The German-American physicist John Bannister Goodenough patented the technology that enabled the production of lithium iron phosphate batteries (known as LFP for its English nomenclature) in 1997. In 2019, at the age of 97, he was awarded the Nobel Prize in Chemistry for his contributions to the development of lithium-ion batteries . However, Goodenough made a critical error; he failed to transition his innovation into the American industry, resulting in a minimal impact in the Western world.
Wang Chuanfu, the founder of the Chinese company BYD , did not make the same mistake. In 2002, he recognized the potential of Goodenough’s technology and instructed his research and development (R&D) team to explore LFP batteries’ capabilities to reduce China’s dependence on nickel and cobalt . This decision led BYD to share the current leadership position in the battery production industry with CATL . In fact, in 2008, BYD launched the first car equipped with an LFP battery.
China Manufactures 57% of Electric Vehicle Batteries
China has become the largest electric vehicle market globally. By 2025, it will sell more electric cars than combustion engine vehicles, partly due to government subsidies. Additionally, China is the largest exporter of electric vehicles. In 2023, the nation exported approximately 1.7 million electric vehicles, which accounts for over 30% of its total automobile exports .
However, its international expansion faces significant challenges due to tariffs imposed by the United States and the European Union , among other regions that struggle to compete with Chinese electric vehicles. Moreover, as previously mentioned, China also leads the world in the production of lithium batteries. In the realm of electric vehicles, the country under Xi Jinping produces 57% of the batteries used by these vehicles. CATL and BYD are the largest lithium battery manufacturers in the world, holding a market share of 37.9% and 17.2% respectively, according to the consultancy SNE Research.
In 2017, for the first time, the market share of NCM batteries surpassed that of LFP in electric vehicles.
China has achieved this leadership position due to several factors. Firstly, it is the largest producer of lithium and rare earth materials, which are the primary raw materials used in battery manufacturing. Additionally, it controls the processing of these materials and can produce batteries on a large scale at highly competitive prices. However, there is another crucial ingredient in this recipe: BYD and CATL lead the global battery industry due to their capability for innovation and adaptation .
In 2017, Chinese government subsidies prioritized the development of nickel batteries with higher energy density, causing many Chinese battery manufacturers to invest in NCM technology. These lithium-ion batteries use a cathode made of nickel (Ni), cobalt (Co), and manganese (Mn), hence their name. BYD fell behind during this period. In fact, for the first time in 2017, the market share of NCM batteries surpassed that of LFP batteries in electric vehicles, and by 2019, NCM batteries dominated the market.
However, BYD did not give up. Wang Chuanfu believed that safety and thermal stability of batteries were paramount, leading to the launch of a new R&D project that culminated in the development of Blade batteries . These devices are thinner, have a modular structure, and can be easily integrated into electric vehicle chassis. This gamble paid off for BYD. By the end of 2020, BYD and CATL together controlled 66% of the Chinese LFP battery market for electric vehicles, up from a mere 6% in 2019. This represents the true strength of the two leading Chinese companies in the global battery industry.
Image | BYD
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