Tesla China Battery Supplier CATL Plans To Largely Increase Cell Production Capacity
In early February 2020, CATL announced a partnership with Tesla and officially entered its supply chain, and recently the company also announced that it plans to raise 20 billion yuan ($2.86 billion) to build lithium battery projects and promote capacity expansion plans.
On February 26, CATL published a closed release plan. According to the announcement, the total amount of funds raised by the non-public offering of CATL is no more than 20 billion yuan (including the number), which is to be fully used in Ningde times Huxi lithium-ion battery expansion project, Jiangsu times power and energy storage lithium-ion battery R&D and production project (phase III), Sichuan times power battery project phase I, and electrochemical energy storage cutting-edge technology reserve R&D project after deducting the issuing expenses and replenish working capital.
Regarding the purpose of this non-public offer, CATL stated that, firstly, it should meet the national industrial policy and stabilize the industry status of the company, and secondly, the company itself, which is a way to help the company realize its strategy and achieve the goals of future development. And it is also beneficial to replenish the company's business development funds and optimize the financial structure.
CATL believes that the capacity building activities of this fundraising project will help it expand its capacity and continue to meet growing market demand. This will help the company maintain its leading technological advantages, open new market areas and further increase the company's profitability.
In addition, CATL said that in order to further advance the company’s production capacity structure and strengthen its market position, it will also invest in the construction of the base project for the production of lithium-ion batteries Ningde Cheliwan with a total investment of not more than 10 billion yuan. ($1.43 billion).
Market expansion and demand growth are the main reasons why the company is formulating plans to expand capacity.
According to SNE Research, for the entire 2019, the installed capacity of CATL batteries was 51% of China's total installed capacity, and the industry status is outstanding.
In early February, CATL published an announcement confirming its partnership with Tesla, and since then it has officially become the third Tesla battery supplier after Panasonic and LG Chem.
CATL wants to raise capital for a significant increase in production capacity, which means that they are very optimistic about the future of Tesla China.
The annual output at the Ningde plant in Fujian province, where the company’s headquarters are located, will be increased by 16 gigawatt hours, the battery manufacturer said.
Capacity in a factory in Jiangsu will increase by 24 gigawatt hours. And in Sichuan, a new plant with a capacity of 12 gigawatt-hours will open. New equipment at these facilities will be launched in two to three years.
CATL is currently building its first overseas factory in Germany. Mass production at the facility with a capacity of 14 gigawatt hours will begin in 2022.
The clamour to compete with Tesla: VW and GM have a mammoth task ahead
A clear leader emerged in global electric vehicle sales in 2019 across both the US and Europe, and it is proving a wake-up call to industry, most evident in the amount of noise we are hearing from auto giants Volkswagen and General Motors.
Legacy automakers are aware of the impending shift away from gas-guzzling cars, fuelled by the increasingly urgent fight against dangerous climate change – and risk damage to their reputation, and ultimately their bottom lines, if they don’t do their part.
But Tesla has a head start and is bolstered for future growth in sales of its “mass-market” Model 3 and upcoming Model Y, with the recent opening of its Shanghai Gigafactory 3 and CEO and co-founder Elon Musk due to attend the sod-turning for its Berlin Gigafactory 4 later in March.
Established automakers have a lot of catching up to do, and this has become all the more apparent again this week, most notably in reports from media outlets about Volkswagen’s plentiful supply of EV batteries and General Motors’ plan for an “EV Day”.
Volkswagen of course, still reeling from the “Dieselgate” scandal of 2015 in which it was revealed it had cheated in vehicle emissions tests, has more recently become one of the most vocal of legacy carmakers on electric mobility in its efforts to redeem itself, desiring to claim a leading title in the transition.
Even while it grapples with software issues for the first in its new electric ID series, it has been reported by the Financial Times that Volkswagen CEO Herbert Diess says VW can source enough electric vehicle batteries for 1 million electric vehicles over the next three years.
This is curious given reports last week that Volkswagen AG sub-brand Audi said it has been forced to halt production of its all-electric e-Tron due to battery supply issue.
It is also interesting to note that Diess seems to have downgraded Volkswagen’s plans from “taking on Tesla” to keeping “as close as possible” to Tesla.
“Elon Musk is taking risks we couldn’t. So I think we make a good pair because he is pulling ahead, and we are fast-followers, we try to keep as close as possible,” Diess was reported as saying by FT.
This pullback is contradictory, and telling: in 2018, Diess claimed that Volkswagen – which has an annual production target of 330,000 ID3 hatchbacks a year from its Zwickau plant – would bring electric cars to market that were as good as Tesla electric cars but half the price.
“We will come in 2020 with vehicles that can do anything like Tesla and are cheaper by half,” he said in comments on German television program ZDF.
But as FT points out, Volkswagen’s group-brand structure is slowing down the speed with which VW is able to change internal attitudes – and curtail labour costs.
It also notes that both Volkswagen and General Motors are “years, perhaps even a decade, from being able to generate petrol-level profits.”
Despite the mammoth task of redirecting the focus, and operations, of these behemoth car makers from the production of internal combustion engines to electric drivetrains, the outward message at least is that they are not daunted.
And yet, the actions imply the opposite – a reality most evident in General Motors’ announcement on Monday (US time) that it would hold an “EV Day” this Wednesday at 12:30pm (4:30am on Thursday for those in daylight savings on the Australian east coast).
The event is portrayed by CNBC as GM’s “hardest push to convince skeptics that the more than 110-year-old automaker can compete, if not thrive, against Tesla.”
It will, according to a press release from General Motors, reveal details about the carmaker’s electrification strategy from both management and electrification experts to media and investors, with separate events during the week for politicians, dealers and employees.
The EV Day reportedly has the support of key players in the company’s leadership team, CEO Mary Barra and President Mark Reuss.
In previous earnings calls Barra has taken pains to reassure investors that General Motors was taking its electrification plans seriously – and that it would make a full range of EVs including utility trucks (utes in Australia, pickups in the US).
“GM has an industry-leading truck franchise and industry-leading electrification capabilities,” Barra told investors and journalists at the company’s quarterly earnings call in May 2019.
“I assure you we will not cede our leadership on either front"
"We intend to create an all-electric future that includes a complete range of EVs, including full-size pickups”
But since GM first announced its intention to transition to making electric mobility in December 2018, there does not seem to have been a great deal of movement towards that goal, outwardly at least. The car maker has since released only three new electric cars in China, trumpeted a new all-electric Hummer at Superbowl and announced EV production upgrades for its Michigan plant.
According to comments made by Reuss as reported by CNBC, the details to be laid out this week by GM will satisfy sceptics.
“I really like our position heading in the area of electrification, and I like it for a lot of different reasons,”
Reuss was quoted as saying to investors last month about the EV Day.
“I think you’ll be very excited about some of the things we’d go into a little more detail than I’ve talked about today … Again, we’ll go into more of that here next month, but this is a very, very well-thought-out strategy.”
Of course, here in Australia the impact of this refocussing of resources to electrification has had its own impact, with GM in February announcing the painful decision to shut down the iconic Holden brand, laying off hundreds of local workers.
While little mention of the reason behind that shutdown was made in mainstream Australian media, the reality is certain: it is going to take considerable efforts for GM to catch up, let along compete, with Tesla on electric cars.
Diess, at least, remains optimistic, despite the Dieselgate legacy and ongoing ID.3 software issues that threaten to delay a European summer launch.
In comments welcoming regulations aimed at pushing a transition to zero-emissions vehicles, he said:
“We are happy with it because if society decides [to lower emissions laws], we’ll go for electric cars.
Actually, that’s good for us.
“There is no other alternative to electric cars.”
New Tesla battery a combination of dry cell and supercapacitor
New electric vehicle battery technology from Tesla to be outlined at its upcoming Battery Day in April will involve a combination of dry cell and supercapacitor technology, sources in China have revealed.
The combination of these two technologies would have the potential to increase energy density, and hence driving range, as well as increase charging speed.
When Tesla acquired battery tech developer Maxwell Technologies in 2019, a document released in May 2019 noted that Maxwell’s dry battery electrode technology used to manufacture its ultracapacitors “could be a ground breaking technology for lithium-ion batteries, particularly in the electric vehicle market”.
Now, Chinese automotive news site Krypton 36 reports that a person close to Tesla told Chinese media that: “The new battery independently developed by Tesla is a combination of dry battery technology and supercapacitor. The specific composition is expected to be explained at the Tesla Battery Conference in April.”
Tesla did not immediately respond to a request to confirm this report, but if it proves correct it could put Tesla – already 6 years ahead of other electric vehicle makers with its version 3 hardware, according to Japanese engineers – even further ahead of the game.
Anticipation about what Tesla will reveal for its next generation of batteries is high; recent news indicated that “advanced talks” with battery maker CATL were progressing and that “Made-in-China” Model 3s may be built with a cobalt-free lithium iron phosphate (LFP) chemistry made by CATL.
It has since been confirmed by CATL that it has indeed signed a volume production agreement as reported by the Chinese Securites Journal (CS), though this report indicates the newly signed agreement ensures only a mass supply of lithium-ion batteries.
Tesla later said on the evening of February 21 (China time) via its Chinese official account on Douyin (known as TikTok in Australia and overseas) that “Cobalt-free does not necessarily mean lithium iron phosphate.”
According to CS, Tesla will instead announce “cobalt-free” batteries at its Battery Day in April, saying it is “probably a new type of lithium ion produced by Maxwell using a new high nickel positive electrode + pre-lithiated negative electrode + dry battery technology + supercapacitor battery and two products of super lithium iron phosphate battery using CTP technology” (translated from Chinese).
Maxwell’s dry electrode technology can increase the cell’s energy density to more than 300Wh/kg, and it is expected to further increase to 500Wh/kg in the future, or break the current bottleneck of 300Wh/kg of ternary lithium batteries.
Maxwell cobalt-free batteries may have the characteristics of high energy density, low cost, improved safety, and faster charging speed in the long run, which will further accelerate the global penetration of electric vehicles.
However, it remains to be seen whether Maxwell’s cobalt-free batteries can be commercialized at this stage – bring on Battery Day.
