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Technology Stocks : "NIO, XPEV, LI, BYD.. China's Quads
BYDDF 38.10+2.6%Aug 4 4:00 PM EDT

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To: roto who wrote (645)10/26/2021 11:15:25 AM
From: roto   of 1466
China’s EV battery manufacturers race to develop new technologies that are less reliant on pricey metals

*Electric car assemblers like NIO and Xpeng are now in a race for supremacy in the future of mobility, and new battery technologies may well be the key
*But refashioning a segment that is vast, fast-changing and vital to the broader industry will not be easy, analysts warn

This second instalment of a three-part series on China’s electric car batteries looks at the technology behind the alternative power source.

On the evening of January 9, William Li, chief executive of NIO, was greeted by a standing ovation after unveiling the carmaker’s plan to launch a battery-powered sedan
with what could be the world’s longest driving range.

Standing at the centre of a sports arena in Chengdu, Li told more than 10,000 people attending the NIO Day event that a 150 kilowatt-hour (kWh) solid-state battery pack
would be used to power the extended edition of its ET7, a new production model, enabling the car to go as far as 1,000 kilometres on a single charge.

Although Li has not confirmed it, the most likely maker of the groundbreaking battery is Contemporary Amperex (CATL), based in the Fujian provincial city of Ningde,
according to industry blogs and speculation. CATL’s spokespeople have declined to comment.

If CATL were to be granted the supply contract, it would be a source of pride for China’s EV battery industry which has been striving to catch up with global leaders since
William Morrison, a Scottish immigrant and chemist, invented a horseless carriage powered by 24 lead-acid battery cells in 1912.

The extended-range edition of the ET7 is expected to be delivered to customers in the fourth quarter of 2022.

The NIO boss was sending out a loud message to China’s car industry that NIO aimed to mount a challenge to not only Tesla, but conventional premium brands
such as BMW, Mercedes and Audi because new battery technologies could make its luxury electric vehicles (EVs) increasingly affordable and environmentally

“Thanks to the fast-growing battery industry, costs of the batteries are coming down,” he told reporters at a media briefing the next day. “ Electric car makers are the
beneficiaries of the technology advancement and we are confident of churning out better vehicles than ICE (internal combustion engine) carmakers at the same costs.”

The cost of EV batteries went as high as US$700 per kilowatt hour (kWh) in 2012. It will decline to US$100 per kWh in 2023 and US$73 by 2030, according to forecasts
by IHS Markit.

A price of US$100 per kWh is seen as a threshold in making unsubsidised EVs cost-competitive with their oil-guzzling peers.

China’s leading EV assemblers like NIO and Xpeng are now in a race for supremacy in the future of mobility, buoyed by Beijing’s ambitions of turning the country
into a global leader by 2025.

“The battery, as the most important component of an EV, plays a decisive role in China’s own EV sector,” said David Zhang, a researcher for the automotive industry at
the North China University of Technology. “Technology-wise, Chinese-made batteries are still a laggard, behind global leaders in terms of energy density. But massive
financial and human resources have been invested to develop new batteries. China’s key battery makers are determined to grasp core technologies.”

China maintains its dominance in terms of the operating and production capacity of EV batteries.

CATL is now the world’s largest EV battery maker, boasting a market share of about 30 per cent, ahead of LG Energy Solution’s 25 per cent, according to SNE Research.

The world’s top six electric car battery firms – CATL, LG Energy Solution, BYD, Panasonic, Samsung SDI, and SK Innovation – supplied 87 per cent of batteries and
battery metals in the second half of 2020.

Energy density is the key standard when classifying EV batteries.

For electric cars to go longer distances between charges, batteries that pack more energy without becoming heavier are needed.

Production cost is also a concern as the industry chases cheaper materials with abundant supply to embrace the carbon neutrality age when millions of petrol cars
will be replaced by battery-powered vehicles in the coming decade.

At present, nearly all batteries used to power EVs fall into the category of lithium-ion, or Li-ion, batteries.

Li-ion is a type of rechargeable battery in which lithium ions move from the negative electrode through an electrolyte to the positive electrode during discharge, and back the
other way when charging.

It comprises four main parts: cathode, anode, electrolyte and separator.

The battery is usually named after its cathode materials, as in the case of an NCM battery or LFP battery.

NCM, composed of lithium, nickel, cobalt and manganese, LFP made up of lithium, iron and phosphate, and NCA that contains nickel-cobalt and aluminium are the three
major types of battery to power the world’s bestselling electric cars.

CATL produces LFP and NCM batteries. BYD makes LFP batteries known as blade batteries because of their long, thin shape.

Technically, those batteries containing the more expensive metals, nickel and cobalt, have the advantage in energy density.

CATL’s NCM 811 battery – with a roughly 8:1:1 ratio of nickel, cobalt, and manganese – can achieve 340 watt-hours per kilogram.
Watt-hours are used as a measure of power output.

NCM batteries made by other key players such as LG Energy Solution use nickel, manganese and cobalt in different ratios and have capacities ranging from 240Wh to 350Wh per kg.

Panasonic’s factories in Japan produce the cylindrical lithium-ion “18650” cells that use NCA technology, with each pack containing 340Wh per kg.

Panasonic has been improving the 18650 cells that are used to power Tesla’s Model S and Model X vehicles. It has also developed new battery technology for the
“2170” Li-ion cells that increases energy density by 5 per cent and reduces the use of expensive cobalt.

In mainland China, LFP batteries are now more widely used than their NCM and NCA counterparts by EV assemblers.

In September, 9.5 gigawatt-hour (GWh) LFP batteries were installed in new electric cars across the mainland, a big jump from the 6.14 GWh provided by NCM and
NCA batteries, according to the China Automotive Battery Innovation Alliance.

The cobalt and nickel-free LFP battery has its own advantages – it is cheaper than NCA and NCM batteries by at least 10 per cent, according to industry analysts. The world
has an abundant supply of lithium and iron.

Tesla chief executive Elon Musk said in late July that the carmaker was making a long-term shift toward cheaper, zero-cobalt LFP batteries.

“This is actually good because there’s plenty of iron in the world,” he said.

BYD, the battery and electric car maker backed by Warren Buffett’s Berkshire Hathaway, has its own cutting-edge blade batteries that arrange LFP cells in a more
efficient array to increase their energy density and enhance their resistance to overheating.

LFP still makes up less than 10 per cent of all Li-ion cells, but Ryan Castilloux, managing director of Adamas Intelligence, said its global deployment soared by more
than 600 per cent in the second half of 2020.

To gain ascendancy in the future of mobility, EV assemblers and battery manufacturers are keenly pursuing new technologies to produce next-generation batteries which
can keep pace with the breakneck speed of electrification on the roads.

Refashioning a segment that is vast, fast-changing and vital to the broader industry will not be easy.

“A higher energy density is the goal that battery makers and EV builders are chasing now, but a rising EV penetration may force them to revisit their strategies over the next five
to 10 years,” said Davis Zhang, a senior executive at Suzhou Hazardtex, an energy solutions provider that supplies specialised vehicle batteries.

“Battery producers will try to strike a balance between production cost and performance amid expectations of surging EV penetration.”

By 2030, a total of 145 million EVs are expected to be on the roads around the world, a massive leap from the 10 million in 2020, according to the International Energy Agency.

In China, the world’s largest EV market, three out of every five new passenger vehicles sold in 2030 will be powered by batteries, which could translate to more than 12 million
units, according to a forecast by Swiss bank UBS.

Castilloux described it as a “tsunami of demand” that could put unprecedented pressure on battery- and motor-material supply chains, triggering a price surge in lithium, nickel,
cobalt, neodymium, praseodymium, dysprosium and terbium.

By around 2025, the shortages of nickel and lithium facing the global EV industry will slow the production of batteries and EVs, he added.

CATL is developing a new sodium-ion battery which uses cheaper raw materials.

The company claims to offer EV makers an alternative to existing technologies that use cobalt as the main ingredient.

The new technology enables the prototype battery pack to have an energy storage capacity of 160Wh per kg, and the next-generation product’s density is expected to exceed
200Wh per kg, according to Robin Zeng Yuqun, founder and chairman of CATL.

“We will devote ourselves to continuously improving battery performance, thus accelerating the comprehensive electrification of transportation,” Zeng said at a
virtual briefing in late July. “We have more than 5,000 research staff who are dedicating themselves to the development of new technology.”

The prototype’s range is already comparable to that achieved by LFP batteries.

CATL plans to form a basic industrial chain in 2023 to mass-produce the sodium-ion battery technology, Zeng said.

He admitted that the new technology would have lower energy density. But he said it has several advantages over LFP, which include low-temperature performance
and high charging speed.

“The right approach to new battery technology is one that requires less cobalt and nickel content, because there is a limited supply of the metals,” said Kevin Shen Yanan,
president and co-founder of Li Auto, one of the top three smart EV start-ups in China. “We are keeping a close eye on the development of the new technology.”

LG said last month it had teamed up with the University of California San Diego to jointly develop a next-generation solid-state battery in order to stay ahead of the competition.

A solid-state battery is deemed a better option because the electricity from solid electrodes and a solid electrolyte is safer, more reliable and more efficient than the liquid
or polymer gel electrolytes found in existing lithium-ion or lithium polymer batteries.

“We are studying more energy-efficient processes to make electrodes and cells,” Chung Geun-chang, battery research leader at LG Energy Solution, told an EV forum
in southern China’s Hainan island province on September 16. “We are also developing a process to regenerate active material from scrap, rather than recycling to
extract a few key elements.”

LG’s new battery technology delivers 500 charge and discharge cycles with 80 per cent capacity retention at room temperature, it said in an article published in Science,
one of the top peer-reviewed academic journals.

Previously, solid-state batteries used metallic lithium as an anode, which could only be charged at 60 degrees Celsius or higher, raising concerns about charge rates.

NIO has yet to unveil the name of its solid-state battery supplier.

Analysts expected CATL to produce the new battery packs for NIO since the Fujian company is also developing the technology.
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