Automakers are embarking on partnerships with China for an advantage in electric vehicles

An employee works on an electric vehicle assembly line in Ningde, Fujian province, in August. [Photo/Xinhua]

Global manufacturers spend big on expertise in software and electrification

Major foreign automakers are turning to Chinese companies for their expertise in smart electric vehicles as established giants step up their efforts to get into the booming sector.

BMW recently announced that it will purchase newly developed round lithium-ion battery cells from Envision AESC, the battery manufacturing arm of China’s Envision Group, for its electric vehicles to be manufactured in the United States.

“The new round cell specifically designed for the electrical architecture of our next-generation models will allow us to improve range, driving performance and reduce charging times,” said Joachim Post, board member of administration of BMW responsible for its network of purchases and suppliers.

Envision AESC plans to build a dedicated 30 gigawatt-hour battery manufacturing facility in South Carolina, and work is currently underway to finalize a suitable site near BMW’s vehicle production and battery assembly facilities.

It is the third Chinese battery cell maker that BMW has signed deals with in the past 40 days. In early September, the German carmaker unveiled its agreements with Contemporary Amperex Technology Co Ltd and EVE Energy to power next-generation electric models from 2025.

The two battery companies will build battery factories in China and Europe. Their new round cells, which Envision AESC will produce in the United States, will deliver a major breakthrough for BWM’s electric vehicles in terms of energy density, charging speed and range, the automaker said.

BMW’s cumulative electric vehicle sales are expected to reach 2 million units by 2025, and electric vehicle sales will account for at least half of its global sales by 2030.

CATL has been a BMW supplier for years. “We look forward to developing and delivering more competitive and sustainable solutions to our partners to promote the global momentum of e-mobility and energy transition,” said Robin Zeng, Founder and Chairman of CATL.

BMW is not alone. Volkswagen is spending 2.4 billion euros ($2.35 billion), its largest investment in China, to develop driver assistance features with Horizon Robotics for its electric vehicles.

The creation of a joint venture is underway and should be completed in the first half of 2023, Volkswagen said, adding that its software arm Cariad will have a 60% share in the partnership.

Horizon, based in Beijing, is a leading player in China providing IT solutions for smart vehicles, specializing in software, algorithms and chip design.

Ralf Brandstaetter, Chairman and CEO of Volkswagen Group China, said China has been the world leader in smart and connected vehicles since 2015 and is “consistently faster than expected”.

Brandstaetter attributed China’s leading role to factors such as the country’s clear guidelines, as well as cooperation between government, scientific institutions and businesses.

“The best possible way to harness this innovation trend and strengthen our competitive advantage is to immerse ourselves in this ecosystem,” Brandstaetter said.

Brandstaetter said a few weeks ago that it tested a Volkswagen ID.4 electric SUV featuring technology that Cariad and Horizon are working on together. “It was an amazing experience,” he said.

In terms of electrification, the Chinese company Gotion serves as the mainstay of Volkswagen’s growth plan.

Volkswagen acquired a 26% stake in the Anhui-based battery maker in 2020. Last year, it was given the task of developing the first-generation unified cells for its volume vehicle segment.

Gotion is also responsible for the rapid industrialization of cells at Volkswagen’s Salzgitter plant in Germany as “technology partner for cell plant layout, machinery and production processes”. Production is expected to start around 2025.

Tesla said Thursday that its first overseas plant, located in Shanghai, “supplies vehicles to most markets outside of North America.” The factory, as Tesla’s main export center, has an annual production capacity of more than 750,000 units.

According to Tesla, more than 95% of the auto parts used in its Shanghai-made vehicles are sourced from China and nearly all of the factory’s employees are Chinese nationals.

China is becoming the main source of supply for the global auto industry, mainly thanks to its first-mover advantage, said Zhang Yongwei, vice president of China EV 100, a major industry think tank. new energy vehicles.

Zhang said the rise of local businesses along the industrial chain has a lot to do with China’s faster pace of electrification, which began in earnest in 2009, when most countries thought it would. was too early to develop the sector.

SNE Research shows that six of the world’s top 10 battery makers in the first half of the year were Chinese.

China EV 100 said Chinese automakers launched 33 passenger electric and plug-in hybrid models in the first half, accounting for 60 percent of the total newly launched passenger vehicles during the period, bringing the total number of passenger vehicle types. electric vehicle models to about 300 in the country. .