As the global competition in electric vehicle power batteries intensifies, Chinese battery giant CATL (Contemporary Amperex Technology Co., Ltd.) has been unveiling its new generation of automotive power batteries. Notably, during the “2023 Chery Tech Day” event, multiple batteries from CATL were showcased, with a strong focus on their second-generation sodium-ion battery.

According to a report by “mydrivers,” although several of CATL’s batteries were showcased during Chery’s event, including the Shenxing Superfast Charging Battery, Qilin Battery, and Sodium-ion batteries. It is set to be the debut choice for Chery vehicles.

According to sources familiar with the matter within Xiaomi, as cited by Chinese media outlet Jiemian News, the Xiaomi electric vehicle that has been spotted multiple times on the roads has finalized its battery supplier list. Both selected suppliers are Chinese companies. The primary battery supplier is set to be CALB, while the secondary supplier is the well-known CATL.

Reports indicate that Xiaomi initially planned to have CATL as the primary supplier, but there was a change of plan. This change could be attributed to the conclusion of patent disputes between CATL and CALB regarding lithium-ion batteries, cathode electrode sheets, and battery-related patents. The National Intellectual Property Administration invalidated the two aforementioned patents held by CATL, allowing CALB to re-enter the market with competitive pricing against CATL.

The report mentions that Xiaomi’s initial electric vehicle production volume is relatively low, which limits its bargaining power. The cost per battery pack starts at 80,000 RMB, accounting for approximately half of the overall cost. The proportion of supplies from the primary and secondary suppliers will reportedly be adjusted based on Xiaomi electric vehicle’s actual sales after its launch. The report also highlights the possibility of Xiaomi introducing additional battery suppliers like BYD through an open bidding process to lower battery costs and enhance bargaining capabilities in the future.

(Photo credit: Xiaomi FB)

Tesla, the world’s leading electric vehicle (EV) manufacturer, has announced its collaboration with BYD, a leading player in the EV and battery industry. The partnership involves Tesla incorporating BYD’s lithium iron phosphate (LFP) blade batteries into the rear-wheel-drive entry-level version of the Model Y, which will be produced at Tesla’s Berlin factory in Germany. Deliveries of this model are slated to commence in June 2023. Let’s delve into the significance of this collaboration from the perspectives of both Tesla and BYD.

Tesla’s Perspective

Tesla’s Berlin factory has thus far been responsible for manufacturing the premium variant of the Model Y, equipped with Panasonic’s 21700 lithium-ion batteries. In contrast, the entry-level version of the Model Y had been imported from Tesla’s Gigafactory in Shanghai, China, with CATL’s LFP batteries installed.

With this collaboration, Tesla will now produce the entry-level Model Y directly at its Berlin factory, integrating BYD’s LFP blade batteries with a capacity of 55 kWh. This battery configuration will offer an approximate range of 440 kilometers. Although this variant features a reduced capacity of 5 kWh compared to the CATL battery-equipped Model Y, the BYD LFP blade batteries boast improved energy density. This enhancement results in an increased range per kilowatt-hour, from 7.6 km/kWh to 8 km/kWh.

Additionally, the adoption of BYD’s blade batteries provides Tesla with cost advantages. The blade batteries employ cobalt- and nickel-free battery materials, which are more affordable. Consequently, Tesla stands to save approximately $750 in battery pack costs when considering a battery cost of $150 per kilowatt-hour. Moreover, the square-shaped design of the blade batteries enables tighter and more efficient packaging, leading to higher energy density. This design also facilitates Tesla’s integration of Cell to Chassis (CTC) technology, which reduces packaging material usage and overall costs.

Considering these factors, the decision to utilize BYD’s blade batteries aligns with the cost-effective preferences of the entry-level Model Y’s target consumer group while fulfilling Elon Musk’s commitment to cost control.

BYD’s Perspective

In 2022, BYD overtook Tesla as the world’s largest EV manufacturer, boasting sales of 1.86 million electric vehicles. As a result, BYD’s market share in battery assembly has steadily increased, owing to its self-supply capabilities. As of the first quarter of 2023, BYD stands as the second-largest global supplier of power batteries, with a market share of 16.2%, surpassed only by CATL’s 35%.

Despite BYD’s remarkable growth in the electric vehicle sector, its battery production capacity initially struggled to keep pace. This resulted in a period during which BYD could only fulfill its own demand and was unable to export batteries, impeding the growth of its battery business in terms of customer quantity.

Apart from its use in BYD’s own EVs and the recent collaboration with Tesla for the Model Y, BYD’s batteries primarily find application in Changan Ford vehicles. Furthermore, a staggering 98% of BYD’s electric vehicle sales currently originate from the domestic Chinese market. This high market concentration poses the dual risks of relying excessively on a single market and a single customer for battery sales.

BYD’s inclusion in Tesla’s supply chain with its blade batteries marks a significant step toward diversifying sales risks. Nevertheless, for BYD to maintain its position as the second-largest battery supplier in the future, the company will need to adopt a proactive and diversified market strategy, expanding its presence in the supply chains of various automakers.

(Photo credit: Tesla)

Sodium-ion batteries are burgeoning as a popular alternative to lithium-ion batteries, thanks to the efforts of Chinese automakers who are pushing for its mainstream adoption.

Leading Chinese companies like CATL and BYD are ramping up the production of sodium-ion batteries. In mid-April, CATL and Chery unveiled their new battery brand, “ENER-Q”, which includes full product lines including sodium-ion, iron phosphate lithium, and ternary lithium batteries. Chery’s new energy vehicles will be the first to use CATL’s sodium-ion batteries.

Following CATL, BYD is rumored to start mass production of its sodium-ion batteries in the second half of this year, which will be used in its compact hatchback, the Seagull series. Both the moves have once again sparked discussions about battery technology in the market.

Geopolitical risks fuels Sodium-ion Batteries

Considering market supply and technical stability, lithium-ion batteries and iron phosphate lithium batteries are still the most popular types of batteries for electric vehicles. The former has a higher energy density but contains cobalt and nickel, which drives up costs. The latter has a lower cost but a lower energy density.

Sodium-ion batteries, on the other hand, have been overlooked due to their low energy density compared to traditional lithium-ion batteries.

So, why are companies like CATL and BYD turning to sodium-ion batteries?

Geopolitical risk is a major factor. Most lithium mines are located in countries like the US, Australia, and Canada. In today’s anti-China political climate, these materials could be used as bargaining chips to curb China’s electric vehicle industry. China won’t want to be at the mercy of other countries when it comes to the fate of its EV industry, so developing new technological routes is crucial.

From a mass production perspective, sodium is a more abundant element in the Earth’s crust than nickel, cobalt, or lithium carbonate, with a distribution that’s more evenly spread out. As such, sodium could be a better fit as a positive electrode material in batteries in the long run. Industry experts predict that sodium-ion batteries could even cost 20% less than iron phosphate lithium batteries once it reaches economies of scale.

The Supporting Actor in EV Batteries

However, a closer look into the pros and cons of both the materials may reveal that it’s not a zero-sum game. Instead, their characteristics can complement each other and help to accelerate battery technology development.

CATL’s new sodium-ion battery has an energy density of up to 160Wh/kg, which is comparable to the iron phosphate lithium battery in its Kirin battery system, but still lags behind the 255Wh/kg of ternary lithium batteries.

As a result, CATL is mixing sodium-ion and ternary lithium batteries in Chery’s new energy vehicles to balance cost and performance.

BYD is also expected to use a mix of sodium-ion and iron phosphate lithium batteries. Assuming this is true, it will echo the market’s assumption that sodium-ion batteries are not overturning the battery industry, but rather helping battery manufacturers maintain flexible product portfolios that cater to different market segmentations.

To give an example, CATL’s lithium iron phosphate batteries have been utilized in heavy-duty vehicles like 120-ton ore trucks and marine service vessels since 2022, where charging efficiency and cost take precedence over high energy density.

Therefore, sodium-ion batteries are likely to become a complimentary choice for lithium iron phosphate batteries, as they offer advantages such as high-rate charging, low cost, and high safety. This will definitely give car makers more flexibility in their future product strategies.