The current supply situation and future partnerships between major automakers and battery manufacturers are changing rapidly.
The electric vehicle (EV) trend led by Tesla has not only attracted more startups in recent years, but also driven the active transformation of traditional automakers and the rapid growth of the market.
Instead of a transmission system, EV directly transmits power to the front and rear electric engines through the battery. Thus, car makers could reduce a lot of energy transmission consumption through their proprietary designs, and also improve their pack of batteries technology, which enables their EV to have higher energy density and enjoy greater advantages.
Therefore, battery is the key component of EV. As new and traditional car makers are moving into the EV business, it has become an important strategy for EV makers to establish a deep cooperative relationship with battery manufacturers, and invest in factories together, in order to meet the needs of their own designs and development of EV, as well as the high proportion of the cost of batteries in EV. Just like Tesla and Panasonic jointly built cell production lines in the early days, there will be more and more EV OEMs internalize the value activities of manufacturing to control costs.
The current supply situation and future partnerships between major automakers and battery manufacturers are changing rapidly, as shown in Figure 1. Although there is a diversity of development, there is still a pattern which can be roughly divided into three groups: (1) American automakers have active ties with Japanese and South Korean battery manufacturers; (2) European car makers plan to cultivate local battery supply systems; and (3) Chinese, Japanese and South Korean automakers cooperate closely with their local battery manufacturers.
Figure 1: The strategic partnerships between main EV OEMs and battery suppliers.
In terms of American car makers, Tesla has jointly built cell production lines with Panasonic, GM and Ford will build plants with LG Energy Solution (LGES) and SK On, respectively, while Rivian’s main battery supplier is Samsung SDI. It can be clearly seen from these partnerships that American EV OEMs rely heavily on the Japanese and South Korean battery suppliers, and from another perspective, Japanese and South Korean battery manufacturers are actively exploring the North American market. For example, LGES and Samsung SDI plan to build plants in North America with Stellantis, respectively.
What needs further explanation is that most of the models produced locally in China by the US and European car makers are in cooperation with Chinese battery manufacturers. For example, the battery supplier of Tesla Model 3 is CATL, while GM Wuling are Great Power (main supplier) and CALB (new entrant). It is worth noting that Tesla’s recent strategy of adopting LFP battery in its entry-level models globally will certainly drive other car makers to establish LFP battery partnerships with Chinese battery manufacturers.
In terms of European car makers, VW Group, BMW Group and Volvo strategically built plants with Northvolt, while Stellantis and Daimler cooperated with Automotive Cells Company (ACC). This clearly shows that European automakers want to establish a local battery supply system and use it as the main force for future supply.
In contrast, there are two kinds of cooperation between European car makers and other non-European (especially Chinese) battery manufacturers: one is outside Europe, for example, the joint venture factory of VW and Guoxuan High-tech mainly responds to the demand of the Chinese market. The second is the initiative of Chinese battery manufacturers, for example, China’s Envision AESC cooperated with Renault of R-N-M Alliance (Renault also has a cooperation plan with Verkor of France) to set up a joint venture plant in Europe, and China’s SVOLT established a battery factory in Germany to win orders from EV OEMs such as Stellantis.
In terms of Chinese, Japanese and South Korean car makers in Asia, the close cooperation with battery manufacturers can be said to be the national teams led by automakers, for example, close partnerships between SAIC and CATL in China, Toyota and Panasonic in Japan, and Hyundai and LGES in South Korea. Under the influence of national policies and corporate culture, there are looming barriers for these countries to protect local companies, which have become the best tool for automakers and battery manufacturers to work together.
Therefore, the car makers of these three countries choose their own country’s battery manufacturers as the main strategic partners, rather than cooperate with those of other countries. Even if they go to markets outside their home countries, they still cooperate with battery manufacturers of the same nationality. This is one of the biggest differences between the EV industry in China, Japan and South Korea and that in Europe and the US.
Note: Researcher and Research here defines EV as battery electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV), with passenger car as the primary purpose.