European car companies need Chinese batteries

In mid-September, European Commission President Ursula von der Leyen officially announced that the EU would start a countervailing investigation into Chinese electric vehicles.

The bloc's market was being distorted because the price of Chinese EVs is “kept artificially low by huge state subsidies.”

In her State of the Union address, Ursula von der Leyen mentioned her views on the current European electric vehicle market. She believes that China's new energy vehicle prices have remained low for a long time due to huge subsidies, which will seriously "distort" the European domestic market.

▲ European Commission President Ursula von der Leyen Picture from: REUTERS

The EU's months-long "countervailing investigation" has been launched, and the subsequent additional tariffs will weaken the competitiveness of domestic new energy sources overseas to a certain extent. However, in the long run, the introduction of the investigation policy can only delay the overseas expansion of domestic new energy vehicles. The penetration of domestic new energy into the European market in terms of industrial ecology may be difficult to contain.

Exports overtake, industrial chain migration

2023 is a special year for China’s automobile industry.

According to relevant statistics, in the first half of this year, China exported 2.34 million complete vehicles, a year-on-year increase of 76.9%; of which, new energy vehicle exports were 795,000 units, a year-on-year increase of 112.7%. With the strong growth of new energy vehicles, China's total automobile export volume has surpassed Japan's and has become the world's largest automobile exporter.

In the European market, China exported about 350,000 new energy vehicles to Europe in the first half of the year. As a reference, the overall sales volume of new energy vehicles in the European market during the same period was 1.419 million units, and the market share of domestically exported new energy vehicles reached 24.6%. Although China's new energy models have not yet formed a brand effect in Europe, their significant market share has made the European market smell the crisis in advance. The countervailing investigation is not a temporary initiative, but has been brewing for a long time.

▲Picture from: AFP

Against the background of continued positive exports, the export ecology of Chinese automobiles has begun to change. Compared with the pursuit of a single export volume, domestic automobile companies have a more positive attitude towards overseas local production. From "quantity" to "quality", not only are they content with selling cars, Chinese car companies also plan to relocate their industrial chains overseas.

In fact, more and more domestic car brands are seeking to "take root" overseas. Take BYD, the "big brother" of domestic new energy, as an example. According to Weibo blogger @蒋凯change, BYD currently has three main production capacity bases in its overseas planning, namely Uzbekistan, Thailand and Brazil.

Among them, the Uzbekistan factory will produce two models and is expected to bear a production capacity demand of 50,000 yuan. The target is to be officially put into production in September this year; the Thailand factory will focus on two pure electric models and will be put into production in mid-2024, with a target of 150,000 yuan. production capacity; the Brazilian factory is expected to have a production capacity of 300,000 units. According to the plan, BYD's overseas base production capacity will exceed 500,000 units in 2025.

The factory in Uzbekistan, which seems to be the fastest to be realized, has recently become a reality. On September 27, Uzbekistan officially issued a statement announcing that it had officially signed a cooperation agreement with BYD. The two parties will set up a joint venture factory in Uzbekistan to produce hybrid and electric vehicles. After the completion of the third phase of the project, the annual production capacity of the joint venture factory can be Reaching the level of 300,000.

Of course, this is not just BYD’s idea. Markets in Central Asia and Southeast Asia are only the first step in the migration of the industrial chain. If you want to build a brand overseas, Europe is the next stop.

Moving production lines to Europe has been accelerated on the agenda.

Yu De, general manager of SAIC's International Business Department, confirmed at a media communication meeting that SAIC plans to set up a local factory in Europe and is currently in the site selection stage. "Please come in, go out." SAIC has enough say in the European market. From January to August, SAIC sold a total of 150,000 new cars in the European market, a year-on-year increase of 1.5 times; BYD also sold a total of 150,000 new cars in the European market after the Munich Auto Show this month. , also sent a signal to build a factory in Europe. Li Yunfei, general manager of brand public relations, revealed that BYD will complete the location selection of local factories in Europe within this year.

For the EU, it may be a little late to start the anti-subsidy investigation. Regardless of whether domestic new energy is involved in dumping issues, domestic car companies have already loosened the European market by shifting from a single production center to a multi-center production structure. Trade barriers.

Battery advantages, feedback products

Compared with the "big fanfare" transfer of the industrial chain, battery installation is more like a silent penetration. In addition to the positive transformation of domestic car companies in the export structure, power batteries have brought more "Chinese elements" to the European market.

▲Data collection comes from: SNE Research

According to statistics from SNE Research, the global installed capacity of power batteries reached 304Gwh in the first half of 2023, a 50% increase compared to the same period (June 2022). The total installed capacity throughout the year is expected to reach a new high.

What’s interesting is that Chinese battery manufacturers are steadily carving up a share of this large power battery pie with a total capacity of 304 Gwh. In the past six months, Ningde Times has contributed a total of 112Gwh of power battery installed capacity, a year-on-year increase of 56.2%. The global power battery market share has reached 36.8%, firmly occupying the "top spot" in global power batteries; BYD, which ranks second, has a cumulative installed capacity of 112Gwh. Approximately 47.7Gwh.

Doing a simple digital conversion, the total installed capacity of power batteries of CATL and BYD alone is close to 160Gwh, accounting for 47.05% of the global share and nearly half of the market.

▲Zeng Yuqun, CEO of CATL

Behind nearly half of the market is China's strong grasp of the upstream and downstream of battery production. In the complete ecological chain of power batteries, domestic batteries have almost covered the complete upstream and downstream layout. In terms of upstream raw materials, domestic companies have taken the initiative in battery minerals. Relevant data estimates that China controls 41% of the world's cobalt resources and more than 50% of the world's lithium resources. At the same time, China is also the largest control country of nickel metal; midstream and downstream On the other hand, China has found a shortcut to cheap batteries (lithium iron phosphate replaces the cathode), and lower factory construction and manual refining costs have given domestic battery companies a firm advantage.

In an earlier article by Dongchehui, it was reported that Tesla’s Model Y in Europe was equipped with BYD’s lithium iron phosphate battery for the first time; this is not an exception. Mercedes-Benz’s new CLA was unveiled at the Munich Auto Show in Germany not long ago. The concept model also has the same plan. According to Mercedes-Benz officials, the pure electric CLA will provide a lithium iron phosphate battery version in the future, and the battery supplier is BYD.

According to data from the European Automobile Manufacturers Association, in August this year, the European pure electric vehicle market share increased for 13 consecutive months and exceeded 20% for the first time. Pure electric sales accounted for more than 1/5 of total sales, becoming the third most popular car purchase. choose.

For European car companies that are actively transforming into electrification, Chinese batteries are an unavoidable hurdle.

In an earlier article by Dongchehui, it was reported that Tesla’s Model Y in Europe was equipped with BYD’s lithium iron phosphate battery for the first time; this is not an exception. Mercedes-Benz’s new CLA was unveiled at the Munich Auto Show in Germany not long ago. The concept model also has the same plan. According to Mercedes-Benz officials, the pure electric CLA will provide a lithium iron phosphate battery version in the future, and the battery supplier is BYD.

In addition, the advantages of domestic batteries are still expanding. Also at the Munich Auto Show, CATL released the world's first lithium iron phosphate 4C supercharged battery, Shenxing Supercharged Battery. At the same time, CATL announced that it has built an R&D center and two production bases in Europe to achieve localized R&D and production.

European car companies need Chinese batteries.

Whether it is from the transfer of the industrial chain or the battery core of electric vehicles, the globalization of China's new energy has become a major trend. The European countervailing investigation seems to be just a small storm in the grand chapter of new energy going overseas.

At the end of the article, I would like to quote German Chancellor Olaf Scholz’s opening speech at the Munich Motor Show:

Competition should stimulate us, not scare us.

Policies cannot stop the penetration of batteries and industrial chains. Instead of spending energy investigating unhealthy competition, it is better to look for relationships from the upstream and downstream layout of the industry.

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