk traveling to Shanghai to meet with CATL's Chairman Zeng.
The CATL batteries will be installed in Model 3 sedans produced at Tesla's new Shanghai factory. The first Model 3s made in China were delivered to customers in January of this year.
Although the coronavirus pandemic is putting a dent in EV sales, demand is expected to rebound in early 2021, said Zeng.
Car buyers holding back during the pandemic is creating pent-up demand that will be "unleashed" starting next year, led by premium electric vehicle models, he said. CATL's other automotive customers include BMW and Toyota.
CATL is building a factory in Germany, which is expected to make more than 70% of BMW's batteries, Zeng told Bloomberg. CATL also works with Volkswagen's Audi unit. Zeng didn't rule out building a plant in the U.S., although CATL has no specific plans for now.
"Our team has made achievements in competing with our global rivals in overseas markets," Zeng said.
According to the 2020 Electric Vehicle Outlook report published by Bloomberg NEF (BNEF), electric vehicles are expected to rebound more from the economic slowdown caused by the coronavirus pandemic than combustion engine vehicles.
Battery-powered cars will grow to be 8.1% of all vehicle sales in China next year, which accounts for the largest share of global EV sales, and to 5% in Europe, BNEF predicts.
"The pandemic may have a lasting effect throughout 2020, but won't be a major factor next year," Zeng said to Bloomberg. "We have great confidence for the long run."
Batteries are the most expensive component of electric vehicles. If CATL becomes a major supplier to the auto industry, the batteries might make up a significant portion of the company's future profits.
Shares of CATL have advanced about six-fold in Shenzhen since its IPO in 2018, giving the company a market value of about $47 billion. Tesla's market cap topped $187 billion this week after its stock price exceeded $1,000 for the first time in company history. The surge in Tesla's shares makes it the one of the world's most valuable automakers, right behind Toyota.
Zang said a "trigger point" for electric cars will occur once they overtake gasoline-powered vehicles around 2030-2035.
By that time, CATL might become the world's leading battery supplier.
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