On December 17, William Li, the founder, chairman, and CEO of NIO, captured widespread attention with a 14-hour live broadcast. The highlight was a battery that, after driving 1,044 kilometers, still had 3% charge remaining. This battery, planned for deployment in NIO's vehicles next year, is a 150-degree ultra-long-range battery pack.
Li described this battery on Weibo as "currently the highest energy density battery in global mass production." Previously disclosed information indicates that the battery pack, developed by NIO, uses cells from WeLion New Energy. As a semi-solid-state battery, it achieves an energy density of 360Wh/kg. NIO first announced this battery pack at NIO DAY in 2020, and three years later, it has finally come to fruition.
While NIO is enhancing its product strength with a "far ahead" battery pack, other companies also held events last week to announce their self-developed batteries:
- On December 12, GAC Aion's self-developed P58 microcrystalline super-energy cell went into production, and its battery factory also announced completion.
- On the same day, Honeycomb Energy, born from Great Wall Motors, held its fourth Battery Day, announcing a focus on short-blade batteries and fast charging.
- On December 14, Jikrypton held an "Energy Day" event, unveiling its first self-developed battery - the Gold Brick Battery.
Additionally, at the Guangzhou Auto Show, Changan introduced its "Golden Bell Cover" battery brand, and a tender notice in late September indicated that another domestic automaker, Chery, is also working on a battery project.
After last year's "chip shortage and expensive electricity" crisis, this year's trend of self-developed batteries by domestic brands has reached new heights.
NO.1 Battery Self-Development: From Systems to Cells Before this recent wave of self-developed batteries, several automakers had announced their "self-developed batteries," focusing mostly on battery systems. For example, Lantu released two self-developed battery systems in September 2021, and Nezha launched its Tiangong battery in May 2022, first used in its highest-priced model, Nezha S.
Other examples include Great Wall's Dayu battery, SAIC's Magic Cube battery, and Geely's Shield battery, all focusing on the battery system level.
However, the recent battery events have seen companies starting self-development from the cell level, even to self-production:
- GAC Aion's self-developed P58 microcrystalline super-energy cell will be mass-produced in its battery factory, aiming for an 18GWh capacity by the end of 2024 and 36GWh by the end of 2025.
- Jikrypton's Gold Brick Battery, from cell to battery pack, is entirely self-developed. Its production facility in Quzhou is a subsidiary of Geely.
- Chery's involvement in battery development is evident from a tender notice by Anhui Deyi Energy Technology Co., Ltd., a company controlled by Chery.
- Changan's "Golden Bell Cover" battery brand plans to introduce eight self-developed cells by 2030.
- NIO, despite sourcing cells externally for its trending 150-degree battery pack, has also planned for independent self-research and production of cells, once assembling a battery R&D team of over 800 people and establishing a cell prototype line.
NO.2 Lithium Carbonate Prices Drop: What's the Point of Self-Development? The question arises: why are automakers keen on developing their own batteries? Two quotes from automotive leaders often cited for justification include GAC Group Chairman Zeng Qinghong's statement about working for CATL due to rising battery costs, and Changan Automobile Chairman Zhu Huarong's data on how "expensive electricity" increased per vehicle costs by 5,000 to 35,000 yuan.
Indeed, the crazy rise in battery prices in the past two years significantly impacted automakers. However, this year, lithium carbonate prices have fallen to around 100,000 yuan/ton, and power battery prices have dropped by 40% compared to last year, from 1 yuan/Wh to about 0.6 yuan/Wh.
Despite overall sufficient battery supply, specific high-quality battery models still face shortages. Moreover, self-developing batteries undoubtedly give automakers more control over costs.
GAC Aion General Manager Gu Huinan encapsulates this mindset: "I have a say in costs because I can make my own batteries and motors. The key to enhancing autonomous competitiveness lies in shifting from resisting costs to controlling them." This approach strengthens automakers' negotiating power even when they still need to purchase batteries externally.
Beyond cost considerations, many automakers have longer-term plans for self-developing batteries. GAC Aion Deputy General Manager Xi Zhongmin mentioned two benefits of establishing a battery subsidiary to strengthen full-stack self-research capabilities: facilitating technical feedback with battery manufacturers and enhancing Aion's assets, possibly in preparation for an IPO. The latter is a common thought among many automakers.
"As domestic automakers' R&D cycles are now 20-24 months, and even some electric vehicles are rolling out in 12-18 months," according to a development personnel, when automakers are racing to accelerate update iterations, every aspect of R&D must be expedited.
Specifically for batteries, the supply of new products often goes through complex processes. Automakers need to follow up at every step, and some stages require sequential waiting. If the entire process from research to production of new batteries is handled internally, the time to market can be significantly shortened.
NO.3 Diversified Strategies Remain the Mainstream While self-developing batteries has many advantages, collaborating with battery companies remains the choice for most automakers.
In September this year, there were rumors that Great Wall was considering selling shares in Honeycomb Energy. Although later denied, the rumor indicated potential challenges, as Honeycomb Energy has been operating at a loss since its inception, with increasing losses.
In addition to Honeycomb Energy, NIO, which announced a delay in mass-producing its batteries earlier this year, is often cited as an example of the difficulties in self-developing batteries.
Addressing the reasons for delaying battery mass production, Li Bin responded at a communication meeting on December 14:
"In the long run, self-developed batteries can improve gross profit, but it's indeed challenging in the short term. Therefore, NIO's current strategy is to postpone projects with high fixed asset investment and long return periods."
The investment required for self-developing batteries is substantial:
- GAC announced that the initial investment in its battery factory was 10.9 billion yuan, equivalent to its total profit in 2022 (8.068 billion yuan) and the first half of 2023 (2.966 billion yuan).
- According to media reports, Geely's investment in batteries since 2019 has exceeded 100 billion yuan, with over 70 billion yuan invested in building battery factories alone.
McKinsey estimates that automakers need to achieve sales of 500,000 new energy vehicles or a battery production scale of 15GWh to gain a cost advantage in self-producing cells.
This explains why companies announcing self-developed batteries are mostly well-performing domestic brands.
In fact, despite the increasing number of automakers announcing self-developed batteries, none plan to rely solely on self-production for their battery supply.
As early as when Aion's battery was established, it stated that its battery supply would follow a dual strategy of self-research and external procurement. This is a common choice among most automakers.
While building their own battery capacity, they are also intensifying cooperation with leading battery companies:
- In 2021, during the rapid development of Honeycomb Energy's capacity and technology, Great Wall Motors still signed a ten-year strategic cooperation agreement with CATL.
- This year, as Chery accelerates its self-developed batteries, it also strengthened cooperation with CATL. CATL's super-charging battery was first used in Chery's Star Tour Y, and its sodium battery will also be first used in Chery models.
- While building its own capacity, GAC's joint venture with CATL, GAC CATL, began its second phase of capacity expansion this year, increasing its annual capacity by 6GWh.
Choosing both self-research and external procurement, automakers balance high investment costs in building their own capacities with the unique nature of the battery industry.
In the current material system, the power battery field follows a "20-80 rule" - 20% of the battery's value and difficulty lie in the R&D phase, while 80% are in the production and manufacturing phase.
As Wang Xiaoqiang, Vice President of Zhongchuang Xinhang, points out, the automotive industry is more mechanical, while the battery industry combines chemistry and mechanics. The two have different technologies and underlying business logics.
Moreover, different vehicle models have varying battery requirements. Professional battery manufacturers can invest more resources in technology iteration, while automakers often iterate based on their own needs, making it difficult to sustain continuous development.
NO.4 In Conclusion High investment costs and demanding technical requirements make self-developing batteries an important part of automakers' strength promotion.
However, an intriguing aspect is that when asked about the advantages of Jikrypton's Gold Brick Battery over CATL's batteries after the release event on December 14, Jikrypton did not directly answer the question.
Regarding the cost of self-developed batteries, neither GAC nor Jikrypton disclosed specific figures.
"The entire battery industry is highly competitive. Most battery company executives mention 'increased revenue but decreased profit' - sales are up, but revenue is down," Yang Hongxin, Chairman and CEO of Honeycomb Energy, lamented on December 12.
For professional battery companies, profitability is already challenging. For automakers self-producing batteries, the real challenges may have just begun.
