CATL, founded a mere 12 years ago, has swiftly secured a commanding 37% share of the global EV battery market. Its low-cost batteries, which power one in three electric vehicles worldwide, have made the coastal city of Ningde in eastern China a mecca for auto executives seeking affordable next-generation car solutions.
Backed by Warren Buffett, BYD (Build Your Dreams) has also carved a significant niche, cornering almost 15% of the battery market. Not only does BYD power its own rapidly expanding EV brands, but it also supplies rival car manufacturers in China.
Both CATL and BYD have achieved a remarkable feat by reducing capital costs in their factories to less than $60 million per gigawatt hour of batteries produced. This cost efficiency has been a key driver in their global dominance, especially when compared to the manufacturing costs of their Korean and Japanese counterparts.
The Chinese firms specialize in lithium iron phosphate (LFP) battery technology, which, while offering shorter driving ranges than other technologies, is more affordable and particularly suited for the driving behaviors of the average Chinese EV consumer making shorter trips within cities.
To challenge this Chinese supremacy, foreign competitors are focusing on emerging technologies. South Korea’s LG Energy Solution, SK On, and Samsung SDI are specializing in lithium-ion batteries with NMC cathodes (lithium, nickel, manganese, and cobalt), offering longer ranges and higher performance. However, these technologies tend to be costlier and present safety concerns.
Emerging technologies like solid-state batteries and sodium-ion batteries also offer potential for disruption. These technologies promise improved capacity, charging times, and safety features. Toyota’s recent breakthrough in solid-state technology has ignited interest, though critics underline the need for more transparent research data.
The question of whether anyone can challenge China’s battery industry supremacy extends beyond technological competition. Factors like trade policies, manufacturing incentives, and environmental concerns play pivotal roles. President Joe Biden’s push to cut US reliance on China and incentivize local manufacturing through subsidies could alter the landscape, as could the willingness of other countries to establish trade barriers.
With CATL and BYD’s formidable positions, the global EV battery market is currently a fierce battleground, and the outcome will shape the future of transportation worldwide.
Source: Financial Times
