How did a Chinese company that few people have heard of manage to defeat German carmakers at their own game? The automobile industry is undergoing a massive transformation as electric vehicles (EVs) replace internal combustion engines (ICEs). But who is leading this revolution and what are the implications for the global economy and the environment?
In this article, you will discover how a Chinese company called CATL became the world’s largest battery maker and supplier for the German luxury carmakers, and what challenges and opportunities lie ahead for the EV market. Read on to find out how China’s battery king outsmarted the German automobile industry and what it means for the future of mobility.
Table of Contents
Genres
Business, Technology, History, Politics, Environment, Journalism, Biography, Non-fiction, Economics, Innovation
The Battery King by Henry Sanderson is a book that tells the story of how CATL, a Chinese company founded by a former engineer named Robin Zeng, rose to dominate the global market for EV batteries. The book traces the origins of CATL, from its humble beginnings as a spin-off of a state-owned battery maker, to its rapid expansion and innovation, to its strategic partnerships and investments with the German carmakers, such as Volkswagen, BMW, and Daimler.
The book also explores the geopolitical and environmental implications of the EV revolution, as China seeks to secure its supply of critical minerals and reduce its carbon emissions, while Europe and the US struggle to catch up and compete with China’s battery prowess. The book reveals the secrets behind CATL’s success, such as its focus on quality, cost, and scale, its ability to adapt to changing customer needs and regulations, and its vision to create a circular economy for batteries. The book also examines the challenges and risks that CATL faces, such as rising competition, technological disruption, trade tensions, and ethical concerns.
Review
The Battery King by Henry Sanderson is a well-researched and engaging book that offers a rare insight into the inner workings of the EV battery industry and the role of China in shaping the future of mobility. The book is based on extensive interviews with CATL executives, industry experts, and government officials, as well as on the author’s own observations and analysis. The book is written in a clear and accessible style, with vivid anecdotes and examples that illustrate the complex and dynamic nature of the battery business. The book is not only informative, but also provocative, as it raises important questions about the economic, political, and environmental implications of the EV transition. The book is a must-read for anyone interested in understanding the forces and factors that are driving the EV revolution and the impact it will have on the world.
Recommendation
When you think of the luxury vehicle industry, you likely think of Germany’s contributions — after all, the country is home to carmakers like Mercedes-Benz, Audi and BMW. But journalist Henry Sanderson explains how a Chinese company with humble origins eclipsed German auto manufacturers in the race to produce batteries for electric cars. Sanderson’s probing, in-depth analysis details the vital role China is playing in the transition from combustion-engine autos to electric vehicles.
Take-Aways
- German carmakers depend on a Chinese-owned battery company, CATL.
- Chinese EV batteries are more flexible and cost-effective than those from China’s international competitors.
- Investments in R&D and government subsidies fueled CATL’s success.
Summary
German carmakers depend on a Chinese-owned battery company, CATL.
Germany has long been a global automobile industry leader, yet in recent years, a little-known Chinese company has made itself indispensable to German automakers. In 2019, the Chinese company Contemporary Amperex Technology (CATL) financed the construction of a $2 billion battery plant in Arnstadt, Germany. At roughly the size of 100 football fields, CATL’s “Gigafactory” plays a vital role in giving the German automobile industry the means to go electric. The plant has the capacity to electrically power hundreds of thousands of cars annually.
“Germany was used to being a supplier to China of advanced manufacturing; but now China had moved up the value chain and was a competitor.”
Following pressure from the European Union in 2019, which had issued climate change targets, German carmakers like Volkswagen promised to transition their industry from internal combustion to electric vehicles (EVs). But Germany failed to invest in the research and development of electric batteries, and there was no domestically owned battery production plant. When the time came to switch to EVs, the German auto ecosystem had to make a dramatic change. By 2020, CATL was supplying nearly every electric carmaker in Germany.
Chinese EV batteries are more flexible and cost-effective than those from China’s international competitors.
Engineer Robin Zeng founded Amperex Technology Limited (ATL) with the Chinese-born Taiwanese businessman T.H. Chen in 1999. In 2000, Japan dominated global lithium battery production, producing 500 million batteries annually, while China produced only 35 million. ATL developed a cost-effective lithium polymer battery for portable electronic devices that had the advantage of being thinner and more flexible than competing models. The Carlyle Group invested $30 million in ATL in 2003, because it regarded the company as a “next-generation” benchmark corporation.
“China’s government was serious about supporting an electric car industry — both to clean up air pollution and reduce reliance on oil imports, but also to attempt to leapfrog Western carmakers and have a stake in the car industry of the future.”
By 2004, ATL was providing Apple with iPod batteries. In 2005, Japan’s TDK bought ATL for $100 million. The Chinese government invested roughly $60 billion in subsidies between 2009 and 2017 — an unprecedented intervention designed to position China as a global leader in the electric car industry. With government support, Zeng and his colleagues created a new Chinese-owned company, CATL. Its Chinese name means “the age of Ningde,” a nod to the small fishing town in which the original partners had founded ATL.
Investments in R&D and government subsidies fueled CATL’s success.
Because Zeng already had expertise in making batteries for the portable electronics industry, he was able to quickly position CATL as a global leader in batteries for the automobile industry. Chinese subsidies supported CATL’s meteoric rise, with the Ministry of Industry and Information Technology circulating a list of “approved” Chinese battery suppliers for EVs; that prevented Chinese carmakers from sourcing their batteries internationally.
“Subsidies had led to a rush to produce and overcapacity, but had ended up with China dominating global markets.”
CATL invested in R&D, securing more than 2,000 battery and battery-charging patents by 2019. By 2020, CATL announced the development of a “million mile” battery, which it claimed could last 16 years. Its bold ambitions didn’t go unnoticed: Tesla chose CATL as the provider for its Shanghai factory in 2020. By 2021, CATL’s market capitalization exceeded $200 billion.
CATL’s success sprang from its ability to scale an existing technology without sacrificing quality. As the world makes the switch to EVs, Zeng predicts that China will emerge as a dominant global economic power, altering the structure of automobile industry competition.
About the Author
Executive editor of Benchmark Mineral Intelligence Henry Sanderson wrote VOLT RUSH: The Winners and Losers in the Race to Go Green.