Nissan & Renault Make Battery Deal With CATL, World’s Largest Battery Manufacturer

Nikkei Asian Review reports that Contemporary Amperex Technology Ltd., commonly known as CATL, has signed an agreement with Nissan to supply it with batteries for the new Nissan Sylphy sedan that will be introduced in the Chinese market later this year. If you think the Sylphy looks a lot like a Nissan LEAF, you aren’t wrong. The two vehicles are built on the same chassis.

The Sylphy will be Nissan’s first volume production electric car and is expected to have a range of 338 kilometers, according to Green Car Congress. That’s right in line with the 300 kilometer number Carlos Ghosn said is critical to calming customers’ range anxiety while visiting Hong Kong last week. Until recently, Nissan manufactured its own batteries and Renault used battery cells manufactured by LG Chem. But now, Renault says the battery for its Kangoo all-electric van will be sourced from CATL, which also supplies batteries to BMW and Volkswagen. (BMW has also used Samsung SDI batteries and Volkswagen has used LG Chem batteries.)

CATL plans an IPO later this year, which it hopes will raise about $2 billion, money that will be used to expand battery production in China and may help fund a battery factory in either Germany, Poland, or Hungary. LG Chem has already selected Poland as the site of its first European battery factory (actually, it is being built in the city where CleanTechnica Director Zach Shahan lives, and it is scheduled to become the biggest EV battery factory in Europe), while Samsung SDI is setting up operations in Hungary. CATL may also be contemplating a factory in the US in the near future.

The company’s goal is to raise production to 30 GWh by the end of 2019 and 50 GWh by 2020 — more than double its 2017 production total. By contrast, Tesla’s initial stated goal for Gigafactory 1 was 35 GWh by 2020, but the planned production capacity grew considerably after launch and the max output CEO Elon Musk postulated was possible was 150 GWh. Perhaps something in between 35 GWh and 150 GWh is where the final capacity will land.

CATL is the largest Chinese battery manufacturers but until recently, it has focused mainly on prismatic cell formats using LiFePo (lithium iron phosphate) and NMC (lithium nickel manganese cobalt oxide) chemistry, primarily for electric buses and trucks and energy storage applications. We reportedly recently that it is the #1 producer of batteries for battery electric buses in China, which has well over 100,000 electric buses. But CATL is transitioning rapidly to more conventional lithium-ion battery cells favored by most manufacturers electric cars.

Data source: Research Department of Power Battery Application Branch

The backstory here is about the special relationship Chinese companies have with the central government. Earlier this month, China announced that it may relax its existing policies, which require foreign manufacturers to have a local partner in order to build factories there. That restriction may be going away, but that doesn’t mean China intends to simply throw open its doors to foreign competitors. Many of the EV incentives available to manufacturers and customers are only available for cars that use batteries manufactured in the country.

Which raises an intriguing question about Tesla. It’s no secret that it wants to build cars in China, but will they be powered by cells produced in Nevada in cooperation with Panasonic? The odds of that happening appear dim. Will Tesla source its batteries from CATL or some other Chinese battery manufacturer? Will it build its own battery factory in China that again uses Panasonic cells? No one outside of Tesla seems to know the answers to those question. Does Elon Musk?

Last year, Hyundai found itself at odds with the Chinese government over electric car production. The Korean companies thought they would use battery cells manufactured by Korean companies, but the Chinese put the kibosh on that idea. So they switched their source of supply to CATL and suddenly everyone was all smiles.

The point? Chinese industry has a unique relationship with the government that helps it compete successfully where others cannot. Carlos Ghosn referred to that special relationship during his recent visit to Hong Kong when he said he understands the frustrations with China’s trade policies that Donald Trump likes to complain about. It seems everyone outside of China understands these frustrations.

“I think what people are trying to do is to say [to China], ‘I want you to listen to me when I have total unbalanced trade and I want us to sit down together and find a way to reduce this imbalance.’” Maybe so, but CATL isn’t waiting around for the playing field to level itself out.