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Home»Startup»The Rise and Precarious Reign of China’s Battery King
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The Rise and Precarious Reign of China’s Battery King

July 2, 2022No Comments4 Mins Read
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The Rise and Precarious Reign of China’s Battery King
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The headquarters of battery big CATL tower over the coastal Chinese language metropolis of Ningde. To the untrained eye, the constructing resembles an enormous slide rising out of the city sprawl. It’s, actually, a large monument to the corporate’s raison d’être: the lithium-ion battery pack.

You will have by no means heard of CATL, however you’ve positively heard of the manufacturers that depend on its batteries. The corporate provides greater than 30 p.c of the world’s EV batteries and counts Tesla, Kia and BMW amongst its shoppers. Its founder and chairman, 54-year-old Zeng Yuqun, often known as Robin Zeng, has quickly emerged because the business’s kingmaker. Insiders describe Zeng as savvy, direct, and even abrasive. Underneath his management, CATL’s valuation has ballooned to 1.2 trillion Chinese language yuan ($179 billion), greater than Common Motors and Ford mixed. A part of that fortune is constructed on proudly owning stakes in mining initiatives in China, the Democratic Republic of Congo, and Indonesia, giving CATL a tighter grip on an already strained world battery provide chain.

Such scale provides CATL large affect—and permits the corporate to be choosy with its contracts and push the rising costs of uncooked supplies onto its shoppers. “They’re just about dictating the phrases,” says Mark Greeven, professor of innovation and technique at IMD Enterprise College in Lausanne, Switzerland. CATL pushes shoppers for long-term, five-year offers. and it’s reluctant to customise its batteries for various carmakers, he provides.

Up to now, these selections have helped make Zeng wealthy—very wealthy. He ranks twenty ninth on Forbes’ 2022 listing of the world’s wealthiest folks. On Bloomberg’s 2021 listing of the world’s prime inexperienced billionaires, he’s second solely to Tesla CEO Elon Musk. Musk may make extra headlines, however Zeng holds virtually as a lot energy.

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However Zeng isn’t Musk. He dodges the limelight and barely provides interviews. Insiders level out that Zeng is working in an setting the place notoriety may hinder, not assist, his enterprise. “Within the West, the personality-cult model of management is one thing that’s valued, inspired, and celebrated. In China, it is harmful,” says Invoice Russo, former head of carmaker Chrysler’s northeast Asia enterprise in Beijing who now runs the Shanghai-based advisory agency Automobility. “You possibly can’t be greater than Beijing.” Carmakers are additionally changing into cautious of how a lot energy CATL has as they search elsewhere for batteries to energy their autos.

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Zeng’s arrival on the EV battery scene may be traced again to 2010—and a gathering with Herbert Diess, who was buying supervisor for BMW on the time. Diess, who’s now CEO of Volkswagen, had launched into a world mission to influence firms making cell phone batteries to pivot to electrical vehicles. He tried European firms, together with Germany’s Bosch. However he additionally approached Zeng, who on the time was operating a subsidiary of the Japanese electronics firm TDK. Retelling the story in an inside assembly in Could 2022, Diess described Zeng’s preliminary response as dismissive—it was, Zeng stated, inconceivable for him to construct such huge batteries.

However, so the story goes, Diess’ plea for batteries caught. In 2011, Zeng led a bunch of Chinese language traders to accumulate a 85 p.c stake in TDK’s EV battery enterprise, which they known as CATL. BMW was its first key account. “Diess introduced our firm into the automotive battery enterprise,” Zeng advised Handelsblatt in 2020. “I’m grateful to him for that.”

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Diess might need impressed CATL to enter the EV market, however through the years Zeng earned a status as a founder who may grasp batteries in addition to enterprise. When he purchased a US patent for cell phone batteries within the early 2000s, he labored to enhance the battery design himself, in keeping with Lei Xing, former editor of Beijing-based media outlet China Auto Evaluation. When BMW agreed to make use of CATL as its battery provider, it was Zeng who learn the 800 pages of necessities line by line, in keeping with Yunfei Feng, a analysis affiliate at IMD Enterprise College.

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