On July 10th, Honda and Contemporary Amperex Technology Co. Limited (CATL) signed a comprehensive strategic cooperation agreement on new energy vehicle power batteries.
This strategic cooperation will cover the joint development, stable supply, and recycling of power batteries.
Key points of this cooperation:
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The two parties will cooperate on the joint development of new energy vehicle power batteries and the joint research of future basic technologies.
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CATL will provide stable power battery supply to Honda.
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The two parties will explore cooperation in battery recycling and reuse in the future.
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Honda will participate in CATL’s non-public issuance and subscribe to CATL’s shares.
CATL Teams Up with Honda
From this cooperation, it can be seen that CATL has officially become a power battery supplier for Honda cars.
The competition in China’s power battery market is far from over. Previously, Volkswagen invested about €1.1 billion to acquire Guoxuan Hi-Tech, and many insiders believe that Guoxuan’s relationship with Volkswagen is likely to change the current domestic power battery industry structure.
It seems that it is not so simple now.
For foreign automakers who want to move faster and better in China’s new energy vehicle market, the best way is to have a stable and controllable battery supply system. If they want to further control costs and customize batteries to meet their own needs, the best way is to have a battery company.
Volkswagen chose to acquire Guoxuan Hi-Tech, while Daimler spent CNY904.5 million to subscribe for about 3% of shares in Farasis Energy to address future power battery supply issues in the Chinese market.
This undoubtedly adds uncertainty to China’s power battery field. BYD’s batteries can be self-sufficient (after all, it has vehicle business), Guoxuan Hi-Tech has Volkswagen, and Volkswagen expects to sell 1.5 million new energy vehicles by 2025. Farasis Energy, linked to Daimler, is temporarily stable in the market.
In contrast, although CATL is still the number one enterprise in China’s power battery ranking, with cooperation partners involving major domestic and foreign car companies, there is no deeply tied automaker. There will still be potential competition risks for CATL in the future.
Honda’s purchase of CATL’s shares not only secures CATL as a client, but also signals to the market that CATL still has huge advantages in China’s power battery field.
About Honda’s Purchase of CATL’s Shares
Honda will participate in CATL’s non-public issuance of shares and its shareholding will be approximately 1%.
By investing in shares, Honda will become an important strategic partner of CATL. CATL will provide Honda with power battery solutions with market competitiveness and overall life cycle cost advantages and maintain stable supply.
The funds obtained from the non-public issuance of shares will be used for CATL’s power battery research and development upgrades and capacity expansion projects.The two parties will drive the global electrification process through technical cooperation and a strong competitive battery supply system.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.