Tesla wants to succeed in the Chinese market, especially in order to dominate the post-epidemic electric car world. The news, published on the Bloomberg news site on July 13, 2020, draws attention to the critical steps taken by the company in the Chinese market and to the Chinese partner he chose in the process of localizing production.
To accomplish this, Elon Musk is said to have turned to a battery engineer who once helped extend the life of Apple's MacBook laptops.
This engineer is 52-year-old Zeng Yuqun
In less than a decade, Zeng turned Contemporary Amperex Technology (CATL) into China's battery champion. Zeng is also a member of the China People's Political Advisory Conference.
CATL products are included in the cars of almost every major global car brand, and will power electric cars manufactured at Tesla's new factory in Shanghai from this month. It is stated that CATL made batteries will bring great advantages to Palo Alto based Tesla in the Chinese market.
More importantly, according to BloombergNEF, Zeng is expected to supply Tesla with lithium-iron phosphate (LFP) batteries that use cheaper raw material mix and cost about 20 percent lower than other common pack types.
This cooperation comes at a very important time for CATL. According to SNE Research, battery sales dropped by almost a third in the first five months of 2020, as automobile purchases fell in China due to the epidemic and some other factors. The Chinese Automobile Manufacturers Association announced on July 10 that sales of electric cars decreased by about 38 percent compared to the previous year.
Milestone in electric car
CATL has previously announced that it can produce a battery that can supply 16 million kilometers (2 million miles) of power to an automobile over its 1,24-year lifetime. Battery replacement is seen as an important problem that prevents consumers from buying electric vehicles.
In May, CATL and Tesla were reportedly working on a low-cost, million-mile battery that is expected to be used this year or earlier next year in Model 3 sedans manufactured at the Shanghai plant.
Tesla localizes the supply chain
In February, CATL signed a two-year battery supply agreement with Tesla. Tesla localizes the supply chain as part of efforts to make their cars more affordable in the highly competitive Chinese market. According to Reuters, as of the end of 2019, approximately 70% of the parts fitted to Tesla's Shanghai-made electric vehicles were imported. Within the scope of the localization effort, the news that the annual production capacity of the locally produced cooling pipes will be increased from 150 thousand to 260 thousand sets were also reflected in the media.
In January 2020, Tesla began delivering the Model 500 sedans installed at the Shanghai plant, which it aims to transform into a 3-year-old production facility.
China's new energy cars are expected to reach 2019 percent to 80 percent of the 90 volume this year. According to the latest report from Ries Strategy Positioning Consulting, the new coronavirus outbreak and the resulting downward pressures have greatly affected the industry.
Electric vehicle sales volume fell 56 percent in the first quarter compared to the same period last year, while recovery in economic activity and localization of Tesla's Model 3 production in China are expected to help prevent negative effects and stimulate sales for the rest of the year.