Battery Supplier CATL Riding Crest of EV Wave CATL is the No.2...

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    Battery Supplier CATL Riding Crest of EV Wave

    CATL is the No.2 maker of electric-vehicle batteries, with business for now limited to China, but is on the short list to be the main EV battery supplier to European OEMs including Volkswagen, Mercedes-Benz and PSA Group.
    CATL supplies battery for BMW i8 plug-in hybrid.

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    TOKYO – Had Bob Galyen written his own story, it almost certainly would have had a different ending: an American in Indianapolis, where he worked for Delco Remy’s battery division and headed the battery team for General Motors’ groundbreaking EV1 electric car, or an American in Auburn Hills, MI, where he ran Magna E-Car’s battery startup.
    It almost certainly wouldn’t have been an American in Ningde, China, where for the past five years Galyen, 62, has worked as chief technology officer for Contemporary Amperex Technology Ltd.

    Not a household name – yet – CATL has rapidly become a major player in the global battery market. CATL wasn’t even a company until 2011, when it was spun off by Hong Kong-based Amperex Technology, a leading supplier of small batteries to Apple and other mobile-device manufacturers.

    It now ranks second in production of batteries for electric vehicles with business for now limited to China. Galyen expects it to pass No.1 Panasonic early this year. More importantly, CATL is on the short list to be the main EV battery supplier to European OEMs such as Volkswagen, Mercedes-Benz and PSA Group.

    Between January and August 2017, it held a 28% share of EV-battery sales in China, ahead of BYD’s 17%. Extrapolating from global sales of electric and electrified vehicles, this means CATL has a global market share of more than 10%.
    An estimated half of CATL sales on a pack basis are to Chinese bus makers. The supplier entered the electric-car market in 2013 with the limited-production Zinoro 60H, a Chinese derivative of BMW’s X1.

    To put CATL’s business scale into perspective: In 2016, according to Galyen, CATL delivered more battery packs to one customer, Zhengzhou Yutong Bus, than Tesla had used in all of its cars since the U.S. EV maker’s inception.
    “It’s a back-of-the-napkin calculation,” he says, “but yes, we delivered more than 250,000 packs to Yutong Bus in 2016. Keep in mind that electric buses, depending on their size, use between six and 24 packs per bus.”

    A straight talker who grew up and went to college in Indiana and serves concurrently as chairman of NAATBatt International and the SAE’s international battery standard steering committee, Galyen raised eyebrows in September when he warned the U.S. was falling behind in battery technology.

    “The U.S. needs to step up its game,” he said at the Battery Show Exhibition & Conference in Novi, MI. “Clearly, we’re getting behind.”

    Galyen cautions this technology deficit, coupled with capacity shortages if automakers hope to meet zero-emission-vehicle mandates in states such as California, “could become a serious national security issue.

    “The situation isn’t much different in Europe, where there are no global-scale battery manufacturers and only Samsung SDI among the top five producers,” he adds. “We’re hoping to be one.”

    In the U.S., Xalt Energy and EnerDel, two leading American manufacturers, have installed capacity of only 700 MWh and 200 MWh. “We can produce that amount in one week at one plant in China,” Galyen says.
    The three largest battery manufacturers in the U.S. are Japanese, South Korean and Chinese, respectively: Panasonic, supplying Tesla; LG Chem, supplying GM, Ford and FCA US; and GSR Capital, supplying Nissan North America. A123 Systems, one of the early market leaders, is owned by the Wanxiang Group of China.

    In Europe, Zurich-based ABB Technology Ventures has joined NorthVolt, a Swedish startup, to build a 32-GWh plant in Sweden. According to a Bloomberg News report, NorthVolt’s CEO, a former Tesla executive, hopes to begin production in 2020.
    In the next three years, CATL will have upwards of 50 GWh of capacity in place. And that doesn’t count capacity in Europe and North America, where the supplier is reported to be close to a decision on building one or more plants, each probably less than 10 GWh.

    Likely customers are Volkswagen, which announced plans at the Frankfurt auto show in September to build 80 new zero-emissions vehicles by 2025, and Daimler, which revealed it would completely transform its Smart brand to electric powertrains by 2020.

    Separately, Mercedes-Benz, Daimler’s main luxury brand, disclosed it would invest $1 billion in the U.S. to build a new EV and battery plant. According to news reports, the investment will be made at the Tuscaloosa, AL, site where Mercedes-Benz US International produces GLE, GLS and C-Class models.

    Both VW and Daimler are leaning toward CATL, but this is unconfirmed.

    “I won’t deny the news reports,” Galyen said in an interview preceding CATL’s mid-November announcement that it would seek a $2 billion public offering to fund facility expansions. “In China, as you are aware, we are working with BMW, Daimler and Audi.”
    Galyen notes gigawatt-size plants take between 18 and 24 months to build and commission. “But you also need to have sustaining business before you start building with bricks and mortar.”

    According to the Reuters news agency, CATL reported net earnings of $471.5 million on sales of $2.1 billion in 2016. Sales grew threefold from 2015 levels.

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