Tesla is coming to China to build a factory to build a car battery.

Tesla, the US EV manufacturer, is coming to China to build a car battery, according to foreign media, not the first foreign company to target the Chinese electric car market. Faced with the overwhelming foreign manufacturers, Chinese companies are making great strides forward. The development of domestic pure electric vehicles has spawned a huge demand for automotive batteries. Many auto manufacturers and capital have entered the development of lithium batteries. The battery battle in China, the world's largest electric car market, is about to heat up.

Tesla will build a factory in China and reshuffle the layout of foreign investment in China.

Tesla now owns a car assembly plant in California and a battery plant in neighboring Nevada, according to the Bloomberg Business Week website on May 5. But Tesla has recently decided to relocate electric car batteries and electric vehicles such as modelY to China, the world's number one electric vehicle market, and plans to announce its site in China as early as the third quarter of this year.

"As far as ModelY is concerned, it may be next quarter, but it will not be later than the fourth quarter at the latest. Tesla Chief Executive Donald Musk said in a recent conference call about earnings. "We will soon announce the results of the site selection of Tesla's China Superplant. "

Tesla is stepping up its plans to build a factory in China following Beijing's announcement in April that it would allow foreign-owned new energy car makers to wholly own factories in the country by 2018 at the earliest. Musk said the company's new plant will produce batteries and assembly cars.

It is understood that in addition to Tesla, Japan's Panasonic has also entered the Chinese car battery market. On March 13, Panasonic's new energy square lithium-ion battery plant in Dalian, China, officially began production and supply. Last year the battery giant launched a new battery manufacturing device and announced that it would deploy in Dalian to mass-produce and supply in-vehicle lithium-ion batteries. The plant is the site of Panasonic's first in-vehicle battery pack in China.

The reporter learned that South Korea LG Chemical has established a power battery factory in Nanjing, and another major global supplier, Samsung SDI, has also started production in Xi'an. Daimler, a German carmaker, has also set up a car manufacturing plant in China and plans to develop power cells.

As "foreign monks" plan to enter the Chinese market for water and drink, foreign battery companies in China are set to wage a battle over the same policies and circumstances, and their layout in China will be reshuffled. Faced with aggressive foreign investment, Chinese companies are neither afraid nor idle.

"The era of Ningde" is no longer unique and wants to help the world

China's supply of electric vehicles is expected to be one of the main drivers of global demand for lithium, the Financial Times reported. Goldman expects China to supply 60 % of the world's electric cars by 2030, up from 45 % in 2016.

How can Chinese companies give in to such a huge market? Even before the release of the country's new energy plan, many companies had emerged or rushed to power batteries.

The rapid increase in the sense of existence is the Ningde era of new energy technology (referred to as Ningde era, CATL). The company has been described by Japan Economic News as a "battery star" for Chinese electric vehicles. In the Ningde era, continuous achievements were made in commercial vehicle batteries and other fields. Recently, the Ningde era and the German car Jutoudaimule signed a battery supply contract.

In the era of Ningde, it was of great significance to become a battery supplier to a number of multinational car giants, especially to enter their global supply chain system, marking the beginning of global competition between Chinese battery companies and Japanese and Korean battery companies.

Another industry, Qiaochubiyadi, can not be underestimated. BYD is one of the first car companies to develop lithium iron phosphate power batteries. It not only supplies lithium iron phosphate batteries for its own new energy passenger cars and passenger cars, but also supplies batteries for other passenger car companies. In 2017, BYD embraced lithium ternary in its passenger car business(also known as lithium ternary polymer batteries, which refer to lithium batteries that use lithium nickel cobalt manganese ternary materials for cathode materials).

According to reports, BYD plans to split the power cell business into separate operations to supply other new energy car companies. This move, BYD power batteries in the passenger car market potential customers, will be several times the original. According to Shenxi, deputy general manager of BYD Lithium Division, the power battery business will be split at the end of 2018 or early 2019 and is expected to be listed within five years.

In addition, Geely, Beiqi New Energy, SAIC and other manufacturers have invested in automotive power battery projects in recent years.

According to reports, domestic power battery companies Wotema, Guo Xuan Gao Ke, are trying to win more market share.

In 2017, the performance of Bic, Voneng, Zhihang and other companies showed extraordinary growth. Analysts believe that the growth is due to their focus on the production of ternary lithium-powered batteries.

Chinese companies have traded more than $1bn in lithium mines, mainly auto companies and car suppliers, according to RWR. This compares with zero in 2016 and $178 million in 2015.

Foreign capital coming to China to reduce the cost of Chinese enterprises is an advantage

Battery manufacturers in China have performed actively in both the domestic and international markets and have so far delivered impressive results. However, this has caused many opponents to worry, as can be seen from the actions of some foreign manufacturers in China.

For the layout of foreign battery manufacturers in China, GeekCar's article believes that from the perspective of landing rhythm, choosing to localize production in the Chinese market is more to reduce the production cost of the entire vehicle. For electric vehicles, the cost of power cells is the largest. As the new energy automotive industry matures, the cost of the major car companies have also risen to a new level. People are more willing to think about how to seize this time window and provide price-competitive products as soon as possible. In this case, manufacturers usually choose power batteries as a strategic entry point for new energy vehicles.

The article said that in the form, it can be divided into two types: car companies build their own battery factory or joint venture with battery companies. If car companies choose to build their own factories, it will undoubtedly be more conducive to their product line integration, but without the help of traditional battery giants, they will inevitably face some challenges in terms of technical thresholds. Once it is decided to set up a joint venture with the battery company, it can reduce some technical difficulties and project risks.

Regarding the advantages and shortcomings of Chinese battery manufacturers, Zhaoxiang, an analyst in the automotive travel industry, said that domestic policy incentives and government subsidies are strong and the overall environment is more friendly than overseas. Production and R&D costs are also relatively low. This is the advantage of Chinese companies.

At the same time, there are also weaknesses. Mr Zhaoxiang said that compared to foreign brands, the technical performance and longevity of Chinese companies are slightly less, and there is still a lot of room for improvement. This is currently the most important weakness.

In fact, the establishment of foreign factories in China has provided a very good opportunity for cooperation and exchange of technology for Chinese local companies, but there are also competition and threats.

Mr Zhaoxiang told reporters that the influx of foreign capital would create competition and impact, such as a market share for local brands in the supply options for many high-end brands and models, but that cooperation and competition would stimulate the development and upgrading of technology. Avoid the failure of enterprises under the policy umbrella to face the competition and challenges of the market.

Strong are strong, good opponents will inspire more potential?

2019 will be a turning point for China's electric cars to truly become popular. But battery companies and carmakers are not on the same starting line. There is no doubt that China will become a "testing ground" for how to build an industrial chain from resource assurance, manufacturing to reuse.

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