What are the factors driving Chinese battery companies to build factories overseas?
"Going to sea" has become the key word of China's new energy vehicle industry chain, including the power battery industry.
Not only products to "go to sea", but also overseas factory construction continues to heat up. Since the beginning of this year, power battery companies have accelerated the pace of overseas factory construction. In April, SRIO, a joint venture between Feneng Technology and Turkey's Automotive Startup Group (TOGG), held a groundbreaking ceremony for a battery factory in Gemlik, Turkey; In June, EVE Power Hungary Kft. (referred to as "Eve Hungary"), a wholly-owned subsidiary of Yi Wei Lithium Energy, invested in the construction of passenger car large cylinder battery projects with its own and self-raised funds, and the investment amount did not exceed about 9.97 billion yuan... According to incomplete statistics, up to now, China's power battery enterprises have built, under construction and planned to build overseas factories with a cumulative capacity of more than 360GWh.
In this regard, why will China's power battery companies go to sea to build factories? Is the domestic market failing? Or is the overseas market more needed than the domestic market?
The reasons are many and good
"The rapid progress of the new energy automobile industry has also made Europe and the United States see the opportunity and trend of this transformation and take more radical measures." Recently, Wang Yu, chairman of Fu Can technology, told reporters in an interview that in terms of external factors, the European Union announced that it would stop selling new fuel cars and minivans from 2035, the new regulations in California decided to ban the sale of fuel vehicles from 2035, and the Australian capital and other places will ban the sale of fuel vehicles from 2035. The Japanese government has also launched the 2030 decarbonized fuel vehicle policy plan; These needs and the huge gap between its power battery technology and the status quo have brought huge business opportunities to China's power battery companies to "go to sea" to build factories. If this opportunity is not seized by domestic power battery companies, it is a huge loss for enterprises, so companies like Funeng Technology began to lay out Germany and Turkey very early, "going out" is a rare opportunity for domestic power battery companies to expand the market territory and seize the potential new energy vehicle power battery trillion US dollars of the global market.
Wang Yu said that the current advantage of the domestic power battery industry lies in "addition, subtraction, multiplication and division." He said that the rapid development of China's power battery industry "multiplication" type of progress, results from the Chinese government's forward-looking policy support, such as some battery companies such as Funeng technology can be successful in the market, which is "addition", Funeng technology since 1997 has begun to explore power battery technology, today's market harvest is the result of cumulative. The "subtraction" is to reduce carbon and protect the environment, which is the common goal of the new energy automobile industry chain.
What are the other market challenges
In recent years, the global competitiveness of Chinese power battery enterprises continues to improve, according to the 2022 global power battery shipment data released by SNE Research, the total load of global power battery in 2022 is 517.9GWh (GWH), an increase of 71.8%; Among them, China's power battery companies occupy 6 seats, and the market share continues to increase, accounting for a total of 60.4% of the global market share, a significant increase from 48.2% in 2021.
The challenge of technological progress has always been there. "I think the most important thing that will shape the landscape and determine the landscape is technology." Ouyang Minggao, an academician of the Chinese Academy of Sciences and a professor at Tsinghua University, believes that domestic power battery companies have increased the specific energy of lithium-ion batteries by three times in the past decade, the cost has dropped by 70 or 80 percent, and the driving range of power batteries has been increased and the life span has been extended. The progress of domestic power battery technology has basically gone through three stages, one is the lithium iron phosphate battery on the bus, the second is the ternary lithium battery, the third is the specific energy increase of the battery cell is limited, and there is a system structure innovation, so that the system specific energy of the battery is further improved.
This is an important factor in our leading global power battery trend today. In the next step, in order to further lead the global power battery development pattern sustainably, technological innovation is absolutely the first.
Market competition among firms has not diminished. Liu Baosheng, chairman of the China Battery Industry Association,
The competition in the power battery industry is becoming more and more fierce, and China is already in a dominant position in the industry, but this has been affected by the new energy policies of some developed countries, so we are facing a fierce competition.
How is the industry landscape changing
In the face of how the competitive landscape of the power battery industry will change in the future, relevant experts expressed their views. Some experts believe that the competitive pattern of the global power battery market will not change within 5 years, but it is not sure after 10 years.
Today, in the competitive development pattern of the growing scale of power batteries and the expansion of the market, there has been a new change, that is, some power battery companies that were originally rooted in China have now begun to extend their "tentacles" overseas and began a global layout.
Wang Yu said that from the market point of view, 2026 is a watershed for the industry, because from 2026 onwards, North American and European battery localization will enter the agenda, according to local policy requirements, battery production must be localized. Then, as a Chinese battery manufacturer, how to complete the internationalization of the market has become particularly important. At the same time, technically, it is also necessary to consider whether it is possible to have battery iteration technology, because the battery market has huge potential, countries attach great importance to it, and a lot of money will be invested in it. In order to ensure that we continue to lead the industry, all our power battery factories must always lead in technology research and development, always stand at the forefront of the world's industry technology, to ensure that before the emergence of iterative technology, or iterative technology is created by us, only in this case, coupled with internationalization, in order to truly ensure that our national power battery has always maintained a leading position.
"Domestic battery companies began to target overseas markets, which is the inevitable development of the industry." Liu Baosheng said that, among them, there is the desire and expectation of Europe to invest in Chinese power battery companies to build factories, and Chinese battery companies themselves have formed a certain foundation and advantages, and the layout of the whole world will be accelerated.
"Whether we can stay ahead of the industry depends on technology." Wang Yu believes that the layout of the company today should take into account the layout of the next 10 years or more, if it is ahead in technology, then it can maintain the industry and market leadership.
Originally published by China Automotive News, June 26, 2023