Chinese Battery Company Aims For Prominence in Global Electric Car Market

A Chinese electric car battery maker wants to become as well known in the global market as competitors Panasonic and LG Chem.

Contemporary Amperex Technology Ltd (CATL) is a five-year old startup seeing rapid growth supplying lithium-ion batteries in China and overseas. Based in the city of Ningde in southeast China, CATL is tapping into China’s government-backed incentives for local companies and global demand from automakers producing plug-in electrified vehicles.

The battery maker has tripled its production capacity for li-ion batteries in the past year to service China’s market demand. CATL is already producing more of these batteries than Korean-company LG Chem, and is creeping up on Panasonic and BYD’s battery market share.

The company has a lofty plan to beat Tesla’s Gigafactory in Nevada. That would come through growing its battery capacity six times by 2020 to 50 gigawatt hours.

Venture capital firms are backing the company’s funding rounds. In October, a second major funding round resulted in CATL’s market valuation quadrupling to 80 billion yuan ($11.5 billion), said CEO Huang Shilin last week. Meeting its goal of going public on Beijing’s over-the-counter exchange and raising another 30 billion yuan ($4.3 billion) is expected to facilitate its identity as a global powerhouse.

The Chinese company is working with BMW as a customer, but couldn’t disclose other companies due to non-disclosure agreements. They may very well be based in Europe. The battery maker has opened offices in Sweden, Germany, and France, with plans to build a battery factory in Europe.

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CATL has been attempting to weave through China’s pressure to shed foreign investment to be eligible for subsidies and other government support. The national government wants to see its companies gain presence in global markets, along with helping to clean up air in China and supply its burgeoning electric car market.

Company founder Robin Zeng knows the importance of finding foreign investors and transitioning over to local ownership. Zeng previously started Amperex Technology Ltd (ATL), a Chinese company that is now majority-owned by Japan’s TDK. ATL initially took a 15-percent stake in the startup, but liquidated its holdings last year when plug-in electrified vehicle sales and increasing battery demand started taking off.

Zeng and the company declined to comment with Reuters, but TDK is still collecting royalties on some intellectual property used by CATL, according to a spokesman for the Japanese company. Both companies also continue to share offices in the Ningde corporate headquarters.

The battery startup seems to understand that while Chinese government backing is important, it’s no guarantee that a company will survive and grow in that fast-changing market.

“People think we’re a big successful company, but we think we’re in jeopardy every day,” said marketing director Neill Yang. “The market environment and technology changes so fast that if we don’t follow the trend we could die in three months.”

CATL sees energy density and efficiency as being vital to its growth. One of its targets for 2020 is halving its battery cost to below 1 yuan ($0.144) per kilowatt hour, and to improve energy density by two-thirds.

The company is increasing its investment in research and development, and already employees more 1,000 people who hold advanced science degrees.

Fu Yuwu, chief of the Society of Automotive Engineers of China, sees that investment as pivotal to CATL positioning itself as a global leader.

“They have such large scale and the support of China’s huge market, all the more reason they should do a good job of internationalizing,” he said.

Reuters


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