The gate of history has a small hinge. Elon Musk and his minions know how to pack thousands of laptop batteries into the Lotus Elise. The electric vehicle revolution has begun.That’s for sure Department Not so in the modern EV story there Its. CATL has also had a lot to do with helping EVs become mainstream.
Wired This week we unveiled a detailed story about Zeng Yuqun, CEO of Contemporary Amperex Technology Limited, widely known for CATL. The company is the world’s largest manufacturer of lithium-ion batteries, with a market capitalization larger than Ford and General Motors combined. So, best known as Robin, is in 29th place. Forbes A list of the wealthiest people in the world.
what Wired The article reveals the role that Volkswagen Group CEO Herbert Diess played in creating CATL. In 2010, Zeng worked for TDK, a Japanese company that manufactures batteries for laptop computers and more. Dies was in charge of purchasing BMW. He asked several European battery makers, including Bosch, about supplying batteries for electric vehicles, but no one was interested.
Here comes one of the little hinges of history. Dies asked Zeng if TDK was interested in making batteries for EVs, but Diess said he couldn’t imagine making such a big battery and gave the idea. Say “denied”. However, the following year, TDK decided to sell its EV battery division. Zeng and a few colleagues bought it and renamed it CATL. Handelsblatt In 2020. “I am grateful to him.”
Meet CATL and Zeng Yuqun
Dís may have prompted CATL to enter the EV market, but over the years Zeng has gained a reputation as a founder who can learn not only business but also batteries.Ray Singh, a former editor of Beijing-based media China car review Said Wired When CATL purchased a US patent on mobile phone batteries in the early 2000s, Zeng worked to improve the battery design himself. When BMW agreed to use CATL as a battery supplier, it was Zeng who read the 800-page requirement line by line, according to Yunfei Feng, a research associate at IMD Business School.
BYD was once the largest battery manufacturer in China, but focused on LFP technology. CATL chose to focus on the NMC battery instead. At that time, automakers had an advantage over NMC because they were primarily interested in range. CATL has rapidly expanded its business in China and has begun to establish business relationships with European automakers. Within a few years, it has passed BYD and has become the largest battery manufacturer in both China and the world.
When China announced a subsidy for electric vehicles, it stated that it would only be available for vehicles with Chinese-made battery cells. These subsidies have created a demand for electric vehicles to move CATL forward. Like Elon Musk, So believes in vertical integration. According to Kevin Shang, a research analyst at WoodMackenzie’s Global Energy Storage Team, CATL will invest the profits from selling batteries in the entire supply chain, from mining to material manufacturing, battery cell manufacturing and even recycling. Was able to be used for. Currently, the company manages lithium supply in China, South America and Indonesia.
Faced with industry fears
Bill Russo is the former head of Chrysler’s Northeast Asian business in Beijing. He currently runs Automobility, a Shanghai-based advisory firm.He says Wired“The long-standing policy of the automotive industry has been to never provide a single source because it empowers relationships with suppliers so much.” CATL under Zeng said, “Would you like to take it?” Has built a reputation as a type of company that “leaves it.” We do not want to manufacture batteries to the customer’s specifications and insist on long-term efforts from the customer.
But in the world of commerce, nothing is the same as before. Manufacturers hedge their bets by building relationships with other companies. Tesla will soon be using CATL and BYD LFP batteries. Panasonic is also a major supplier of Tesla. General Motors is building a battery plant with LG Energy Solutions, and Ford is partnering with SK Innovation to build two new battery plants.
CATL and Chinese Syndrome
Automakers are anxious not to rely too much on any supplier, but Zeng’s most serious thread could come from China itself. “In the West, the style of leadership of personality worship is valued, encouraged and celebrated. In China it is dangerous,” says Bill Russo. “You can’t be bigger than Beijing.” I warned.
Zeng is the exact opposite of Elon Musk. He is not in the limelight and rarely interviews. Insiders point out that Zeng does not help his business, but operates in a notorious environment that can hinder his business. One example is Jack Ma, co-founder of Alibaba and one of the wealthiest individuals in China. Alibaba’s IPO was swiftly canceled and fined $ 2.8 billion in antitrust violations after a speech criticizing Chinese regulators for curbing innovation. Ma’s personal property has been doing $ 10 billion in haircuts since last year.
The Chinese government has established a so-called “common prosperity” policy that encourages sharing the wealth generated by the technology industry with everyone who has contributed, not just the C Suite. China’s President Xi Jinping describes “common prosperity” as one of China’s most important goals for the next 15 years. In June, banks in China were told to curb executive compensation.
CATL is already facing soft criticisms of its behavior. In November 2021, the Shenzhen Stock Exchange expressed “excessive” concern about CATL financing. The crackdown on China’s electric vehicle and battery industries could have serious implications for the industries the world relies on for a green transition.
Concerns have been raised that Beijing rather wants to replace CATL and other battery giants with a network of small businesses. However, experts are divided on the magnitude of the risks facing CATL. Russo believes that the risk of CATL depends on Zeng’s ability to maintain a balance between government and public figures.
CATL may have been important in helping China establish its EV dominance, but recent technological crackdowns have led Beijing to clash with broader political ambitions. It warns that the industry may suddenly be reorganized. “Too much control is the bottleneck,” says Russo. “And that’s what neither the industry nor the government wants.”
Take away
While it’s remarkable that CATL will become the world’s dominant battery maker, maintaining the top position in China is not necessarily about shareholder value. The government is still dominated by the Communist Party, which has a historical interest in benefiting workers. It is clear that freedom of speech is not a Chinese value. In fact, it may be a one-way ticket to ambiguity, no matter how wealthy the individual is.
Jack Ma’s lesson should be seen as a warning to anyone who thinks he or she is bigger than a party. Elon Musk may think he can decide who says what on the internet after buying Twitter, but he’s deceiving himself. The tech industry has a history of surrendering to Chinese government orders, provided that the Chinese government is allowed to do business in China.
For Zeng Luqun, the way forward is never slowing down. He has doubled the number of CATL battery researchers and they are working hard to complete the sodium ion battery. This will be a countermeasure against the high prices of lithium battery raw materials today. The company is also building its own battery replacement infrastructure in China.
CATL named it by offering the best batteries at the best prices at the moment when NMC’s chemistry was dominant. If sodium batteries or battery replacement are in the future, CATL will be ready under the guidance of Zeng Luqun.
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