Batteries: Panasonic leads the battery war with Chinese rivals

With the gradual decline of China’s new energy vehicle (NEV) subsidies and plans for China to increase the ratio of foreign capital investments, China’s NEV industry could face a real market challenge. In addition to the rise of NEV joint ventures, the domestic lithium-ion battery industry also faces threats from Japanese and Korean enterprises.

Panasonic is the world’s leading battery maker and is currently the sole lithium-ion battery supplier to Tesla.

In March 2018, Panasonic began mass production of NEV lithium-ion batteries at its Dalian plant in China. The plant is Panasonic’s first facility in China for the production of square NEV lithium-ion batteries, with a total investment of JPY50Bn (US$457M). The plant’s capacity can meet demand from 200,000 NEVs and the batteries will be supplied to North American and Chinese NEV markets.

Panasonic is currently considering the possibility of cooperation with two factories in Jiangsu province, China. Production lines at the two factories will be upgraded to manufacture NEV lithium-ion batteries once the cooperation is finalised. Panasonic also plans to upgrade its Wuxi digital battery base in order to prepare for supply to the mid to low-end NEV market.

Roskill View: Demand for NEV batteries is increasing worldwide, especially in China, with the development of the NEV market. As a Tesla battery supplier, Panasonic has gradually shifted its business focus from the consumer electronics market to the NEV market, and become an automotive parts supplier. In May 2018, Panasonic publicly admitted for the first time that Tesla would produce battery cells in China.

Threats are coming from major Japanese and Korean enterprises. Panasonic has planned to expand its capacity to 45.8GWh, LG has planned to expand to 33.6GWh, and Samsung has planned to expand to 33.5GWh by 2020. The Chinese battery makers are coming up with their own aggressive investment plans, however. Tianjin Lishen for example, plans to start supplying batteries to Japanese carmakers and also plans to ramp up capacity to 30GWh by 2020 and to 60GWh by 2025. A US$2Bn IPO for China’s battery giant CATL was approved by Chinese regulators in April 2018. CATL plans to expand its capacity to 50GWh in 2020.

To discuss the lithium-ion battery industry with Roskill, contact Nessa Zhang: nessa@roskill.com or Jose Lazuen: jose@roskill.com