2023-06-25 07:22:00
Twenty-seven million – China today produces the most cars and the most electric vehicles. This is a score on the scoreboard, which is useless to dispute, but it is also difficult to argue with those who say that Chinese cars do not shine with technical diversity, and electric cars repeat Tesla’s decisions as one and the same. So far, yes, but in my opinion, there are at least five technologies that China has already “privatized” to dominate the intellectual sphere of the auto industry for the coming decades.
I talked about how the Chinese auto industry works in a report from a motor show in Shanghai and in an article about a visit to the Great Wall company. In short, the segment of affordable compact sedans with traditional engines is almost completely occupied by foreign brands, among which Nissan, Toyota and Volkswagen are in the lead. In the genre of compact crossovers with internal combustion engines, the championship is already with Chinese companies, but all these cars are technically similar to each other and carry a minimum of revolutionary technologies.
Among the variety of models and brands, 96% of the ICE market is occupied by cars with engines up to 2.0 liters. The Chinese auto industry has perfectly mastered the production of turbo engines, robotic gearboxes, the simplest multi-links for the rear wheels, all-wheel drive transmissions with a rear axle clutch – and touch displays. Automobile factories “package” this equipment into bodies of various formats (compact, mid-size or seven-seater crossovers), decorate it with an individual design “wrapper” (almost every brand has its own style center with a famous chief designer) and bring hundreds of thousands to the market.
The situation is similar in the segment of hybrids and electric vehicles, which in China are grouped under the category NEV (New Energy Vehicles). The only difference is that Chinese brands plus Tesla dominate here. This applies to all segments of the NEV market, from affordable compact hybrids and electric trains (BYD, Wuling, Geely, Chery) to premium crossovers (Li Auto, Nio, Xpeng). The choice is the widest, but if you look closely at the technical side, it becomes obvious that here, too, the design fantasy does not go beyond standardized solutions. For hybrids, these are small turbo engines paired with electric motors integrated into a robotic transmission, plus a separate electric motor for the rear wheels. For electric vehicles, lithium-ion batteries under the floor, electric motors in front and behind, plus cruise controls of varying degrees of unmannedness.
Both that, and another, and the third were invented far from the Chinese, but they set up mass production and ensured demand. However, so far – only in its home field, because the halved Russian market remains the largest export destination for the Chinese auto industry. However, China has a whole deck of solutions up its sleeve that will allow it to say a really new word to the entire automotive industry. These are lithium, sodium, drones, autopilots and WeChat. But first things first.
Lithium around the head
We say “electric car” – we mean a lithium-ion battery. Even if in fact it is lithium iron phosphate (LFP), lithium polymer (LiPo), lithium titanate (LTO) or lithium manganese (LMO). In any case, the charge carrier in them is positively charged lithium ions. Which thus proves to be a key element for the development of electric vehicles.
Nearly 80% of the world’s lithium production goes to batteries. The global industrially available reserves of this metal (approximately 26 million tons) are dispersed throughout the globe, but 70% are in Chile, Australia and Argentina. China is only fourth in terms of resources (7.6%), but it is China that controls 70% of the processing of lithium and its supply for the production of batteries.
A simple example: due to the fact that the Chilean deposits are underdeveloped, today Australia produces the most lithium (47% of production), but almost all of this volume is exported to China. In addition, China owns deposits in the Congo and shares in a joint project in Bolivia. Add to this the fact that China controls 70% of the world’s production of cobalt, which goes to the production of cathodes.
The top ten manufacturers of lithium-ion batteries, according to Bloomberg, in 2022 consisted entirely of Asian companies, and the share of China exceeded 55%. The first place by a huge margin is held by the Chinese company CATL (Contemporary Amperex Technology Company Limited) – 34% of the world market. Korean LG has only 14%, BYD has 12%, Panasonic has 10% of the market, and Korean chaebol giants SK and Samsung have 7% and 5%, respectively. Rounding out the top ten are four other Chinese companies, which collectively account for 10% of the market – these are CALB, Guoxuan, Sunwoda and SVOLT. All other manufacturers of the world are another 8%
That is why there are six Chinese companies in the top ten world leaders in the production of lithium-ion batteries today: CATL, BYD, CALB, Guoxuan, Sunwoda and Svolt (a former division of Great Wall Motor). Of these, CATL alone accounts for 34% of global production, while the other five companies account for another 22%.
It turns out that one country almost exclusively owns the main resource for electromobilization. And from this point of view, it doesn’t really matter how many electric cars will eventually carry the emblem of the Chinese brand, if every second of them, including Tesla, has a Chinese battery. However, there are nuances.
Firstly, lithium consumption has been increasing by about 30% annually over the past three years: from 82.5 thousand tons in 2020 to 130 thousand tons in 2022. There will be more to come. And although even a two-fold increase in this “expenditure” mathematically does not yet mean a shortage, the reserves are still finite, and each next ton will cost more and more.
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