CATL expands EV battery market share – encroaching on LG territory

China’s CATL  started supplying electric vehicle batteries to General Motors in the United States. This is the first transaction with GM. So far, LG Chem has been in charge of the GM EV battery alone. CATL secured Volkswagen, BMW, and Tesla as customers, and expanded its relationship with global automakers.

“We will work closely with CATL,” said Julian Blissett, vice president of GM to media. Although the specific contract size is unknown, it is mentioned that the next-generation electric vehicle platform Ultium will be used.

So far GM has only made electric vehicles with LG Chem batteries. When the Ultium was first released in March, it said that LG Chem’s batteries will be used. Recently, along with GM, LG Chem founded the Ultium Cells LLC battery joint venture in Rosetown, Ohio, USA. The joint venture will invest 1 trillion won each in a 50:50 stake. It plans to invest 2.7 trillion won in phases to secure production capacity of more than 30 gigawatt-hours (GWh).

In this situation, industry experts say that CATL’s supply of batteries to GM means more than expanding the number of sources. An industry source said, “GM made an electric vehicle with LG Chem’s pouch-type battery, and CATL uses a square battery.” From the beginning, it is possible that other battery makers than LG Chem were in mind.

Some industry analysts say that, like Tesla, the decision was made with Chinese electric vehicles in mind. In order to cut costs, the company intends to use the lithium iron phosphate (LFP) battery instead of the ternary to target the Chinese domestic market. CATL announced that it will supply lithium iron phosphate batteries to Tesla Model 3 in the second half.

An industry source added, “Because China’s electric vehicle battery subsidies have been extended for two years and it is the largest market with Europe, there is no reason not to use local batteries for automakers.”

The price of battery packs should accelerate below the $100 per kilowatt hour (kWh). The average price of a ternary battery pack this year is $135. Using a lithium iron phosphate battery, it is possible to construct a battery pack that is more than 20% cheaper.