China EV Problem & Battery Breakthroughs by CATL

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1:36Welcome to the Pulse podcast on everything electric cars. It's a life and death decade for the automotive industry. And on this podcast, for once, it's me hosting and I do apologize profusely for that. Normally you have the lovely dulcet tones of Imogen Bogle and even once Robert Llewellyn, but today it's me. And there's a reason for that because I'm actually in Beijing at Auto Beijing with the fantastic Elliot Richards, who almost all of you will be familiar with. Elliot's been our Chinese-based correspondent for many years now, talking to us about everything that's going on in China. And you cannot talk about the automotive industry these days without talking about China.

2:15so we're here at Auto Beijing to have a look around and today's podcast is going to be all about the themes that are emerging from this show. Hello Elliot, how are you? I'm very good, thank you. How are you? I'm good, I'm good. It's very surreal to be here with you and also where we are right now. Do you want to tell people where we are sat at this precise moment?

2:34Elliot Richards:Yeah, so for those of you I guess who are listening to this, we're actually sat on the CATL stand within an EVTOL aircraft by Autofly. So we're in the back seats, very comfortable, and our cameraman's sitting in the pilot seat. And there's two seats behind us as well, so we're saying this is a perfect vehicle for Elliot and his wife and three children. Might be a bit pricey, I suspect. But the reality is we're here at Auto Beijing, so if there's some background noise and you are listening into this, I do apologize. We've obviously done our best to find a relatively soundproof place to conduct this podcast so we're here uh inside this very sort of futuristic uh vehicle talking about the the show and how are you more generally how's life treating you in and it's just a whirlwind time to be here covering this subject right yeah absolutely i mean things change so much um and so fast in this industry that's actually very hard to keep up and a show like this is so overwhelming like the size of this show this is the biggest biggest show that's ever happened in china the biggest auto show in the world is 380 000 square meters of space it's 1.3 kilometers from end to end as we both experienced yesterday um and there's there's a lot of themes that i think are coming out from from today i think we'll discuss that later but yeah it's it's changed a lot since the last time you guys were here and then since 2023 when trying to open back up after COVID.

4:01Elliot Richards:Huge changes in the industry but I think the first thing, the most important thing for us to talk about is CATL right because that's for me the anchor behind all of the innovation and all of the cars here is what's happening on this stand that's why we you know we started the Auto Show walk around video with CATL and we're filming here right now. So we're going to talk about CATL I think that you're right I think that's an incredibly important part of everything that's going on in the market. We're also going to talk a little bit about China, where the market really is. Lots of different conjecture online.

4:35Is it collapsing? Is it thriving? Is it going to take over the world? We're going to talk about that. And then we're going to talk a bit about the show highlights as well. I agree, this show is so big, it's been a bit of a blur. So we're actually talking at the beginning of day two, once we've had a bit of time to process everything that we've seen. So we'll get into those themes shortly, But for now, a quick advertising break. Our three free YouTube channels on EVs and clean energy tech are funded by our fun-packed Test Drive-tastic events in the North, West and Greater London, and our events Down Under.

5:09Next up, Everything Electric heads to Harrogate, and then Cheltenham. All events include a B2B EV day and commercial vehicles too. And now, back to the episode. OK, so let's cut straight to the chase. CATL is a company that if you're in the industry, you will almost certainly have heard of. But for the average person out there, you might be unaware of who they are and what they do. I really like the acronym CATL because the longer form name is... Is it Contemporary Amperex Technology Limited? A bit of a mouthful. So CATL is the brand. And actually, in complete transparency, we're here this week as a result of CATL's kindly helping us to come out and be at this show.

6:00And actually, it's the best company, I think, for us to come with because they are integrating their tech into pretty much everything. So, one of the things that's always fascinated me about the rise of Silicon Valley was the Intel inside processors that actually made the whole thing work. And here we've got another ingredient brand in CATL, which is doing fundamentally the same thing, not just for electric cars, but for electric tech of all shapes and sizes. And the interesting thing is CATL might not be a household name yet, but I've got a feeling like Intel, it will be in the not too distant future.

6:36And a quick fact before I start asking Elliot questions is that of the batteries made for battery EVs around the world, CATL are making 39 % of them. That's right. EYD is second with just over 16%. So between those two Chinese behemoths, they're actually producing well over half the batteries. But CATL, four out of 10 battery electric vehicles are basically carrying their batteries, which is extraordinary. And the tech is amazing, which we'll get into. But tell us a bit about the success story. How has this been possible for this company to come about and to suddenly be dominating the landscape to this extent?

7:14Elliot Richards:I mean, there's a multitude of reasons. And I think they were one of the earliest ones to develop batteries in China. So they started developing batteries for things like Nokia phones. I think that was the ATL. And they're engineers, right? So everyone in that company is an engineer. So Robin Zheng, the CEO, he is an engineer by trade, by Tartt. So it's a very engineer led company. And so they've been able to really build up their battery expertise, you know, with gadgets, with phones, with other things. And then when China's Made in China 2025 strategy came into place in 2015, that gave them the motivation.

7:51Elliot Richards:You know, they had subsidies, they had many benefits from the Chinese government in order to then develop for automotive in a big way. So they suddenly had a huge customer base of all of the Chinese OEMs who were like, well, we need batteries, where do we go? It's more BYD or CATL. And so that really spurred on the innovation. And then they invested heavily into research. I think they got something like 120 ,000 researchers working for their company. And I think something like, I can't remember the numbers, I'm going to get it wrong, but a few thousand of those have PhDs. They're doing so much research into the latest and greatest battery tech that if you haven't heard the innovation has come from CATL, then it's probably not a real innovation.

8:34Elliot Richards:So we spoke about Donut Labs, for example. You know, the jury's still out, how legitimate that is. But if they're saying they can do it, I'm like, well, why hasn't CATL been able to do it with their thousands of people researching? So for me, that's why this company is so important. They're at the cutting edge, but they're already, as I said, in so many different cars. And actually, there's a fantastic thing on the stand, which I'll share on my LinkedIn account, which is actually, it's kind of a Rolodex of all the cars that they're in. And it flashes through a whole range of different cars. And actually, I would consider myself an EV expert.

9:08And there were a whole bunch of cars from Chinese manufacturers that I was unaware of, which really surprised me. I think, I'm not even sure, we'll do the test later. I'm not even sure Elliot would know all of them. There are so many. But for those listening in the West, it's important to say that CATL is supplying Tesla, I think BMW, many other Western automakers are getting their batteries from CATL as well. And I think from my perspective, they've just started to make a few more announcements, as they do, and it can be a little bit easy to become, I guess, complacent about all the announcements coming out of China.

9:40But the latest stuff, again, is another re-raising of the bar, BYD and Geely and CATL, all these companies seem to be sort of competing with each other. But CATL's recent announcement take things a step further. Can you kind of unpack a few of the different announcements that have come out recently, if you can remember them?

9:57Elliot Richards:Yeah, I've got my notes. So, I went to a press conference a couple of days ago, and every time I go to these conferences, you learn something new about what's going on with the company. So, now, one in every two cars sold in China has a CATL battery inside. So, I think it's 47%. So, that's very impressive straight away. But their new battery technology, so there's one called the Shenzheng battery, and they've just announced the Shenzhen 3, so now this comes with super fast charging, so 10 to 80 % in 3 minutes. 10 to 98 % is 6 minutes and 27 seconds. That's just mind-blowing, just that alone, yeah.

10:32Elliot Richards:And then even in minus 30, it only takes 9 minutes. So, you know, we've heard the announcements from BYD with their flash charging, the VCA-TL have their own kind of similar developments, but these are now batteries which it it takes the same amount of time to fill up a petrol car and i think that's what is going to happen in the next kind of two years is the rollout of this you know super fast flash charging you know high discharge rate charging and for those cars to be able to enjoy those benefits they all have to upgrade to 800 volt architecture 900 volt architecture 1000 volt architecture and all underpinned by the batteries.

11:13Elliot Richards:So, Shenzhen was one announcement, so the super fast charging and the battery health for those batteries after a thousand charges still remains at 90%. In the press conference, they started showing equations. I've never been in a press conference. It's all like flash images, like lifestyle images, but in there they said, this is the equation. And I had no idea what they were talking about at that point. I think they're fairly confident that someone who works on YouTube can't take a screenshot. Definitely not. Definitely not. It just shows you how engineer focused they are. No other company would be brave enough to show equations on the screen during a press conference.

11:51Elliot Richards:For me, the most interesting one is around weight. For the first time ever, I've heard a company say weight is an issue. you know these cars now have or customers demand cars with a thousand kilometers of ev range or or whatever it might be i think we might talk about weight and size later in this podcast yeah that's right but they they said well if we reduce the size of the weight of the battery and give the same amount of range then it's going to benefit the handling the brakes the the lifetime of the bearings the bushings and everything else by up to like 30 or 40 percent So, also it's a response to what's happening in Norway and France.

12:31Elliot Richards:They're very conscious of the weight limitations coming in for cars. So, they've got their Chilin third-generation battery, which is an NCM battery. It starts with a Q, Chilin? Yeah, with a Q. And that has 280 watt-hours per kilogram, so it's pretty high. But it means the battery for 125 kilowatt battery is 600 kilograms instead of 850 kilograms for a LFP battery. so they've shaved off 200 kilograms from that battery now it might not sound like much but if they're moving in that direction will we get the 400 kilogram battery well you know we're heading towards that much better place where batteries don't become so much of a burden um and you can get these amazing ranges but if you have flash charging then do you need a car with a huge battery and so much rain so it's you know there's so much happening you know what's going to be which part of the industry is going to grow quicker will it be the the weight weight of the batteries or will it be the fast charging or will it be a combination of both um so that was very very exciting for me to hear someone talking about weight um and then the other one is the they've got this condensed battery now so using their aircraft technology in their battery so i I think last year they announced the 500 watt hour per kilogram aircraft battery.

13:50Elliot Richards:So they've condensed that now to a 350 watt hour per kilogram battery, which now means they can get a thousand kilometers from an EV, like CLTC range, but 800 kilometers maybe from a battery. So because we've seen from this show, the cars seem to be getting larger and larger and larger and bigger and bigger. I think having lighter batteries, which have much more, which are much more energy dense, will really help the industry try and reduce its weight in general. And obviously this podcast is going on everything electric cars, but fundamentally CATL is integrating battery tech into all types of transport and other technologies as well.

14:29But we're sat here in a vertical takeoff and landing vehicle, but it's the marine industry. I think if anyone's going to make short haul aviation possible, it will be CATL. So this has got huge kind of, very, very kind of transport industry-wide ramifications. But the interesting thing is, I think that a lot of the narrative around EVs is driven by fear and ignorance. Yes. And so all decision makers are probably underestimating some things and overestimating other things. I think that's fascinating that you get these kind of super long-range batteries. They can charge really fast. But at the moment, a lot of focus is downstream is people putting a lot of charging in the ground that maybe is slower.

15:12maybe putting in the wrong type of charging, maybe we'll end up with too much charging, because suddenly, actually, if you can charge very, very quickly, and the battery range is much longer, that's going to change that equation to such an extent. So that's my fear sometimes with misinformation, and the fear that's out there, actually, it's not enabling us to plan properly. I think we could end up with a lot of sunk assets that actually we didn't need in the long run. So anything else? Because I'm fascinated always by sodium. Oh yeah, yeah, yeah. So the Naxxra battery is their sodium battery. And that's showing great promise as well.

15:47Elliot Richards:Yeah, so we went to the far north of China to see the Naxxra battery. It was minus 30 outside. It was horrendous. But they were releasing their new sodium ion battery with Chang 'an, and they're putting it in one of their more affordable sedans, a fairly plain sedan. And they announced that that will be going to mass production in Q4 of this year. So slightly later than we originally thought, but that is really game-changing tech. Yes, the range isn't quite so high. It's something 400 to 500 kilometers at the moment, but it can work in icy cold conditions. It's so much cheaper, so much more affordable that it will just bring down the price of electric cars.

16:28Elliot Richards:So that for me, I can't wait to actually see that come onto the market and see what impact that has. I think it's kind of a, not a Trojan horse, but I don't think people realize the impact that battery is going to have. Well, I think, again, that's another part of the equation that people are perhaps underestimating is the degree to which the Chinese manufacturers have built themselves around sort of vertical integration around the supply chain, cost down advantages that's going to give them. If they get to sodium iron at scale, at speed, that's going to enable them to make cars even more cheaply and give legacy OEMs even more of a headache.

17:02So, it's really, really interesting. But I think the sodium mine is great because we don't want to be just solely reliant on lithium, for example. LFP has obviously been a huge boom. The developments that are going on now are fantastic. And this is just part of an ongoing change. I mean, where we will be another two or three or four or five years, I really cannot even begin to fathom it, the speed at which companies like CATL are developing the marketplace. So, even though I think we're a bit ahead of the kind of the mainstream media and what's out there in the market, I think there'll be discussions going on within CATL and other companies that would probably blow our tiny minds.

17:41Where are we going to take this? And I don't know, maybe AI can play a role perhaps in advancing these equations and moving things forward even faster. So, CATL for us is a really fascinating story. We'll keep telling that for sure. We could talk about it, I suspect, for hours. We don't have that time. So let's move on to the second topic. Now, you don't consume a lot of Western media because you live here in China. You live in Shanghai specifically. You're not probably consuming too much Chinese media either, which makes you kind of an interesting kind of canvas on which to sort of paint this discussion.

18:19But back at home, it is now clear. You go on LinkedIn as one platform, for example. You go on YouTube. it's very clear that people have woken up to the fact that something very seismic is going on in China. It's going to have a huge impact on the world. It's mostly all technologies, but obviously vehicles are going to be a big part of that. And cars are hugely exciting, aspirational topics. So there's loads of posts now on LinkedIn, loads of videos on YouTube, loads of podcasts about this subject. It's suddenly become the talk of the town. But it kind of oscillates between China's in crisis, they've got too much supply, all the businesses are consolidating, they're going to go out of business, and China's going to take over the world.

19:03Obviously, the world's much more nuanced than that. What are you seeing? Is there a sense of panic here, a sense of pride? What is actually going on in the Chinese market, if you can summarise it?

19:14Elliot Richards:Yeah, how long do we have? This episode is brought to you by Hongkouk. The Hancock ION tyre is built exclusively for electric vehicles, engineered to deliver what EV drivers need most, confident grip, quietness, energy efficiency and long mileage. As the official tyre partner of Formula E, Hancock proves its EV technology is at the highest level of performance and brings that same innovation to every ION tyre on the road. Yes, I think for me, I was trying to think about this last night. There has been a huge shift in what we're seeing here today, right? We're seeing a lot more SUVs, a lot more people talking about huge ranges like the smart hashtag six sedan.

20:00Elliot Richards:It's got 1 ,800 kilometers of range. Why do you need that much range in a sedan? Dan. I think there is a fear in this market because overseas expansions haven't gone well for everyone. We've seen some automakers not doing very well in Europe and other markets. And back home here, there's the price wars. So things are getting so competitive now. So what's happened is these automakers have responded by saying, well, we know the Xiaomi sells really well so let's just do a xiaomi copy we know big three row suvs with hybrid um uh powertrains in them are also selling really well so we'll just do that so if you go in some of these halls now so all you see is three row suvs and sedans which look like xiaomi's and there's kind of this fear no one really wants to take a risk with anything anymore there's no real stat there's a couple of interesting cars here but there's nothing real um which really stands out and i think that's because the the automakers here are scared they've got price wars at home things are not selling um very well in overseas markets so they just revert to this kind of kind of blob suv kind of type and that's showing that they're not confident the only automakers who are taking risks at the moment is smart with a hashtag too who knows if that will sell citron are doing some interesting concepts whether they sell very well and that's really about it.

21:27Xiaomi have made quite a lot of progress. Xiaomi have made a little bit their vehicles look a little bit different they're coming out of the tech world it kind of feels like that yeah stylistically they look a little bit different but you could say they look a bit like Porsche yeah absolutely I mean there's no such thing unfortunately as an original idea as much as we might fool ourselves into thinking that but what's really interesting for me is to see these big beasts whether it's Chinese companies or legacy automakers adopt this herd mentality. They just chase the herd mentality. The political pendulum swings towards EV at one point, maybe back towards hybrids in more recent times will swing inevitably back towards battery EVs because that is the better technology.

22:09If you're coming on this podcast, you might not be surprised to hear me say that, but there are a whole range of ways in which it's better. We think it will win out. It's just a matter of when. So I'm just sort of fascinated by the competition in China, because coming to this show, I think we'll talk about some of the specific highlights. But thematically, I think you're right. It doesn't feel it's bigger than the Shanghai show. So that belies the rumors that the Chinese car industry is on the floor. But it doesn't seem quite as distinct to me. There does seem to be some copycatting going on, some herd mentality going on.

22:48But how many sales are there, not just in the Chinese domestic market, which is huge, but globally, to go around amongst all of the automakers, new and old, that just aren't enough. That is an inescapable reality. It's the year of the fire horse, isn't it, here in China, which is a year which augurs big things happening, potentially. It feels like that consolidation piece. It feels like everyone's got themselves here to Beijing. It feels like the second half of the year could be potentially... Spicy. Spicy. That's a very, very good word for it. Are there any companies you fear for more than others?

23:28Elliot Richards:I would say no one's safe. No one is safe. I mean, you look at... So, Geely, for example, closed down their Gidu car brand after, what was it, two or three years? They have cars on the streets you know they were they were pushing it hard and now it's gone and they didn't save the cup their own company they didn't save it um it's hard to pinpoint any automakers who are really struggling obviously the legacy automakers are some are doing better than others you know some of the japanese ones are responding in the chinese market so toyota's got five evs on their stat china market only right is it enough maybe not honda for example they just closed the factory I think last week in China because they don't sell ICE vehicles anymore in China.

24:10Elliot Richards:So legacy brands, the more agile legacy brands like VW, they've built and designed a car with Xpeng in China, for China. It looks fabulous. It looks really high tech, good software. Is that the answer? I don't know. Time will tell, right? But it seems to have a very good reception. I mean, with the Chinese automakers, the jury's still out. I think you're going to see definitely consolidation with some of those. You've still got the big state-run companies like SAIC. They'll start swallowing up some of the brands, but we will see some casualties for sure. And you can't ignore the macro. At the moment, there is still conflict in the Middle East.

24:48There's still the Chinese economy to consider as well. These things aren't divorced from each other. You know, excusing the pun, but the Chinese economy has been a strong engine within which to kind of launch this armada of different EV brands. But if the economy actually is weakening as well, that's also problematic. So putting Iran and the cost of fuel to one side, because that definitely strengthens the case for battery EVs, how is the Chinese economy in general? I imagine it's quite opaque here. And statistics can be skewed. And we see statistical economics played out in UK media, American media, et cetera.

25:28and even then numbers can be shown up in a certain light. But I imagine here you're just not getting that level of transparency in what's going on with the wider economy. What's the vibe, I guess, here?

25:40Elliot Richards:Yeah, so I can't give you any numbers. But the sense here is that things are tightening. So, for example, people are staying in their jobs for longer, they're not changing their jobs. As a result, they're spending less, they have less disposable income, so they're not buying as many cars. So, for example, Well, BYD's sales year over year are down 50%. 50%. They were selling 600 ,000 a month last year. Now, they're only selling 300 ,000 a month. But it's still a huge number, but that is a significant drop for BYD. And BYD has affordable models here for a few thousand pounds. So, if they're hurting, then there's definitely problems, right?