(Bloomberg) – Chinese giant that makes electric car batteries for Tesla Inc. and Volkswagen AG has developed a power supply that lasts more than a million kilometers – an industry benchmark and a potential windfall for car manufacturers trying to convince the drivers of their electric vehicle. models.
Contemporary Amperex Technology Co. Ltd. is ready to produce a battery that lasts 16 years and 2 million kilometers (1.24 million miles), said President Zeng Yuqun in an interview at the company’s headquarters in Ningde, in southeast China. . The warranties on the batteries currently used in electric cars cover about 150,000 miles or eight years, according to BloombergNEF.
Extending this lifespan is considered a key breakthrough since the pack could be reused in a second vehicle. This would reduce spending on ownership of an electric vehicle, an advantage for an industry seeking to recover the sales momentum lost by the coronavirus epidemic and the drop in oil prices that has made gas consumers more competitive.
“If someone places an order, we are ready to produce,” said Zeng, 52, without disclosing whether contracts for the long distance product have been signed. It would cost about 10 percent more than batteries currently inside electric vehicles, said Zeng, whose company is the world’s largest battery manufacturer.
Concerns about the loss of resistance of batteries and their replacement after a few years is a factor which slows the adoption by consumers of electric vehicles. Tesla announced last year that it would put a million-mile battery into production, and General Motors Co., last month, said it was approaching the milestone. This distance is equivalent to going around the planet 50 times.
Anticipating a rapid return to growth in the electric vehicle industry, CATL is investing dollars in research and development into advances in battery technology. While the coronavirus epidemic will drive sales down this year, demand for EV will increase in early 2021, said Zeng, who founded CATL a decade ago.
Car buyers who hold back during the pandemic are creating pent-up demand that will be triggered from next year, led by high-end models, he said. CATL customers include BMW AG and Toyota Motor Corp.
Zeng’s comments reinforce the view that electric vehicles should be better able to withstand the economic downturn caused by the epidemic than gas consumers. Battery-powered cars will increase to 8.1% of all sales next year in China, which accounts for the largest share of global sales of electric vehicles, and to 5% in Europe, predicts the BNEF.
“The pandemic could have a lasting effect throughout 2020, but will not be a major factor next year,” said Zeng. “We have great confidence in the long term.”
CATL signed a two-year contract in February to supply batteries to Tesla, a major boon for the Chinese company, because the American leader in electric cars has so far mainly worked with Japanese company Panasonic Corp. and the South Korean LG Chem Ltd. negotiations, Tesla CEO Elon Musk traveling to Shanghai to meet Zeng.
CATL batteries are expected to be installed in the Model 3 sedans produced in the gigantic new Tesla factory near Shanghai, whose deliveries began around the beginning of this year. Batteries are the most expensive part of an electric vehicle, which means that suppliers of these components have a chance to reap a lion’s share of the industry’s profits.
Zeng said he often shared ideas with Musk, the two exchanging text messages about technological and business developments. CATL is strengthening its relationship with Tesla, with issues such as cobalt-free batteries on the agenda, said Zeng.
“We get along well and he’s a fun guy,” said Zeng of Musk. “He talks about cost all day, and I make sure we have the solutions. “
Zeng said Musk had also asked for his help in obtaining ventilators for coronavirus patients. The US billionaire delivered more than 1,000 respirators from China to officials in Los Angeles in March.
CATL’s shares have increased six-fold in Shenzhen since its IPO in 2018, giving the company a market value of around $ 47 billion. Tesla, by far the most valuable manufacturer of electric vehicles, has a market capitalization of about $ 160 billion.
A “trigger point” for electric cars will occur once they overtake gasoline vehicles around 2030-2035, said Zeng. This view is more ambitious than that of researchers like the BNEF, which predicts that the change will take place a few years later.
CATL, which is adding a production unit in Germany, is expected to manufacture more than 70% of the batteries required by BMW, one of the first customers, said Zeng. CATL also works with Volkswagen’s Audi unit and cooperates with Porsche, he said.
Zeng has not ruled out building a factory in the United States, although he said the company has no specific plans at the moment.
“Our team has achieved success in competing with our global rivals in overseas markets,” said Zeng.
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