The Key to Electric Cars Is Batteries. One Chinese Firm Dominates the Industry.
SHANGHAI—A little-known Chinese company has become the world’s biggest maker of electric vehicle batteries.
Beijing engineered a scenario that didn’t give the world much choice.
China is by far the biggest EV market, and to boost its standing in the fast-growing industry, China began pressuring foreign auto makers to use locally-made batteries in the country several years ago. One company—Contemporary Amperex Technology Ltd., known as CATL—was the only shop capable of producing them at scale.
Auto makers weren’t pleased, but they fell in line. During a visit to CATL headquarters in 2017, three Daimler AG executives displayed their irritation shortly after the meeting started, recalled Jiang Lingfeng, then a CATL project manager who prepared a technical briefing for the visitors.
One Daimler executive cut off his briefing, said Mr. Jiang. “We’re not interested,” the executive said, according to Mr. Jiang. “The only reason we’re here is that we have no choice, so let’s just talk about the price.”
China accounted for 60% of the 2.1 million electric vehicles sold world-wide last year. By 2030, global plug-in car sales are expected to be between 23 million and 43 million annually, according to the International Energy Agency. In its highest estimate, EVs will comprise 57% of vehicle sales in China, 26% in Europe and 8% in the U.S.
To meet demand, auto makers will need millions of lithium-ion batteries—by far the most lucrative part of an EV.
Leading the charge is CATL, which became the world’s biggest EV battery maker by installed production capacity this year—the number of battery factories and their combined scale—according to Benchmark Minerals Intelligence, a research firm. CATL modeled itself after another Chinese company, telecommunications giant Huawei Technologies Co., copying its departmental structures and culture of demanding workloads, employees said. CATL also mimicked Huawei’s practice of prioritizing research and development to deliver frequent technology improvements.
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