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Competition in the power battery market heats up

BYD plans to “spinoff” its power battery unit so that it can supply batteries to other OEM customers, several news sources disclosed recently.

According to China Association of Automobile Manufacturers (CAAM) statistics, BAIC BJEV topped the new energy passenger vehicle sales list in the first quarter of 2017 with 12,700 units, while BYD followed with 8,719 units, down by 50 percent year on year. BYD’s new energy passenger vehicle market share dropped to 17.37 percent from the more than 30 percent previously.  

It had also lost its top place in power battery market. In the first quarter, Contemporary Amperex Technology Co., Limited (CATL) ranked first with 328,000 kWh of battery supply and took a market share of 25.8 percent, up by 12.5 percent. While the number for BYD was 217,000 kWh, 17 percent and 63.9 percent respectively.

Established in 2011, CATL has focused on its power battery business and cooperated with many OEMs such as FAW,GAC and BAIC. It also plans to establish two joint ventures with SAIC Motor to better tap the market. 

One can never hold a favorable position for long.

While most OEMs hold in hands only core component production and procure the rest from other suppliers, still there are some like BYD that has a relatively high degree of vertical integration, where it makes the vehicles and supplies the components, such as battery, engines and transmissions in-house.  

It is once said that BYD could produce everything in-house except tires and glass.

Revenues for BYD’s autos and related products were ¥57.01 billion ($8.29 billion) in 2016, of which the NEV business accounted for ¥34.62 billion, according to BYD’s 2016 annual report.

It is obvious that BYD’s NEV revenues have surpassed its traditional vehicle business. Some attributed BYD’s achievement to its early entry into the NEV industry and holding of core technologies on battery, engine and electric control.

When taking supply chain into your own hands, quality control becomes easier and product compatibility better, or so it seemed.

But times have changed. Right now almost all power battery manufacturers are expanding their business. BYD’s edge on battery business has gradually weakened due to lack of competition and restriction only to internal business.  

Its rivals can select the best components from suppliers worldwide. For example, Geely’s Emgrand EV uses CATL’s battery, JJE’s engine and UAES’s electronic control system.

At present, BYD’s power battery production capacity stands at 16 GWh. In March, BYD invested ¥245 million in Qinghai Province to tap lithium for its battery raw materials.

With BYD’s full participation in the power battery game, the sector will be reshaped.

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