Will last 16 years or 2 million km: China has created a durable battery for Tesla

Chinese giant enterprise producing batteries for electric vehicles Tesla Inc. and Volkswagen AG, has created a battery that can last 1,4 million miles (2 million kilometers) - an industry benchmark and a potential boon for automakers trying to motivate drivers to buy electric vehicles, writes Bloomberg.

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"Contemporary Amperex Technology (CATL) is ready to release a battery that has a service life of 16 years or 2 million kilometers (1,24 million miles)," Chairman Zeng Yuqun said in an interview at the company's headquarters in Ningda. southeast China. According to Bloomberg, warranties for batteries currently used in electric vehicles cover about 150 miles (more than 000 km) and 241 years of service.

Extending this period is seen as a key step forward. In addition, a new type of battery can be used in another vehicle. The novelty will reduce the cost of owning an electric car, which will positively affect the industry, which seeks to restore the sales momentum lost due to the outbreak of coronavirus and falling oil prices, which made gasoline fuel more competitive.

“If someone places an order, we are ready to fulfill it,” said Zeng, 52, without specifying whether contracts had been signed. The new product will cost about 10% more than standard batteries found in electric vehicles, said Zeng, whose company is the world's largest battery maker.

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Concern about having to replace batteries after a few years is one of the factors that has kept consumers hesitant to adopt electric vehicles into their lives. Last year, Tesla noted that it would launch a battery capable of operating a million miles (1,6 million kilometers), and in May 2020, General Motors Co. stated that they have almost developed a battery capable of withstanding a distance equal to 50 circles around the planet.

Predicting a fast return to the growth of the electric vehicle industry, CATL is investing in battery technology research and development. Although an outbreak of coronavirus will lead to lower sales during this year, demand for electric cars will increase at the beginning of 2021, said Zeng, who founded CATL ten years ago.

Non-investing car buyers during the pandemic are creating demand that will be met next year, Zeng said. CATL's customers are BMW AG and Toyota Motor Corp.

Zeng’s comments confirm that electric cars can withstand the economic downturn caused by coronavirus better than gasoline powered cars. Battery-powered cars will account for up to 8,1% of all sales next year in China, which account for the largest share of global electric vehicle sales, and up to 5% in Europe.

“The pandemic may have a lasting effect throughout 2020, but will not be a major factor next year,” Zeng said. “We have great confidence in the long term.”

In February 2020, CATL entered into a two-year contract for the supply of batteries for Tesla, which is a great boon for the Chinese company. The American leader in the production of electric vehicles has so far mainly worked with the Japanese company Panasonic Corp. and South Korean LG Chem Ltd.

The CATL batteries are designed for Model 3 sedans produced at Tesla's huge new factory near Shanghai, which began deliveries around early 2020. Batteries are the most expensive part of an electric vehicle, so suppliers of these components stand to reap the lion's share of the industry's profits.

Zeng said he often shares his thoughts with Tesla founder and owner Ilon Musk when they exchange text messages about technology and business development. According to Zeng, CATL is strengthening its relationship with Tesla, and the use of cobalt batteries is on their agenda.

"We get along well. Elon is a funny guy,” Zeng said about Musk. “He talks about cost all day long, and I’m confident we have solutions.”

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Zeng said that Musk also sought help in the manufacture of mechanical ventilation machines for patients with coronavirus. In March 2020, an American billionaire transferred over 1000 breathing apparatus from China to officials in Los Angeles.

CATL shares have risen roughly 6-fold in Shenzhen since 2018, with the company's market value reaching $47 billion. Tesla, by far the most valuable electric vehicle maker, is worth about $160 billion on the market.

According to Zeng, the “trigger point” for electric vehicles will come after they overtake cars with a gasoline engine in about 2030–2035. This view is more ambitious than the point of view of Bloomberg researchers, who expect the shift to happen a few years later.

Zeng says CATL, which is opening a manufacturing facility in Germany, expects to make more than 70% of the batteries needed by BMW, its very first customer. CATL also operates the Audi segment of Volkswagen AG and collaborates with Porsche.

Zeng did not rule out the possibility of building a plant in the United States, although he noted that the company has no specific plans yet.

“Our team has had success competing with global rivals in overseas markets,” he said.

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