Electric car frenzy turned battery makers into electricity brokers

Automotive is investing billions of dollars in bringing new electric vehicles to consumers in the United States and other global markets, but their success depends on securing the most important and expensive part: the battery.

 

Electric car frenzy turned battery makers into electricity brokers

A handful of companies based in China, Japan, and South Korea make automotive-grade battery cells, which has disturbed the traditional dynamics between carmakers and spare parts suppliers. These battery companies - although little known to the general public and relatively new to the auto industry's vast supply chain - are key to the manufacturers' goals of bringing dozens of new EV models to US showrooms by 2025.

 

"Vehicle makers don't have enough batteries to live up to their short-term commitments" said Sam Jaffe, managing director of Karen Era, an energy storage firm in Boulder, Colorado. "A lot of battery factories are being built. But there is a problem with the battery supply shortly. All the car companies coming on this occasion are suppressing.

 

Intellectual property tensions, logistics, production delays, and battles have increased tensions between this new generation of carmakers and suppliers, who benefit far more than suppliers of camshafts, mufflers do and pistons do. The auto industry's sudden embrace of EVs can lead to more incidents, such as recent memories of four different models of battery fire hazards.

 

To avoid the possibility of Germany, Ford Motor Company, again one of the companies now has to work with other carmakers to meet European emissions regulations.

 

'Disruptive supply disruption'

Although battery manufacturers may increase output in the short term, shortages are a major problem. Volkswagen AG unit Audi had to suspend production of its e-Tron in February, and Tata Group's Jaguar Land Rover Automotive PLC, which had earlier this month cut off production of the I Pace due to disruptions with battery-supplying LG Chem Limited. Had suspended

 

Ford and VW have warned that a legal dispute over trade secrets between LG Chem and South Korean co-producer SK Innovation could "disrupt catastrophically supplies." The US International Trade Commission is expected’ to issue a review of the dispute on October 26.

 

According to a research report by UBS Securities on October 21, the cost of an EV in batteries alone range from half to one-fourth, and the top six suppliers controlled 87% of the global market last year. "Despite China's growing exports, we expect the overseas battery market to remain strong," he said.

 

Battery providers are wary of over-committing any single auto car and are willing to pay the billions of dollars they have spent on production lines around the world. Many are hedging their stake by entering into agreements with more than one partner. The small club includes two South Korean rivals, China's contemporary Amprix Technology Company and Japan's Panasonic Corporation.

 

"Battery suppliers can be great with their OEMs," said Nathalie Capti, a former battery engineer at General Motors and Apple Inc., who now runs Battery Lab, a consulting firm in San Francisco. "There are only a few cell suppliers that can meet their standards and volume. Nowadays, car manufacturers are at the mercy of cell suppliers.

 

Tesla Cell Productions


Panasonic has long been involved in hip-hop with Tesla Inc.: The two companies operate a large-scale battery plant known as the Gig factory outside Reno, Nevada. Elon Musk, chief executive officer, complained that the Japanese company was moving at a rate that limited production of Tesla's Model 3 sedan. Panasonic is adding the 14th battery cell production line to the Nevada factory, a move that will increase production by 10 percent. But it doesn't look like Tesla: it also has a joint venture with Toyota Motor Corporation.

 

"Today's batteries can't scale fast," Musk, outlined the company's technology plans at Tesla's "Battery Day" event last month. "There is a clear path to success but there is still a ton of work to be done."

 

Tesla also acquired batteries from CATL and LG Cam. But California-based carmaker Palo Alto is in dire need of batteries and Kasseri is eager to wean a company that relies on external suppliers. Tesla plans to build its cells on a pilot line near its auto plant in Fremont, California and is building the building in a new factory in Austin, Texas.

 

During the horrific events of the environmental crisis, the EV push has made an immediate new demand. European cities such as Madrid and Paris and the Canadian province of British Columbia are among the powers that drive internal combustion engines. And California, which is suppressing smoke from devastating wildfires, announced last month that it would ban the sale of new petrol-powered cars in 2035.


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