Yu Liyan / Yicai2017-05-11
(Yicai Global) May 11 -- Leading Chinese carmaker SAIC Motor Corp. [SHA:600104] recently linked up with the country’s largest electric vehicle battery manufacturer, Contemporary Amperex Technology Co. (CATL). Their partnership will have far-reaching implications, a market insider told Yicai Global.
The Ministry of Commerce’s antitrust bureau said in a recent statement that the two companies would set up a new-energy vehicle battery joint venture.
“The move makes sense according to the law of business development,” said Yu Xinmin, vice chairman of the China Intelligent Electric Vehicle Professional Committee. “It’s something that we all need to go through when we grow up. It’s win-win cooperation.”
Major Chinese automakers must cooperate with leading battery firms, said Zhao Guangbin, an economist at PricewaterhouseCoopers. Even if automobile manufacturers are financially capable of acquiring foreign battery producers, such deals will likely be blocked by, for example, the US government, he said.
“Batteries are the bottleneck for NEV industry development,” Zhao said. Tesla Motor Inc.’s [NASDAQ:TSLA] success is mostly attributable to its core technology -- it batteries, said Zhao.
Although CATL has maintained healthy business growth, it urgently needs to scale up production on the back of continuous technology development, and the tie-up with SAIC Motor is indicative of the recognition the company has gained, Zhao said. The state-owned enterprise will provide CATL with more resources, enabling it to develop alongside the quickly-growing market, he said.
Batteries present a critical and inevitable barrier for NEV makers’ development. Tesla plans to produce 200,000 electric cars this year, more than doubling its volume from around 80,000 units last year, Yu Xinmin said. Lags in battery supply forced Tesla to turn down or postpone some orders, Yu said.
CATL is the third largest battery producer on the market, after Panasonic Corp. [TYO:6752] and BYD Auto Co. [SHE:002594]. CATL sold 6.2 gigawatt-hours of energy storage last year. Seventeen electric and hybrid models from eight carmakers that were on display at the Shanghai International Automobile Industry Exhibition last month are powered by CATL batteries or battery modules.