In China automakers are surpassing traditional battery manufacturers in terms of battery production. As this years batch’s NEVs to qualify for vehicle and vessel tax incentives highlights. This strategic move towards vertical integration allows automakers to:

• Secure a stable battery supply: Given the rapid growth of the EV market, automakers are likely looking to mitigate risks associated with relying solely on third-party suppliers.
• Potentially reduce costs: By cutting out the middleman, automakers could achieve cost savings in the long run, potentially leading to more competitive EV pricing.
• Have greater control over battery technology: This allows them to tailor battery specifications to their specific vehicle designs and performance requirements.

This trend doesn’t mean traditional battery suppliers are out of the game. Securing partnerships with multiple automakers remains crucial for them to achieve full production capacity. The data indicates that most battery suppliers need to support 4-8 EV models to reach full production efficency.

However, there are exceptions to this rule. LG, for example, supplies batteries for Tesla’s Model 3 and Model Y in China, installing about 2.5 GWh per model. This strategy of focusing on a few high-volume models proves successful for both LG and Tesla.

Similarly, most large battery suppliers provide over 1 GWh of batteries per model, indicating a focus on high-capacity batteries for demanding models.

The 390th batch announcement underscores a dynamic shift in the Chinese EV landscape. While established battery giants like CATL remain dominant, the growing trend of automakers producing their own batteries indicates a move towards greater self-sufficiency and potential disruption in the battery supply chain. It is clear this dynamic will shape the future of global EV markets.