As the EV race speeds up, can BYD battery business close the gap on CATL? KrASIA.
Robin Zeng, CATL’s founder and chairman told Bloomberg in June 2020.
We’re getting along well, and he’s a fun guy.
He was referring to Elon Musk, founder and CEO of Tesla, one of CATL’s biggest clients. And since the two signed a deal to use CATL batteries in Tesla’s vehicles in February 2020, why wouldn’t Zeng and Musk be getting along in what has been a massively lucrative relationship?
Fujian-based Contemporary Amperex Technology Co, better known as CATL, currently dominates the global EV battery market, ahead of LG Chem, Panasonic, and BYD Auto.
The recent deals signed with Tesla, plus record sales growth registered by CATL’s customers Nio, XPeng, and Li Auto, have sent the company’s shares up 62% this year, while CATL’s market cap rallied past USD 200 billion from around USD 70 billion just a year ago. Zeng is now richer than Alibaba’s founder Jack Ma, with a net worth close to USD 50 billion.
But the battery industry is dynamic, with no place for complacency. While CATL is currently leading, other battery producers are vying for market share as demand grows in China for electric cars. Batteries are the single most expensive part of an electric vehicle, representing about 30% of the total cost of a car, according to Bloomberg.
BYD Auto, China’s largest EV maker and the country’s former leading battery producer, looks like one of the most serious challengers to CATL. The Xi’an-headquartered carmaker, backed by Warren Buffet, has batteries at the heart of its business, producing them for a broad range of devices such as cellphones, laptops, and grid-connected energy storage systems.
Yet contrary to CATL, which from the beginning focused on manufacturing batteries for other EV clients, BYD had exclusively placed its lithium-ion batteries on its cars. From this year, however, BYD has moved to increase the scale of its battery business by supplying other companies, and it has already struck deals to supply automakers like FAW Group, BAIC Group, Toyota, and Daimler.
With a host of tech giants throwing their weight into the EV race, including Apple, Xiaomi, Huawei, Tencent, Didi, and Alibaba, China’s largest two battery producers are set for a new round of competition for supplier contracts in the next era of EVs. However, unlike other industries, battery supply deals are usually not exclusive, with plenty of overlap among EV customers.
READ the latest Batteries News shaping the battery market
Highlight:
- With global tech giants getting into EVs, China’s two largest battery makers are vying to supply the next generation of EV projects.
As the EV race speeds up, can BYD’s battery business close the gap on CATL?, July 25, 2021
