Author: Kenvin
Introduction
In the competition for power batteries in China, Japan and South Korea, Ningde Times has gained the upper hand for Chinese batteries by launching a counter-attack. In the new energy vehicle industry, China has occupied the strategic high ground and has no “core disease”.
Recently, as a leading player in domestic and even global power batteries, CATL of Ningde Times has achieved frequent good news. First, it signed a CTP technology license and cooperation intention agreement with Hyundai Mobis, and then it was rumored to have won an order of up to 45GWh of lithium iron phosphate from Tesla.
In the competition for batteries among China, Japan and South Korea, Hyundai Mobis is considered the backyard of Korean batteries and Tesla is the largest customer of Panasonic batteries in Japan. However, being taken down one by one by Ningde Times in this round of competition shows that Ningde Times, representing Chinese power batteries, has taken the upper hand.
Especially, Ningde Times authorized CTP technology to Mobis. It has been widely rumored in the industry that Chinese power batteries, whose technology is inferior to that of Japanese and Korean batteries, have finally had their moment.
Entering the Core Area of the Korean Supply Chain
More advanced battery business is not about winning a single OEM order, but about entering the core area of their supply chain and changing from “winning points” to “winning faces”.
On October 27, Ningde Times officially announced that it had signed a technology license and cooperation intention agreement with Hyundai Mobis. According to the agreement, Ningde Times will authorize the use of CTP (efficient grouping) technology to Mobis and support Mobis in the supply of CTP battery-related technologies in Korea and around the world.
It is reported that CTP technology has the characteristics of high integration and is a technology that can integrate battery cells into battery packs without modules. Compared with traditional battery packs, CTP batteries can improve volume utilization by 15%-20%, reduce the number of parts by 40%, improve production efficiency by 50%, and reduce the manufacturing cost of power batteries. This is a great temptation for new energy vehicle manufacturers who pursue cost-effectiveness.
In fact, as early as February of this year, foreign media reported that Ningde Times and SK Innovation would become the third batch of battery suppliers for Hyundai’s pure electric vehicle “E-GMP” platform. Among the three models in the third batch, two of them are supplied by Ningde Times, and one model is supplied by SK Innovation. This is also the second time Ningde Times has provided power batteries to Hyundai Motors after winning the second batch of orders for the E-GMP platform with LG.# Bidding Results of Modern Cars’ Power Batteries
SK, LG, and CATL stood out in the bidding for the power batteries of modern cars and Samsung SDI missed out. On the one hand, modern cars adhere to the principle of not putting all the eggs in one basket, which means they adopt a strategy of decentralized procurement of power batteries to ensure a stable supply. On the other hand, LG batteries have caused frequent global accidents, so Modern Cars had to choose a “reliable” battery supplier.
For CATL, the successful entry into the purchasing list of modern cars demonstrates CATL’s power battery technology and international influence. CATL is no longer satisfied with the domestic market and has entered the Korean auto market, threatening the position of Korean power battery companies.
The cooperation between CATL and Modern Mobility is the first external output of CATL’s advanced CTP technology and the first time that Chinese power battery technology has gone overseas, which is of great significance. The saying that “Chinese battery technology is not good enough” has become history.
For both CATL and Modern Mobility, this cooperation will enhance their international market competitiveness and create a new international cooperation mode of the industry. It also expands the global application of innovation technology of CATL’s batteries and seizes a wider international battery market.
Taking Over Japanese and Korean Batteries, Becoming Tesla’s “New Love”
On October 29th, it was reported that based on next year’s sales plan, Tesla has ordered 45GWh of lithium iron phosphate batteries from CATL, mainly for models such as Model 3 and Model Y. Although the news has not been confirmed, it is not impossible based on Tesla’s recent series of praises for LFP batteries.
If it turns out to be true, it would be of significant meaning. Model 3 and Model Y are Tesla’s key models with the highest electricity consumption, which means CATL has become Tesla’s most important battery supplier.
The Model 3 and Model Y using lithium iron phosphate batteries are both standard range versions, with 55kWh and 60kWh, respectively. Based on this calculation, the 45GWh battery order will correspond to nearly 800,000 vehicles, which has exceeded Tesla’s total global sales in the first three quarters of this year. As of the third quarter of this year, Tesla sold 627,350 vehicles globally.
Insiders also revealed that in addition to pre-ordering 45GWh of batteries from CATL, Tesla plans to add more orders, and “both sides are already in talks.” In addition to power battery orders, there are also energy storage battery orders, and CATL has entered Tesla’s entire energy supply chain.
In the third-quarter earnings conference just ended, Tesla stated that all future standard range vehicles of Tesla will gradually switch to lithium iron phosphate (LFP) batteries worldwide.Tesla is expected to deliver more than 800,000 vehicles this year, with Elon Musk predicting an average annual growth rate of 50% in vehicle deliveries over the next few years, leading to over 1.2 million deliveries in 2022. Earlier this year, CATL extended its battery supply agreement with Tesla, committing to continue supplying lithium-ion batteries to Tesla from January 2022 to December 2025.
On October 29th, it was reported that Mark Fields, interim CEO of rental car company Hertz, said the company may increase its Tesla electric vehicle orders to 200,000.
For Tesla, the biggest headache is battery production, which is the biggest obstacle to increasing delivery volume. The battery supply is in short supply, leading to CATL receiving a huge battery order from Tesla and preparing for subsequent production. This is a natural outcome.
CATL’s “favor”, undoubtedly hurts the Japanese Panasonic the most. A few years ago, Tesla put Panasonic on a pedestal, but now it has found new love and Panasonic has no choice to be unhappy. And as another Tesla battery supplier, LG has announced that it is developing a high-performance and cost-effective lithium-iron-phosphate battery, but the specific production time is unknown.
With CATL’s dominance in the field, it is not surprising that others envy its success. Thanks to China’s booming new energy vehicle market, CATL has taken advantage of its own battery technology advantages and upstream and downstream industry layout across the country, leading to it holding battery orders from Tesla, Chinese automakers including Nio, XPeng, Li Auto, SAIC, GAC, BMW, Mercedes, and Hyundai, making other battery giants look up to it.
Global power battery installations rose by 128% to 197GWh in the first nine months of this year. The top ten companies were CATL, LG Energy Solution, Panasonic, BYD, SK Innovation, Samsung SDI, CEC, Guoxuan High-tech, AESC, and PEVE, accounting for a total market share of 93.6%. CATL had a 30.9% share of the global power battery market, up from 20.6% in 2020. Domestically, CATL had a 56.5% market share, installing 8.87GWh in September, according to the latest data from the China Innovation Alliance of New Energy Vehicles.## Ningde Times accelerates capacity expansion, becoming a leading player in the global electric vehicle battery market
Ningde Times, which has been stably occupying a leading position in the market share, has been continuously accelerating its capacity expansion in recent years. According to incomplete statistics, from February of this year to now, Ningde Times has invested 39.5 billion yuan. Up to now, Ningde Times has deployed seven major production bases globally, including domestic bases in Ningde, Fujian, Liyang, Jiangsu, Yibin, Sichuan, Xining, Qinghai, Zhaoqing, Guangdong, Shanghai Lingang Base, and foreign factories in Germany, with a total planned capacity exceeding 500 GWh.
In terms of joint venture capacity, Ningde Times has already established joint ventures with SAIC Group, FAW Group, Dongfeng Motor, GAC Group, Geely Automobile, and other automakers. Their total planned production capacity is about 108 GWh. Citic Securities predicts that by the end of 2021, Ningde Times’ sole proprietorship capacity will reach approximately 200 GWh; by 2022, it will reach around 320 GWh; and by 2025, it is expected to exceed 600 GWh, accounting for 30% of the global market.
On the evening of October 27, Ningde Times released its performance announcement. The announcement showed that Ningde Times achieved a revenue of 29.287 billion yuan in the third quarter, a year-on-year increase of 130.73%, and a net profit of 3.267 billion yuan, a year-on-year increase of 130.16%. Driven by numerous positive news, Ningde Times, listed on the A-share market, saw its stock price reach 639.22 yuan on October 29, up 5.27%, and its market value exceeded 1.49 trillion yuan, second only to Maotai’s 2.5 trillion market value and ICBC’s 1.65 trillion.
With splendid performance and an astonishing stock price, Ningde Times is known in the industry as the “Ningde King”. Although it has a powerful aura, the Ningde King also has its shortcomings. This year, the lithium price skyrocketed, and the industry as a whole came under pressure. In order to ensure long-term lithium supply, Ningde Times has extended its tentacles into upstream lithium mine acquisitions.
On October 1, Ningde Times announced that it would acquire Canadian Millennium Lithium Corporation for $297 million (approximately RMB 1.92 billion) in full. The lithium company, headquartered in Canada, mainly operates in Argentina, including two lithium mine projects (Pastos Grandes and Cauchari East Lithium). Argentina, Bolivia, and Chile, collectively known as the South American “Lithium Triangle”, account for more than 75% of the world’s lithium supply. Previously, Ningde Times has acquired another lithium company with a focus on Argentina, Neo Lithium Corp, as well as North American Nickel, which focuses on Greenland’s lithium mine development and a stake in the Australian Pilbara Minerals.
In the competition of electric vehicle batteries in China, Japan, and South Korea, with the help of Ningde Times’ moves, the balance is gradually tilting towards Chinese batteries. China has already taken the strategic high ground in the new energy vehicle industry and has no “core disease.” It is even more gratifying that the outstanding student who shoulders the world of Chinese batteries, the “Ningde King,” is still diligent enough not to become complacent even after achieving some success.
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.