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Foreign manufacturers begin expanding into Chinese market to seize opportunities

By  : INDICS Operator Updated  :   2017-12-18 09:53:02
source: Global Times

Toyota Motor Corp and Panasonic Corp announced a battery business partnership agreement on Wednesday, with those batteries expected to be used in EVs produced by Toyota's JVs in China.

Currently, leading Japanese and South Korean battery manufacturers produce nickel manganese cobalt (NMC) batteries, while their Chinese counterparts mainly focus on lithium-iron phosphate (LFP) batteries. The latter has lower capacity density and shorter driving mileage, but is safer.

Growing competition

Panasonic is currently the world's biggest supplier of batteries for plug-in hybrid vehicles and EVs. In the first half of this year, Panasonic took up a 29 percent market share, followed by South Korean battery maker LG Chem Ltd with a 13 percent share, and Chinese brands BYD and CATL with shares of 10 percent and 9 percent, respectively, data from the Nomura Research Institute showed.

Panasonic considers the battery business central to its goal of doubling its automotive business revenue to 2.5 trillion Japanese yen ($22.05 billion) by March 2022, Fortune reported on Thursday. To realize that goal, it has been expanding its battery production capacity across the world.

Domestic battery maker BYD, based in Shenzhen, South China's Guangdong Province, has been investing in research and development as well as the manufacturing of NMC batteries to complement its LFP batteries.

The company said in a statement sent to the Global Times on Thursday that it invested in an NMC battery production base of 10 gigawatt hours in Northwest China's Qinghai Province to realize production capacity. BYD has since built facilities in the US, Brazil, Japan and Hungary.

Meanwhile, CATL, a latecomer based in Ningde, East China's Fujian Province, has developed fast this year.

On December 4, the catalog for the 11th batch of NEVs, published by the Ministry of Industry and Information Technology, added 165 new vehicle types that qualify for promotion. CATL supplies batteries for 40 of these types of vehicles.

Vehicles included in the catalog can get subsidies, a favorable policy to help promote the development of the domestic new energy industry.

In terms of the overall performance index, the gap between domestic independently-made lithium-ion batteries and their foreign counterparts is not obvious, but what is certain is that battery cell performance is not as desirable, according to Zheng.

For example, Tesla's chief battery scientist Kurt Kelty announced in May that his team made a great breakthrough, with the Tesla battery life now decreasing by 5 percent or less after the vehicle has run 480,000 kilometers.

Tapping the Chinese market

The sales of NEVs maintained high-speed growth this year, with the figure climbing to 609,000 units between January and November alone, the latest data from the China Association of Automobile Manufacturers (CAAM) showed.

According to CAAM, the sales growth rate of NEVs is expected to stay between 40 and 50 percent in 2018.

With the rapid growth of the market and the phase-out of subsidies to domestic new energy automobile brands, Japanese and South Korean battery makers in the Chinese market will grab new opportunities, experts noted.

The Chinese central government will cut subsidies to NEVs by 10 percent this year from the 2016 level and plans to phase out the subsidies entirely by 2020.

"With smart machinery and excellent processing techniques, foreign battery brands are indeed superior to their domestic counterparts. Demand for them may increase when the high-end market booms, but they also face heavy pressure to cut costs, and improve efficiency and safety in the Chinese market," Liu said.

Only when costs are effectively lowered, driving mileages enlarged and ancillary facilities established will the demand for NEVs be truly realized, he said.

Zheng said that chargeable batteries may be a good choice to popularize NEVs among customers. "Just like petroleum stations, battery stations may also emerge in the future, supplying fully-charged batteries for NEVs," he said.

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