Another very deep dice, this one from Bloomberg Businessweek December 23:
Inside the world’s largest battery plant, delicate robot arms coat sheets of aluminum and copper foil—each only 5 micrometers thick, about a 20th the diameter of a human hair—with an electrode slurry, a process that resembles nothing so much as spreading jam on bread. The coated material, along with a thin separator film, is guided along by massive steel rollers, precisely calibrated to ensure each strip is neither too tight nor too loose. The next step is to wind the strips into tightly packed spirals known as jelly rolls and seal them into casings. More robotic arms then inject an electrolyte solution, turning the assemblage of metal and chemicals into a highly efficient lithium-ion battery.
The process is largely automated, but a retinue of human inspectors trained to detect the slightest imperfection keeps watch at stations throughout the factory. A single air bubble or misaligned weld could lead to a short circuit, a rare glitch in production. Once inspected, the aluminum-enclosed battery packs will be loaded onto shelves to let stand for hours to days before being shipped to electric-vehicle factories around the world.
This facility, covering almost 2 square miles in Ningde, in southeastern China, is designed to produce 60 gigawatt-hours of EV batteries annually, enough to power 1 million Model Ys for Tesla Inc. It’s the flagship manufacturing hub for one of the world’s most important automotive companies, Contemporary Amperex Technology Co. Ltd., or CATL. More than 1 out of every 3 EVs made this year had a CATL battery inside, according to data from South Korea-based SNE Research—including cars from BMW, Ford, Honda, Mercedes and Tesla, as well as Chinese brands such as Xiaomi. In May the company raised $5.3 billion by selling shares in Hong Kong, and its 57-year-old founder, Yuqun “Robin” Zeng, is now one of the 30 wealthiest people on the planet, according to the Bloomberg Billionaires Index, with an estimated fortune of $58.3 billion.
But for CATL, as with other companies that come to lead their industries, unique success is creating unique challenges. Growth is slowing in the Chinese EV market, the world’s largest, where more than 50% of new passenger cars sold are either fully electric or plug-in hybrids. BloombergNEF forecasts the country will soon have a surplus of battery manufacturing
, with predictable effects on prices. CATL is setting up factories in Europe and Southeast Asia, regions where it hopes to build businesses as successful as the one at home. Zeng has an eye on North America too. But his company has been discouraged from manufacturing in the US by various government policies, and President Donald Trump’s administration has maintained a ban that prevents it from bidding on government contracts—all while gutting measures designed to encourage EV adoption. (Ford Motor Co., which licenses technology from CATL in the US, recently said it would take $19.5 billion in charges related to its money-losing electric operations.) Meanwhile, even in more EV-friendly Europe, governments are growing wary of depending on Chinese companies for batteries and other critical technologies.
CATL is therefore treading a fine line, between being perceived as an essential innovator and an ominous threat. In an interview with Bloomberg Businessweek, Zeng says he intends to push forward regardless, pumping out more and better batteries and pushing CATL’s engineers to develop more ways for customers to use them. “Blindly chasing geopolitical changes would essentially cripple our operations,” he says. “That’s why having a Plan B is a core part of our strategy.” Having built an engine of unprecedented scale to electrify global transportation, in other words, Zeng has no choice but to run it ever faster and further.
Zeng’s entrepreneurial story has a familiar ring in China. He was born in 1968, the height of the Cultural Revolution, and came of age in the 1980s, as the economy began to open to private enterprise. Like millions of ambitious students of his generation, he studied engineering in college, then spent a few unremarkable months at a state-owned company in his home province of Fujian. He soon tired of the routine and moved, in 1989, to Guangdong, where pro-market reforms were proceeding much faster than elsewhere.
Zeng found work with a unit of TDK Corp., a Japanese manufacturer of electronic components. Ten years later he left to co-found a startup, Amperex Technology Co. Ltd., to develop batteries for various small gadgets. Using a license to a Bell Labs patent, Zeng ironed out technical glitches—such as a dangerous tendency for power packs to swell after being charged a few times—and later won a contract with Apple Inc. to supply batteries for the iPod. Deals with other electronics giants followed, and in 2005 Zeng sold his venture back to TDK, in an acquisition Chinese media reported was worth $100 million.
After working for his old employer for six more years, Zeng again struck out on his own, creating a company that would focus on the nascent electric-car industry. (Tesla introduced the Model S, arguably the first mass-market EV, in 2012.) For an English name, Zeng simply added “Contemporary” to that of his first startup. In Chinese he called it “Ningde Era”—in honor of his hometown, where it would be based. CATL’s first real break came in the form of a supply agreement with BMW AG, which established its bona fides in the automotive supply chain. “We were very fortunate to work with BMW since our earliest days,” says Matt Shen, CATL’s general manager for Europe. “We learned incredibly detailed and rigorous requirements from them.”
The deal turned out to be a beneficial move for BMW too, giving it a head start on complying with rules requiring EVs sold in China to use domestic batteries to qualify for purchase subsidies. Those policies, which began to be implemented in 2015, were part of a larger plan to reduce dependence on imported components, and gave CATL a key advantage over bigger rivals such as South Korea’s LG Chem Ltd. and Japan’s Panasonic Corp. Soon it was landing supply contracts with the Chinese joint ventures of General Motors, Mercedes and Volkswagen.
CATL first went public on the Shenzhen exchange in 2018, giving Zeng a paper net worth of $3.4 billion. It then won business from Elon Musk, who was looking to equip Tesla models made at a new plant in Shanghai. In 2020, CATL began supplying power packs for Shanghai-built Model 3s; the deal was later extended to Model Ys, and to include vehicles exported from China to other countries. (For its non-Chinese production, Tesla primarily sources from Panasonic and LG.) In the fast-growing domestic EV market, CATL had become so successful that some carmakers complained. “We’re all working for CATL now,” Zeng Qinghong, then the chairman of Guangzhou Automobile Group Co. (GAC), grumbled when the company hiked prices in 2022, amid rising material costs.
One effect of this success was the transformation of Ningde, previously among the poorest cities in eastern China. Today it teems with car and ship traffic generated by CATL, which is by far the largest local employer and taxpayer. Compared with the bright lights of Shanghai or Shenzhen, the city is still a backwater, and attracting talented staff is a perennial challenge. To draw them, CATL offers perks such as subsidized housing and educational support, as well as basketball courts, gyms and other recreational facilities. It also tries to foster community, to an extent that can raise outsiders’ eyebrows: Single employees can enroll in a corporate matchmaking service, and those who pair off can celebrate their nuptials in CATL-organized group weddings.
Critics note that, like other Chinese industrial giants, CATL has benefited from generous subsidies as well as protectionist policies that allowed it to become established with limited foreign competition. And it isn’t considered especially unique in its mastery of the chemistry of lithium-ion batteries, or of an increasingly popular alternative, lithium-iron-phosphate—at least not compared with Japanese and Korean peers. It’s working on novel approaches such as solid-state batteries, which replace the liquid electrolyte in today’s lithium-ion units with a solid separator and promise monumental performance improvements if technical challenges can be overcome. But so are CATL’s competitors.
What sets it apart, instead, are efficiencies on the production line. Among producers, “the fundamental chemistries aren’t that different. What is different is how inexpensively they can be manufactured,” says Gill Pratt, the chief scientist of Toyota Motor Corp. “It really is much more about manufacturing and production than it is about some huge science breakthrough.”
CATL’s industrial prowess has allowed it to effectively flood the Chinese market, forcing it to look for new applications to soak up its growing production. But even the most successful expansion in China won’t be enough to keep the company moving at the breakneck pace Zeng envisions. For that it will need new markets....
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