How China’s car batteries conquered whole world

When General Motors Co’s $27 billion EV program went up in flames in August, it also singed EV enthusiasts’ high hopes for a new generation of long-lasting batteries that could take cars farther while keeping costs low. The storied American car company was forced to recall the 140,000 electric Chevy Bolts made since 2017. Turns out that the car’s expensive nickel-cobalt-manganese batteries, which promised a range of more than 250 miles and greater energy density, carried the risk of catching fire. The company has since said it’s found a fix, with the recall’s $1.8 billion cost to be mostly covered by the battery’s maker, South Korea’s LG Chem Ltd.
You can’t blame GM for trying. Driven by a blinding urge to be market leaders as they invest billions of dollars to meet tough emissions regulations, GM and many of
its peers have found themselves backing unproven technologies. Countries, in turn, are caught in an arms race to lead the world’s electric future.
Yet there is one hopeful outlier: China. As the world’s biggest source of new carbon emissions, the country has taken deliberate and difficult steps to push towards electrification. In doing so, China is showing how an older, stable battery technology — paired with effective industrial policy — could be the way forward.
To be sure, the history of Beijing’s industrial policy is checkered. Decades of misguided and unfocused cash-slinging by state-owned enterprises pushed industries as varied as rubber, cotton and chemicals into overcapacity, as the country tried to be the biggest manufacturer and exporter of all goods.
In contrast, China’s relentless fine-tuning of its electric vehicle and battery policy blueprint has put in place smart incentives and penalties, helping companies to navigate complicated technologies and make efficient batteries that can be safely deployed.
It built a deeply integrated supply chain for electric-car parts, with a focus on cornering the production of batteries and cutting costs, well before the rest of the world. Beijing has also incentivised consumers to go electric, creating demand alongside supply.
Now, global carmakers including the likes of Tesla Inc. are using a technology that China’s biggest battery manufacturers have on offer: a
refined version of the decades-old lithium iron phosphate, or LFP-based, powertrains that will propel hundreds of thousands — and eventually millions — of electric cars, including those from Volkswagen AG and Hyundai Motor Co.
Whether this approach will lead to a technological revolution for electric vehicles born in China is still hard to say. Beijing’s blueprint wasn’t explicitly mapped out years ago; there were no definite targets or distinct paths to follow. Instead, its industrial policies governing EVs and the batteries that power them have been more trial and error. But unlike with past endeavors, the successes have outweighed the failures and put China in pole position.
Beijing didn’t take on the cutting-edge technology of batteries. Instead, it focused on an iterative approach to solving the Rubik’s Cube-like puzzle that has bedeviled battery makers: Make a battery safer and it won’t take your car as far; give a battery more range by making it more energy-dense and it becomes more combustible.
Technocrats were quick to realise that chemistry mattered. The forefront of lithium-ion battery technology, where the South Koreans led the way, included nickel, cobalt and manganese in varying proportions. But these batteries were less safe, prone to combusting more quickly and burning hotter.
In addition, materials such as cobalt were expensive and difficult to procure, making them unsustainable in the long run. The other, older formulation was lithium, iron and phosphate. These batteries were bulky and large but safe.
More than a decade ago, analysts forecast the demise of LFP batteries. They may have been cheaper and safer than other alternatives, but they were big, low-voltage and couldn’t meet consumers’ hunger for greater range. Nickel, cobalt and manganese batteries would theoretically solve these problems. Manufacturers strove to increase the nickel content to achieve greater distance and density. Their enthusiasm prompted rosy predictions that by 2018, over three-quarters of battery demand would be for the NCM type.
That didn’t happen. Instead, the chemistry and efforts to bring down costs have proven challenging. Expensive, more energy-dense, nickel-rich power packs have been catching on fire from overcharging, overuse or while being parked.
Yet large manufacturers have been reluctant to acknowledge that the technology just isn’t there yet. Desperate to get ahead and find the next-best way to power cars of the future, global firms have forged ahead without fully assessing how they could channel their money, research and development, especially how different materials and processes could improve batteries. For their part, national policy makers have pushed regulation, but they haven’t focused as much on the need for hefty targeted subsidies to jump-start the industry.

—Bloomberg

Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal