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Chinese EV battery maker eyes global industry leadership, builds partnerships

Nissan's Sylphy Zero Emission electric sedan Photo: Reuters

Contemporary Amperex Technology, a Chinese battery producer established in 2011, has grown into an integral supplier in the global supply chain of electric vehicles, providing battery cells and related technologies to a number of big car manufacturers.

In its latest effort to push into the global market of electric car battery, the Chinese startup forged a partnership in late May with Japan's Honda Motor, under which the two partners will jointly develop a new battery that will power the Japanese company's flagship electric car models scheduled to hit the Chinese market by 2020.

The two companies will also launch comprehensive collaboration on the manufacturing technologies of pure electric cars and car battery specifications, according to the partnership.

The cooperation between Contemporary Amperex Technology and Honda is partly seen as a result of China's policy preference for the production of pure electric cars equipped with batteries made by domestic companies. The Chinese government will adopt an industrial policy in 2019 which will require global carmakers to produce a large proportion of pure electric cars and plug-in hybrid vehicles, triggering an immediate demand for a large supply of car batteries.

China is the world's largest electric car market, and the market size is expected to expand largely due to the Chinese government's plan to phase out the production and sales of gasoline-powered vehicles, which will be replaced by new energy vehicles.

Contemporary Amperex Technology is strengthening its foothold in Japan. Recently, the company opened an office in Yokohama to oversee its businesses in the Japanese market. The opening ceremony of the office was attended by several executives from Japan's leading carmakers such as Honda and Nissan in a clear sign of its recognition among Japanese automakers.

The Ningde-Fujian province company aims to become the world's largest car battery producer by 2020, which it believes could be achieved with the help of orders from Japanese car manufacturers. In addition to conducting marketing activities in Japan, the company will also regularly dispatch technicians to local automakers' research centers.

Its enhanced presence in Japan has touched the nerves of the local automotive companies, among which Toyota Motor is mulling plans to spend 1.5 trillion yen on the research and development of car batteries to compete with the Chinese battery maker, which has long been subsidized by the Chinese government. 

In 2016, the Chinese government rolled out a protectionist industrial policy excluding foreign battery companies from a list of battery makers which are able to obtain government subsidies. But the country's Ministry of Industry and Information Technology has recently said that the policy is expected to be cancelled by 2020, as part of commitments to open more sectors to foreign investors.

More than one tenth of Contemporary Amperex Technology's net profit was contributed by government subsidies, said the company, which reported a net profit growth of 31 percent year-on-year to 3.9 billion yuan in 2017.

The company has recently completed its initial public offering at the Shenzhen Stock Exchange, the biggest by a startup in nine years in China, indicating bigger opportunities for fundraising, which can be used for the research and development of high-performance car batteries.

During China's annual parliamentary meeting this year, Zeng Yuqun, co-founder of Contemporary Amperex Technology, told reporters at a press conference that a car battery developed by the company could provide a mileage range of up to 600 kilometers, saying that a breakthrough in the mileage range would be made in the near future. Zeng also said that the company had developed a charging technology enabling an electric car to run as long as 500 kilometers on a 30-minute charge.

There is a big possibility that the car battery industry would be dominated by Chinese companies due to their advantages in fundraising and production capacity, said Sanshiro Fukao, senior analyst at Hamagin Research Institute of Bank of Yokohama, according to a report on the Chinese website of Nikkei on May 25.

In 2017, Contemporary Amperex Technology completed battery shipments of 12 Gigawatt hours, surpassing Japan's Panasonic to gain top spot in battery sales worldwide. Panasonic, with battery shipments of 10 Gigawatt hours in 2017, was earlier reported to establish a super battery manufacturing facility with Tesla Motors in China, where the US premium electric car producer has been approved to open a company-owned plant to deepen localization.

Nick Butler, a veteran adviser to a number of companies and institutions in the energy business, wrote in an article published in the Financial Times on May 21 that batteries would be the "next battleground" in the global electric car industry.  In the article, he labeled China and Japan as the extremely ideal locations for super factories where car batteries are made, citing the two countries' positions as main centers of electric vehicle production. "The chosen locations will shape the geography of auto sectors for decades to come," wrote the energy expert.

In 2017, the global sales of new energy vehicles jumped by 58 percent from a year earlier to 1.2 million, half of which were sold in China.

Besides cooperation with Japanese automakers, Contemporary Amperex Technology has also found favor with car manufacturers in Europe.

In March, it stood out among a number of strong competitors to win the bid for a Volkswagen contract, which allows the Chinese battery maker to provide batteries and related technologies to the German carmaker's evolving Modular Electrification Toolkit program, a modular system for manufacturing electric cars. In November 2017, Volkswagen announced plans to introduce nearly 40 new energy car models in the Chinese market by 2025.

And at a press conference held in Stuttgart in May, German carmaker Daimler announced to add Contemporary Amperex Technology into its global supply chain by awarding a contract for car batteries to the Chinese company.

Co-founder Zeng has reportedly said that the company is considering opening a plant in Germany, Hungary or Poland in the hope of providing more battery cells to the local car manufacturers.

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