Who are affected when car companies make batteries?

Author：He Lun, IIA’s Co-Chief Content Officer, Deputy Head of IIA Academy of Auto

Automobile hot topic Q&A (Ep.241)

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Following Tesla, Volkswagen announced its ambitious battery strategy in a high-profile manner; after the main plant of Guangzhou Automobile Power Battery Co., Ltd. with a total production capacity of 15GWH was officially topped out, GAC Aian continued to release the latest battery technology in a high-profile manner...a series of actions by related car companies Pushing the battery war to a climax, the battery problem has once again become the focus.

Q: In 2020, China’s lithium battery shipments will be 143GWh. Volkswagen, a giant automobile giant like Volkswagen, has joined the battery war. The shots are 6 super battery factories with a total capacity of 240 GWh/year. Tesla plans to do so in 2022. Self-produced 100GWh batteries; Mercedes-Benz plans to deploy 9 battery factories in 7 cities on 3 continents. Geely and Funeng Technology jointly establish a battery plant with a total capacity of 120GWh. BYD's total capacity is expected to increase to 100GWh in 2022. Great Wall Motor's Hive Energy plans to increase the total capacity plan from the original 100GWh to 200GWh by 2025. Domestic and foreign auto giants have deployed their own batteries on a large scale. What do you think?

A: It is inevitable that the vehicle manufacturer will make batteries. The reason is simple. Electric vehicles have become the general trend and become the mainstream model in the future, but the vital battery is completely in the hands of the parts suppliers. The cost of owning the car, the supply of power modules, and the development of battery-related technology, etc. And so on, are all controlled by others, and it's strange that automakers don't want to produce their own batteries.

Q: Those large-scale car companies have the advantage of economies of scale and other resources to build batteries. The problem is not big, but what about the small and medium-sized car companies?

A: They can do whatever they can with battery supplier giants to develop batteries suitable for their models, or simply buy finished batteries, they will always find a way out.

Q: Auto companies produce their own batteries. Is the battery supplier probably the most injured?

A: I don't think so. Battery suppliers want to monopolize battery cheese, it is simply wishful thinking. On the other hand, car companies will not completely self-contain batteries, but will develop brand-specific batteries in joint ventures with high-quality battery suppliers. A small part of the batteries can also be directly customized by suppliers according to their own standards and requirements. Can enjoy the benefits of economies of scale to a certain extent.

For example, although it may not be very appropriate, such as ZF's 9-speed automatic manual transmission, Mercedes-Benz, BMW, Audi, Land Rover, Jeep, etc. are all in use, but they are all based on the performance requirements and manufacturing standards of these brand models. The secondary design and development have been carried out in cooperation with a certain degree of exclusivity. The same is true for Aisin's gearboxes. They all lived happily. Future battery suppliers are expected to do the same. Take a look at how many Chinese and foreign auto companies have started joint ventures and cooperation with the world’s number one battery supplier Ningde Times. Auto companies like Volkswagen are also cooperating with others in joint ventures to develop batteries. It is not difficult to understand.

Q: But BYD is a self-contained battery in terms of batteries. It is in a competitive relationship with other car companies. It is estimated that no one will buy its batteries. In this way, is it difficult for BYD batteries to achieve sufficient economies of scale, no matter how good they are?

A: BYD’s situation is quite special. Although it is a car company, it is a battery manufacturer. It has a solid accumulation of relevant technologies, resources, and experience and lessons. It does have its own uniqueness in batteries. The question is whether BYD can do a good job of its own business model, sort out the relationship between the battery business and the group's OEMs and customers outside the group. Simply put, in addition to the advantages of battery products, you must have a complete set of external customer benefit guarantee systems. Accumulate enough credibility to convince customers that you will never get stuck or look at external customers because of the manufacturer's competitive relationship. Just like Aisin Gearbox, although it is owned by Toyota, it can also make Toyota's rivals rush.

Q: The Ministry of Industry and Information Technology supports the battery swap model and will issue related policies. Some car companies also advocate the use of the battery swap model. In your opinion, what impact will the self-produced battery of car companies have on the battery swap mode?

A: It is absurd to adopt the battery swap mode on a large scale. Not to mention that Carlos Ghosn has long said that this is a "dead end". Musk also abandoned the power exchange model after two years of trial and error. From the perspective of common sense and business logic, the registered capital in 2020 will exceed 5 million yuan. The number of power battery-related companies reached 9,350, and there were 10 companies with a market share of more than 1.3% in the installed vehicle market. There are countless power batteries. Even if calculated based on a small part of them, how big a warehouse is needed for a power station to meet What are the battery replacement needs for different brand specifications, technologies, and standards? How much does it cost?

Forcing automakers to use only two or three types of batteries with specifications, standards, and technical content, or to meet the conditions for battery replacement, but that is deliberately creating a monopoly to prevent the advancement of battery technology. And now battery technology is changing with each passing day, Volkswagen's solid-state battery, Tesla's electrodeless battery, BYD's blade battery, GAC Aeon's magazine battery and other new technologies are about to come out. How do you want to unify specifications and standards? Besides, I don’t want to let myself drive in fear by replacing my own car with a battery that I’ve tossed about in someone else’s car.

Also, one of the biggest difficulties that battery technology needs to overcome is the long charging time. GAC Ion’s upcoming graphene-based battery can be charged 80% in 8 minutes. With the advancement of technology, once the charging time is shortened to almost the same as refueling, everything invested in the battery swap mode today will be completely abolished.

Q: The GAC Aion graphene-based battery you mentioned has been scolded by the media. In particular, an academician of the Chinese Academy of Sciences pointed out in his speech: "If someone tells you, this car can run 1,000 kilometers, it can be fully charged in a few minutes, it is safe, and the cost is very low. Technically speaking, he must be a liar." What do you think?

A: GAC Aion's "80% charge in 8 minutes" refers to the "graphene-based super fast charge battery", and the "NEDC cruising range of 1,000 kilometers" refers to the "silicon negative electrode battery". The two batteries have their own characteristics, which are clearly stated in the promotional pictures, and there is further explanation in the official information draft. Don't confuse the two.