Chinese giant CATL pushes beyond batteries into power grids, EV platforms

Zeng Hsing Industrial Co

13/11/2024 07:35

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      CATL aims to develop and manage green energy grids for
mines,
cities, and data centers
    

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      CATL plans to launch micro-grid pilot at copper mine in
DRC in
2025
    

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      CATL to launch off-the-shelf EV platform to reduce costs
for
automakers
    

  
 (Adds EU Commission comment in 34th paragraph)
       NINGDE, China, Nov 13 (Reuters) - Robin Zeng, the
billionaire founder of CATL  300750.SZ , aims to reinvent the
world’s largest battery maker as a green-energy provider and to
slash the cost of developing electric vehicles, upending the
economics of the industry that has powered its growth.
    Zeng told Reuters in an interview that he expects the
business of developing and managing "zero carbon" electric grids
could be "ten times" larger than supplying electric-vehicle
batteries, a market CATL now leads with a 37% global share.
CATL, he said, aims to build independent energy systems big
enough to power a massive data center or even a city.
    In a separate strategic move, CATL plans to offer an
off-the-shelf electric-car platform with a long-range battery
integrated into a chassis. Customers could then launch their own
customized EVs by designing only the interior and exterior. The
goal, Zeng said, is to sharply cut EV development costs - to
millions of dollars from billions - and open the industry to new
competitors.
    Zeng’s initiatives aim to unlock new growth for his
25-year-old enterprise, which got its first big break selling
lithium-ion batteries for Apple’s  AAPL.O  iPod before pivoting
to EVs in 2011 with a BMW  BMWG.DE  supply deal.
    CATL sold $40 billion worth of EV batteries last year, up
from $33 billion a year earlier. Hitting Zeng’s goal for
electric grids of tenfold revenue growth would put the battery
maker on par with state oil giants Sinopec and PetroChina
 601857.SS , China’s largest companies.
    CATL’s strategic pivots into electric grids and EV platforms
have not been previously reported.
    In an exclusive interview with Reuters on Nov. 7 outside
CATL’s headquarters in the southern Chinese city of Ningde, Zeng
also discussed the battery giant’s readiness to invest in the
United States if President-elect Donald Trump opens the door;
the path to profit for its European factories; and why the
industry’s fixation on so-called solid-state batteries as the
next big breakthrough is misplaced.
     
    A GIANT 'GREEN GRID' MARKET
    CATL’s energy-storage business grew 33% last year, outpacing
its EV-battery business. But Zeng sees a much bigger opportunity
for CATL by supplying green-grid systems including solar and
wind power, dedicated storage and a smart system to draw power
from parked EVs.
    China has the world's highest EV-adoption rates; EVs and
hybrids have accounted for more than half of all new cars sold
there in recent months.
    CATL, Zeng said, can build a zero-emissions grid big enough
to power a massive mining complex or a city. The firm aims to go
well beyond energy-storage and into power generation, Zeng said.
    "That's huge compared to EVs," he said.
    The grids, and CATL management systems, could serve AI
companies scrambling to secure green energy for data centers.
CATL would partner with providers of solar panels and wind
turbines, Zeng said.
    "A lot of the data-center companies are asking me, 'Hey,
Robin, can you really do it 100% green?'" he said, noting they
are often "giant" firms. "They have money, but they don't have
the technology."
    CATL plans a pilot project in the Democratic Republic of the
Congo with CMOC Group  603993.SS , the Chinese mining company in
which it holds a stake. The company is also working with Hainan,
an island province off China's southern coast, on a larger,
longer-term project that would combine energy storage with solar
and offshore wind turbines.
     
    OFF-THE-SHELF EV PLATFORM
    CATL supplies batteries for more than a third of electric or
hybrid vehicles globally.
    Now Zeng is pushing a new automotive offering - an EV
chassis engineered by CATL with a battery capable of running
more than 800 km (497 miles) on a single charge. The battery is
integrated into the chassis in a way that protects it from
damage in accidents, Zeng said.
    That project, code-named "panshi", or "bedrock" in Chinese,
has not been formally announced but CATL has started marketing
the platform to customers. Reuters reporters saw a demonstration
version of the EV platform at CATL's headquarters on display for
customers and staff.
    Zeng said the project could slash the cost of developing a
new EV from billions of dollars to just $10 million. That could
make a niche EV firm profitable by selling just 10,000 cars a
year, Zeng said. 
    This would open the industry to new EV players in economies
without established automakers, he said.
    CATL has shown the "panshi" technology to Porsche
 PSHG_p.DE  for a potential luxury EV and to investors in the
United Arab Emirates eager to start a local EV brand, Zeng said.
    "We are not trying to go into making a car. Never," Zeng
said. "But we try to make everything ready for carmakers."
    CATL could even supply a 3D-printed body for the car, Zeng
said.
    CATL faces competition in the new market for ready-to-make
EV platforms, including from Xpeng  9868.HK  and Shanghai-based
engineering firm Launch Design.
     
    OVERSEAS BATTERY PRODUCTION
    In Europe, CATL has been working on a plan to build a
jointly owned battery factory in Spain with Stellantis
 STLAM.MI . That deal could be finalized in January at the
latest, Zeng said.
    CATL operates a six-year-old factory in Germany, its first
in Europe, and is building a new plant in Hungary. Zeng said
those plants would be profitable in 2025 and 2026, respectively.
    The larger Hungarian plant, which will start production next
year, will produce 100 gigawatt hours of batteries on a sharply
lower cost base than the plant in Germany, Zeng said.
    The plants are part of a CATL plan to make batteries in
Europe for automakers such as BMW, Stellantis and Volkswagen
 VOWG_p.DE .
    Zeng said CATL's European business is important in part
because the region has prioritized the clean-energy transition.
But he called the EU decision to impose tariffs of up to 45.3%
on Chinese EV imports "stupid thinking."
    European automakers would be better off partnering with
Chinese automakers, as Stellantis has with China’s Leapmotor
 9863.HK , to bring lower-cost EVs or long-range hybrids to
market, he said.
    "In this battle, actually, China is more advanced," Zeng
said. "Why not learn from us?"
    The EU Commission declined to comment.
     
    LITHIUM MINING AND THE FUTURE OF BATTERIES
    Zeng said he stopped production at a huge CATL lithium hub
in the southern Chinese province of Jiangxi in September because
the price of lithium carbonate fell, achieving his aim. He
started the project in 2022 when prices were soaring.
    CATL's intervention was intended to "reduce the cost
dramatically," he said.
    CATL has faced criticism in China from competitors and
others who say its size gives it power over pricing of battery
minerals or the ability to muscle out competitors.
    Zeng said CATL was not aiming to drive rival miners out of
business by pushing down lithium prices and recognized the need
for a profitable supply chain. "As the big player in batteries,
we want to maintain, or try our best to maintain oxygen for
everyone," Zeng said.
    The reasoning for the production suspension has not been
reported. CATL said it was making "adjustments" to production
when it first announced the move in September.
    CATL's Yichun plant had also faced higher costs because of
its reliance on a hard type of lithium ore, analysts have said.
    Zeng also downplayed the potential of solid-state batteries
as the next game-changing technology.
    CATL has more than 20,000 staff in research, including 1,000
dedicated to solid-state batteries, which have been touted for
years as a lighter, more powerful alternative to the current
generation of EV batteries. 
    Zeng expects CATL to start a limited rollout of the
technology in 2027. China's government has also provided more
than $830 million to fund research on solid-state batteries
industry-wide.
    But Zeng sees sodium-ion batteries as a better bet,
potentially replacing up to half of the market for lithium-iron
phosphate batteries that CATL now dominates. Unlike other
battery materials, sodium is cheap and abundant, and the
chemistry has the potential to reduce fire risks in EVs, experts
have said.
    CATL offers a sodium-ion battery that is paired with
lithium-ion batteries for use in EVs.

 (Reporting by Kevin Krolicki and Zhang Yan in Ningde;
Additional reporting by Charlotte Van Campenhout and Philip
Blenkinsop in Brussels;
Editing by Brian Thevenot, Matthew Lewis and Louise Heavens)
 ((mailto:matthew.lewis@thomsonreuters.com;))