In the era of new energy vehicles, power batteries are undoubtedly the heart, and their importance is self-evident. Riding on this trend, power battery manufacturers have made a lot of money, and at the same time, competition in this field has entered a fierce stage. Let’s take a closer look at the global power battery giants, CATL, BYD, LG, Sino-Air, Panasonic... Whenever we talk about which of the two is better, the answer is not simply “this one” or “that one”, it’s hard to tell the difference.
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Just recently, BYD's Frey Battery made peace with another power battery manufacturer. On October 7, Fudi Battery officially announced that it had signed a "strategic cooperation memorandum" with South Korea's LG in Seoul on September 4.
It is reported that Fudi Battery was established in 2019 and belongs to BYD’s “Fudi Series”. Previously, BYD independently packaged its vertically integrated business into five "Fudi" companies. Its business covers the R&D and manufacturing of five core parts of automobiles - batteries, electric drive systems, automotive electronics, body and chassis, and interior and exterior decorations.
From an official perspective, after the signing, the businesses of both parties will conduct in-depth exchanges on competitive advantages such as technology and products to deepen mutual understanding.
The so-called in-depth communication may mean that the focus of the cooperation between the two parties is not the field of power batteries, which has always been in a competitive relationship. The two parties will carry out in-depth cooperation in home energy storage, robots and other smart home fields.
The industry predicts that on the product side, Fudi Battery may use the consumer battery LFP4680 to cooperate with LG, involving battery cells, modules and system aspects, so as to create products for the European and American markets.
Judging from the naming of LFP4680, this battery should be a lithium iron phosphate cylindrical battery. Looking at the development trend of the entire industry, it is very difficult to produce 46-large cylindrical batteries. First, the demand for terminals to enter the market has not yet been released, and the production of large cylinders is hindered; second, the performance and manufacturing of large cylinder products have not yet fully matched user needs; third, the sources and scale of high-capacity raw materials and structural parts are limited.
The most important thing is that because the production qualification rate cannot increase, the production efficiency is difficult to improve, and the exploration of structure, technology, and materials is still undergoing constant changes and explorations.
Although it is difficult, its advantages are obvious enough. Through structural innovation and material system, the 46 series large cylindrical battery can achieve more efficient manufacturing, higher performance and lower cost to meet the needs of electrification. Therefore, whoever takes the lead in mass-producing 46-series large batteries will gain market initiative. Driven by the market, 46-series large batteries will become one of the main technical routes for battery manufacturers.
In addition to Tesla, domestic and foreign car companies such as BMW, Mercedes-Benz, General Motors, and NIO are all deploying cylindrical batteries. BMW has signed cylindrical battery cooperation agreements with battery manufacturers such as CATL, Envision Power, and Everview Lithium Energy, and the results are expected to be seen in new-generation models.
This cooperation between the two parties in the consumer field of batteries still provides great possibilities for further cooperation between the two parties.
In addition to cooperation in the product field, Fudi Battery and LG are also communicating on the US Inflation Reduction Act and future cooperation strategies.
In 2022, the United States passed its Inflation Reduction Act (IRA), marking that the United States is entering a new era of decarbonization. The bill covers hundreds of billions of dollars in long-term business incentives and tax exemptions. It is the largest action taken by the United States to reduce greenhouse gas emissions so far.
However, the bill involves the U.S. government providing high subsidies to the domestic electric vehicle industry, which has strong unilateralism and protectionism, which has made many other countries dissatisfied. Therefore, the cooperation between Frey Battery and LG may be trying to find a way to win the European and American markets.
Regarding why domestic power battery manufacturers are keen on the "going global" phenomenon, Zhu Huarong, chairman and party secretary of Changan Automobile, once publicly stated that the new energy vehicle industry has transformed from "little electricity, shortage of electricity, and expensive electricity" in the past to today's overcapacity of batteries.
According to data from the China Automotive Power Battery Industry Innovation Alliance, from January to June this year, the cumulative installed volume of power batteries in my country was 152.1GWh, a cumulative year-on-year increase of 38.1%. However, during the same period, my country's cumulative output of power batteries was 293.6GWh, a year-on-year increase of 36.8%. In other words, the production of power batteries in the first half of this year was nearly twice the number of vehicles installed, and the production was much higher than the demand.
The decline in capacity utilization has also led the industry to think about how to digest the problems caused by overcapacity. Going overseas has brought new "ideas to solve the problem", and Europe and North America have become popular destinations.
On the one hand, China's electric vehicle market is already crowded with power battery manufacturers, and the space left for these companies is indeed limited. On the other hand, the outside world also expressed their incomprehension about the drama of shaking hands and making peace. After all, these two companies have long been entangled with each other and have been in the top three of CATL.
SNEresearch disclosed that from January to July this year, BYD was the world's second largest power battery manufacturer, with a battery installed capacity of 58.1GWh and a market share of 16%, second only to CATL (132.9GWh, 36.6%) and higher than LG New Energy (51.4GWh, 14.2%).
Netizens couldn't help but joke: The enemy of my enemy is my friend. The powerful alliance between BYD and LG has also been interpreted as a possibility of jointly challenging the dominance of CATL.
Regardless of whether it is as speculated by the outside world, the cooperation between BYD and LG is a foregone conclusion. As Lei Lei, general manager of Fudi Battery's consumer battery division, said, this cooperation will not only help improve the market competitiveness of both parties, but will also enable both parties to achieve a "milestone leap" in developing strategic consensus.