Auto Giants "Steal" Batteries: From "Buying, Buying, Buying" to "Making Their Own" – What Does This Major Supply Chain Shuffle Mean?
Hello everyone, I'm your financial journalist. Today, we're talking about a subtle yet profound shift in power within the electric vehicle (EV) industry.
If you've been following the EV sector recently, you might have noticed a trend: in the past, when buying a car, people mainly cared about whether it used batteries from CATL (Contemporary Amperex Technology Co., Ltd.). But now, leading car companies like Xiaomi and Li Auto are frequently mentioned in news about battery manufacturers. Some are investing in them, others are collaborating on research and development, and some are even trying to take control of the production details of these batteries.
What's really going on behind this? Are car companies overdoing it, or has the industry's logic changed? Let's break down this news into five key points to help you understand this game of power.
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1. Why Are Car Companies Suddenly "Disobedient"? – Breaking the Dominant Position
Core Logic: They don't want to be "held hostage" by one supplier.
Over the past few years, there was an unwritten rule in the Chinese battery market: CATL was the undisputed leader. Data shows that in the first seven months of this year, CATL accounted for 45.37% of the domestic market share. That means almost one out of every two domestically produced electric cars used CATL batteries.
It's like going to the grocery market where there's only one big supplier with the best selection of goods. As the buyer (the car company), you have money, but you have limited say because CATL not only has price advantages but also leads in technology, putting car companies at a disadvantage in negotiations.
More importantly, CATL once implemented a "lithium mine rebate" program, which essentially meant that if you signed a long-term contract to buy 80% of your batteries from them, they would settle the cost of lithium mines at a lower price. While this saved car companies money, it also locked them into CATL's supply chain.
Now, as some of these contracts are coming to an end, and car companies don't want to put all their eggs in one basket, they're starting to wake up. Giants like Xiaomi, Li Auto, NIO, and Tesla are introducing second and third-tier suppliers such as AMEC (Americk Microelectronics Technology Corporation), Xinneng Technology, and EVE Energy. This is not just about having more options but also about gaining more bargaining power when negotiating with leading battery manufacturers.
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2. From "Buying Finished Products" to "Controlling Details" – What Do Car Companies Really Want?
Core Logic: Batteries Are No Longer a "Black Box"; They Are a Core Variable in Vehicle Design.
In the past, the relationship between car companies and battery manufacturers was simple: the battery manufacturers produced battery packs, and the car companies just installed them, making minor adjustments to the connectors. This was known as "black box procurement" where car companies didn't know the specifics of how the batteries were made and didn't care, as long as they worked.
But now, companies like Xiaomi and Li Auto are taking a different approach. Huang Zhenyu, vice president of Xiaomi Auto, put it plainly: "We want to be involved in the entire process." What does this mean?
- Previously: The battery manufacturer said, "This battery has an energy density of X and a cost of Y," and the car company would say, "Okay, I'll pay 1000 yuan."
- Now: The car company says, "I want this battery, but the anode material must be this type, the cell structure must be this way, and even the rolling process during production must meet my requirements."
Why such detailed control? Because the battery directly affects the car's range, charging speed, safety, and even the layout of the vehicle's interior. If car companies only choose from finished products, there's little room for optimization. However, by getting involved from the material, structure, and process stages, they can better integrate the battery with the chassis and thermal management system.
It's like renovating a house. Before, you bought a fully furnished house with furniture and appliances already in place; you had no choice. Now, you want to design the layout yourself, specify the type of flooring and pipes, and even require the construction team to work according to your plans. It's more troublesome, but the result is a house that suits you better, and the cost structure might be more efficient.
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3. Saving Money and Ensuring Supply: Rational Choices Under Dual Pressures
Core Logic: Second-Tier Manufacturers Are 5% Cheaper and Can Be a Lifesaver.
Car companies are making these changes for both technological reasons and practical considerations related to money and supply.
First, saving money: Second-tier battery manufacturers like Xinneng and AMEC are about 5% cheaper than CATL. For a car with a 100-kilowatt-hour battery that costs 80,000 yuan in batteries, this can save 4,000 yuan per car. If they sell 10,000 cars a year, that's a substantial profit of 40 million yuan. In an industry with thin margins, this is significant.
Second, ensuring supply: At the end of last year, there was a shortage of battery supply, and car company executives had to go to battery manufacturers to secure deliveries. Li Auto suffered from this, as CATL's tight supply led to delayed car deliveries, forcing them to switch suppliers to alleviate the issue.
Introducing second-tier suppliers is like having a backup water pipe in addition to the main one. Although the quality of the backup pipe might not be as stable, it ensures there's water when the main pipe fails. For companies producing in large quantities, "stable supply" is sometimes more important than "ultimate performance."
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4. Equity Partnerships: From "Client-Supplier" to "Partners"
Core Logic: Using Money to Gain Influence and Reduce the Risk of Building Own Factories.
Li Auto invested 2.65 billion yuan in AMEC, becoming its second-largest shareholder. This is more than just an investment; it's a strategic partnership.
Building a battery factory by itself is a major capital commitment with significant risks. Factories cost billions, and technology evolves rapidly, so if the market changes, the factory could become a burden.
The current model is: car companies provide money, define the technology, and place orders; battery manufacturers provide the factory, workers, and manufacturing experience.
- For car companies: They don't need to build their own factories but can ensure that battery manufacturers prioritize their needs through shares and deep involvement in research and development, even getting priority in production when capacity is tight.
- For battery manufacturers: They receive substantial funding from car companies, which relieves financial pressure (for example, AMEC was previously losing money) and locks in long-term orders, improving capacity utilization.
This is a win-win partnership where car companies gain control over technology and supply, and battery manufacturers get funding and orders.
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5. Concerns and Challenges: Can Second-Tier Manufacturers Stand Out?
Core Logic: Lower Costs and Flexibility Are Advantages, but Quality Consistency Is a Weakness.
While car companies are embracing second-tier manufacturers, this doesn't mean CATL will be replaced, nor does it mean second-tier manufacturers will easily take over.
The biggest challenge is quality consistency: CATL is strong not only because of its technology but also because it can produce almost identical batteries with a high quality rate. Second-tier manufacturers still lag in technology and process control. For example, Geely has filed a claim against AMEC, and GAC Aion's ride-hailing vehicles have experienced issues with Xinneng's battery cells bulging.
Batteries are safety-critical components, and any issues can be serious. Therefore, although car companies are introducing second-tier suppliers, management becomes more complex. Xiaomi has sent quality teams to battery factories for "penetrative management" to monitor every step and prevent quality issues.
Additionally, consumer perception is a barrier. Many car owners still trust the brand of CATL and think second-tier batteries are unreliable. Car companies need to put more effort into marketing to address these concerns.
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Summary: What Will the Future Look Like?
This transformation won't completely break CATL's dominance, but it will make the market more diverse and competitive.
1. CATL Remains the King: With its massive R&D investment (22.1 billion yuan last year) and scale, it will still be the preferred choice for most car companies, especially for high-end models.
2. Rise of Second-Tier Manufacturers: Manufacturers like Xinneng and AMEC will gain market share in mid-to-low-end or specific car models with their cost-effectiveness and flexible services.
3. Car Companies Gain More Control: They are no longer passive buyers but are becoming "definers" of battery technology through self-development, investment, and joint development.
What Does This Mean for Consumers?
- More Choices: In the future, when buying a car, you might not have just the option of CATL or non-CATL batteries; there will be a variety of brand combinations.
- Potential Lower Prices: Increased competition could lead to lower battery costs, which may reduce the overall price of cars.
- Quality Matters: When buying cars with second-tier batteries, pay attention to the car company's quality control measures and after-sales policies.
In summary, the competition in the EV industry has shifted from focusing on the car itself to the supply chain. Whoever controls the core battery technology and supply stability will have the upper hand. And car companies are working hard to become that person with the power to define the future of the industry.