Translation
Outing BaiRen Media, a subsidiary of the auto industry, focuses on the evolution of the automotive travel industry chain.
Author: Roomy
Just before Meng Wanzhou returned to China, Xu Zhijun once again emphasized that Huawei does not produce cars and definitely stated that the choice between producing cars and not producing them is not a matter of right or wrong, but an outcome of success or failure. Although Yu Chengdong has a passion for car production, he has only one vote and it is not useful.
Though time flies, after 1028 days, over countless mountains, the incident with Meng Wanzhou has come to a temporary end, but the Huawei war is still ongoing. Despite passing the darkest hour, Huawei still has their survival tool of “stop-valve”, swinging over their head.
The chip war still continues and another dilemma arises after the chip shortage – “battery shortage”. The wealthy can either build their own battery factories or invest in battery-related enterprises, but for those whose budgets and camps are smaller, they can only search for suppliers and queue up to wait.
The law of the jungle prevails in the business world.
So, I once again understand what Xu Zhijun meant by saying that “the choice between producing cars and not producing them is not a matter of right or wrong, but an outcome of success or failure”.
Huawei Does Not Want to Produce Cars, but Geely Wants to Produce Mobile Phones
1028 days and 14 hours flying.
“The boat is late, but eventually it will sail.” Meng Wanzhou arrived safely in Shenzhen. Wearing a red skirt and walking down the red carpet, she gave a short speech and choked up, “Homeland, I am back!”
Thus, the Meng Wanzhou incident has come to a temporary end, and she will continue to serve as the CFO of Huawei. This means that the global communications industry leader temporarily broke through numerous blocks.
However, in the future, the United States will not easily let Huawei off the hook, and their business will continue to be obstructed.
On the day before Meng Wanzhou returned to China, the rotating chairman of Huawei, Xu Zhijun, publicly stated at the Global Multi-Connection Conference, “After being sanctioned, we have been relying on stockpiling chips to survive.”
However, this does not affect Huawei’s only desire, which is to be an “excellent supplier”. At the Global Multi-Connection Conference, Xu Zhijun reiterated that Huawei only wants to be a car parts company – the kind valued at $50 billion – and they will not give up their mobile phone business, nor produce cars!
“Why produce cars?”
“If we can create a $50 billion car parts company and extend our ICT (Information and Communication Technology) technology domain, it would be profitable. Isn’t a $50 billion car parts company valuable?”
In response to the incessant questioning from outsiders, Xu Zhijun candidly stated, “There is no why. We know where our expertise lies, or we know how to choose our future.”Nowadays, intelligent cars are similar to early-stage smartphones, and everyone can make intelligent cars just like kicking a pile of sand.
“Nobody knows who will come out alive.”
No one can see how the final chapter of the game will be written, and the right and wrong choices cannot be measured right now. However, one ancient commercial law is clear: everything successful is right, and everything failed is wrong.
Although Xu Zhijun also ridiculed “not making cars,” which made Yu Chengdong (Huawei’s consumer business leader) dissatisfied, Yu Chengdong, who is responsible for Consumer BG, wants to make cars. However, unfortunately, Yu Chengdong only has one vote.
While saying “it’s up to you to make cars or not,” Xu Zhijun is setting another flag: “Huawei will not give up its smartphone business, nor will it sell its smartphone business. We are working hard, very hard, to bring the smartphone business back on track at the right time. This is our goal.”
Just like when Huawei entered the smartphone field, Huawei will not be blind when it comes to “making cars.” Even if Xiaomi, Baidu, Apple and other tech companies that compete with Huawei enter the car-making industry, Huawei must remain patient.
Because Huawei still has many problems to solve, such as chip shortages, weak C-end market, etc. These are the difficulties that cannot be dispelled even with the joy of Meng Wanzhou’s return to China. The game in the field of science and technology between China and the United States and the chip war will continue.
It is understandable that Huawei only wants to be a car parts supplier for now. The fact that major technology companies are entering the car-making and self-driving fields is also a trend, after all, the future technology war will require both software and hardware. So, recently, a traditional automaker is preparing to go both ways.
Recently, there were rumors that Geely wanted to cross the boundary and make mobile phones. Some described this as a traditional automaker finally not being able to sit still and launching a counterattack on the automotive Internet ecosystem.
As Xu Zhijun said, digital development depends on digital technology, and the vitality of digital technology lies in continuous innovation. Today, the number of HarmonyOS system users facing the C-end has already exceeded 100 million, and the Euler system facing the B-end has also entered a new stage.
This is indeed a significant threat to future car companies’ development of technology ecosystems and involves the struggle for the right to speak in the software era. Geely’s cross-border mobile phone production is considered to be an attempt to resist external interference and expand its own automotive ecosystem.
“At present, we do not have any news that can be disclosed to the public.” It was denied, but not entirely.Actually, there are some signs of making phones, which can be peeped through Geely’s layout.
Besides the main business of automobiles, Geely Holding Group is also involved in industries such as flying cars, aerospace satellites, etc. At the same time, it lays out intelligent car machines through Hubei Yikatong Technology Co., Ltd. and proposes the concept of “online all the time” based on global online cloud services for mobile phones and car machines.
Connect them and think carefully.
Who suffers from the battery crisis?
If the return of Huawei’s princess Meng Wanzhou does not mean the end of the US sanctions against Huawei, the chip war and shortage are still a Damascus sword. Then, in the booming car manufacturing industry, another Damascus sword has slowly been suspended.
Earlier, due to chip shortages, many automakers including Volkswagen, Ford, and NIO were forced to stop production, and delayed delivery of models was ubiquitous. Toyota reduced its annual sales target by 300,000 vehicles, and the like. This wake-up call has already made automakers feel anxious.
However, more worrying things are becoming a reality. The “battery crisis” will make new energy vehicles fall into another dilemma.
“The chairman of SAIC needs to specifically find CATL to lock in production capacity,” which adds a little bit of anxiety. Yang Hongxin, Chairman and CEO of CATL, complained in May that “I really can’t stand customer urging for delivery.” On the one hand, there is a surge in demand in a short period of time, and on the other hand, there are only a few leading battery suppliers in the market.
Baidu and Xiaomi have a huge momentum to build cars, and mass production may be just two or three years away. Traditional automakers are transitioning to new energy at a flying pace. They have ambitious goals, such as reaching 800,000 or 1 million vehicles within three years, and selling 3 or 4 million vehicles by 2025…
Behind the ambitious goals is the increasing demand for batteries, which may even exceed the load. Even if the production line operates 24 hours a day, it is difficult to meet its demand. Yang Hongxin, Chairman and CEO of BCL Energy, once said that the production capacity gap of power batteries is between 30% and 50%, and the tension of the gap cannot be alleviated by 2025.
“When the chip shortage ends, the main supply shortage faced by the electric vehicle industry will come from batteries. The production capacity of batteries in the next few years may be tight because expansion takes time.”
This is similar to the conclusion of a global research report released by Bank of America. According to model calculations, the supply of EV batteries will face a risk of depletion as early as 2025, and it is estimated that the utilization rate of production capacity of various suppliers will basically exceed 85%. Some institutions predict that the power battery supply gap will expand to about 40% by 2025, and the “battery crisis” may further intensify between 2026 and 2030.As electric vehicles surge in popularity, the “battery shortage” epidemic will spread fast and hard.
Elon Musk expressed a bit of pessimism at the January 2021 earnings call, stating “even with our cell suppliers going at maximum speed, we’ll still have a huge mismatch between cell production and vehicle production in 2022 and later years… and that’s a fundamental scaling limitation”.
Currently, the top five or six battery manufacturers are already operating at full capacity. When supplies are limited, society becomes more pragmatic and the limited production lines naturally favor strong and dominant enterprises and models that are tightly bound to the battery supplier.
Battery anxiety has spread to the upstream industry. Multiple suppliers such as Contemporary Amperex Technology, Guoxuan High-Tech, and SVOLT Energy Technology have announced expansion plans, which will increase their production capacity almost tenfold compared to the power battery installed in vehicles this year.
“Currently, it is actually the battery suppliers who hold the bargaining power,” bluntly stated one industry insider. Host factories are in a weak position — they are at the mercy of suppliers whether they consider costs or the stability of the supply chain.
For those automakers with a high demand for batteries or deep pockets, self-built battery factories are often the way out. Volkswagen, Tesla and Nio have all chosen to “save themselves” by building their own battery factories. In addition, powerful host factories also often choose to establish joint ventures with battery suppliers.
All in all, the game is still won with a combination of deep pockets and resources.
Where did Great Wall Motors get the courage to say “never”?
Given Wei Jianjun’s determination to maintain control over technology, it’s even less likely that he would “wait in line outside of CATL (Contemporary Amperex Technology)” for batteries. Therefore, Great Wall Motors, which has strong funding, a resolute transformation strategy, and an ambitious goal of producing 4 million vehicles by 2025, decided to build its own batteries – Da Ya Power Battery.
Previously, Great Wall has always claimed that Da Ya Power Battery would share patents with its comrades in arms. However, the specific details of Da Ya Power Battery remain unknown, as there has not yet been a model that has undergone load testing, so things like range and safety are still unknown.
“Da Ya Power Battery will be applied to new energy vehicle models under Great Wall Motors in 2022, and the first model to debut will be the Salon brand. Over 60 patents will be opened to the public for free. In 2022, the technology of Da Ya Power Battery will be widely applied to the new energy series under Great Wall Motors.”, said Cao Yongqiang, the head of Great Wall Motors’ power battery design department, on September 24th.“`
Da Yu Batteries, in fact, does not refer to a battery with a new chemical system developed by Great Wall Motors, but rather refers to the name of an entire battery system, with the main design idea being “turning blockage into smooth flow”.
Based on the philosophy of “Da Yu manages water flow, smoothness beats blockage”, the core technology principle of “control + guide = flow” is adopted, a 4-layer and 5-dimensional safety matrix is built, with 8 major innovative designs including thermal isolation, bidirectional rectification, thermal flow distribution, directional deflagration, high-temperature insulation, automatic fire extinguishing, positive pressure hypoxia prevention and intelligent cooling, covering various areas such as heat source suppression, isolation, cooling, and discharge to ensure that the batteries do not catch fire or explode after heating up.
Cao Yongqiang’s interpretation is succinct, stating that the traditional “blocking” control technology of battery cells has been changed, and the gas and fire flow generated after thermal runaway is safely directed out of the battery pack according to the designed channel.
After getting the design idea, how is it implemented?
In terms of technology, Great Wall Motors has implemented it through 8 core technologies including thermal isolation, bidirectional rectification, thermal flow distribution, directional deflagration, high-temperature insulation, automatic fire extinguishing, positive pressure hypoxia prevention and smart cooling.
The goal of Great Wall Motors is to ensure the safety of the battery pack by utilizing the safe integration technology of Da Yu. “Never catch fire, never explode” is the promise made by Great Wall Da Yu batteries.
Two “never”s, I don’t know whether to say that Great Wall Motors is confident or fearless. Especially at a time when the number of vehicle fires and explosions is increasing, it’s a bold promise to make.
“What if it backfires?”
In fact, Great Wall Motors is not the first company to focus on “fire” and “explosion,” and BYD’s Blade Battery has also been loudly promoting “safety is the greatest luxury of electric cars.” The subsequent collision-induced fire incidents have also caused BYD to suffer from public opinion attacks and have to repeatedly demonstrate the safety of the Blade Battery.
In addition to Great Wall and BYD, Guangzhou Automobile Group’s Aion new generation power battery safety technology, CATL’s “never catch fire” 811 battery, and Xinwangda’s “only smoke, no fire” power battery, among others, have also come up with non-fire solutions.
The safety of electric vehicles has always been a concern to consumers. The current mainstream view in the industry is that no battery can be 100% safe.
But only Great Wall Motors dares to say “never”.
Well, that takes some courage.
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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.