Geely's purchase of LG Nanjing Factory to save orders in the Chinese market?

On May 17th, the Wall Street Journal reported that "Volvo's plug-in hybrid cars made in China will use high-end Korean battery technology. Unlike direct purchases, these LG chemical power batteries are produced in Hengyuan, Zhejiang Province. "

LG Chemical helped Hengyuan to establish a production line and authorize the use and production of its battery technology, the report said. Batteries produced in Hengyuan will also be used for gramming.

This also explains the Volvo auto president and chief executive officer Ken? Samuelson said at the Geneva Motor Show in March that "our solution is to cooperate with Geely and provide locally produced battery products according to Volvo's related battery requirements. "

"Automobile Business Review" was rejected when Yuning, vice president of Geely Group responsible for overseas merger and cooperation business, sought proof. Admitting only to have been in charge of international companies such as LG, Volvo and Linkock, he declined to disclose more information.

But the Auto Business Review has been able to basically restore events from some of the information previously available and a large number of public reports. This is a major event in the field of new energy vehicles in China. Volvo is the first automaker to solve a domestic battery problem without switching battery designs.

As of May 1, 2016, China's policy requires new energy vehicles that receive subsidies to use battery companies in the catalogue of companies with automotive power batteries as suppliers, because LG, Samsung and other Korean batteries have not been included in the catalogue. New energy products that lead to the use of Korean batteries need to switch suppliers.

Volvo, SAIC, GM, and Volkswagen all use Korean batteries. Policy changes have led other companies to choose to switch suppliers. In addition to development and verification work, the development cycle of new energy products for many car companies has been extended. SAIC officials have suggested that "it will take at least a year to replace existing batteries. If product upgrades were added, a two-year transition period would be required. "

What is more affected is that Samsung SDI, SK, LG and other Korean battery companies that have established factories in China have reduced production or even shut down.

According to different sources, Geely subsequently opened negotiations with LG Chemical. At the Shanghai Motor Show in April 2017, the two sides completed the contract. Geely wholly acquired the right to use all production equipment and manufacturing technology intellectual property rights of LG Nanjing Plant. The two sides also established follow-up cooperation. LG will help Geely Group's high-end brands, including Volvo, continue to upgrade battery technology.

In mid-2017, Geely demolished the factory's production equipment to Hengyuan Battery Base in Jinhua, Zhejiang Province(Hengyuan is a company that focuses on automotive power batteries under the Geely Holding Group). Up to 100 LG engineers helped Hengyuan debug the production line to meet LG quality standards. At the end of 2017, commissioning was completed and entered the mass production stage.

The factory has a capacity of 1GWh and can supply battery demand for 80,000 hybrid cars. Some people in Hengyuan once said that "this production line has more than 2,000 patents. China's most cattle battery manufacturing technology is now Jiliheng! "

Car power batteries are divided into electric cores, modules, and PACK. It is said that this cooperation Geely has obtained all the technical use rights from the electric core to PACK, and the purchase price is very fair.

Industry professionals analyse that because the Nanjing plant can not produce as planned, the equipment is depreciated day by day, and it also costs personnel and maintenance costs. Volvo is a big customer of LG(Europe's largest customer), and now it also adds Linkock and London taxi customers. Selling to Geely was a quick fix to solve the problem of vacant Nanjing factories, saving or even expanding orders in the Chinese market, and retaining a global customer, the total calculation does not suffer.

The benefits are even more obvious. Other companies that have adopted foreign batteries since the introduction of the "domestic battery" policy have experienced a two-year break and supplier switching, and Volvo has been affected for a much shorter period of time.

In addition, we observed that the CMA platform was shared between Linkk and Volvo, that the equipment and technology of the LG battery plant were acquired under its own control, and that the battery supply of the Linkell new energy model was guaranteed, and that the same level of parts suppliers was maintained between Linkk and Volvo.

For Volvo and cachet, which are global market-based brands, adopting the same battery supplier's products at home and abroad is obviously an important quality assurance and the most economical approach.

The page contains the contents of the machine translation.