Robin Zeng, the founder and chairman of Contemporary Amperex Technology Ltd (CATL), has urged Chinese electric vehicle (EV) builders and car component manufacturers to cease the price war engulfing the sector and focus on ensuring the reliability of their products.
Speaking at the 15th Annual Meeting of the New Champions, also known as the Summer Davos, the boss of the world’s largest EV battery maker joined the chorus of recent voices warning that such intense price competition may come at the cost of safety, as well as profitability.
“Competition in the [EV] industry should pit players against each other in terms of technology, long-term value, sustainability as well as safety and reliability,” he said on Tuesday at the forum, which is being held in the northeastern city of Dalian. “A one-off price competition is not desirable. After all, it is a race throughout the products’ life cycle.”
Zeng, 56, is the latest influential business leader to criticise the cutthroat competition in the mainland’s electric car industry, one of the few bright spots in the Chinese economy, amid mounting worries that constant price reductions could ensnare even the likes of BYD, the world’s bestselling EV maker.
In April, Goldman Sachs forecast in a research report that if BYD were to slice another 10,300 yuan (US$1,418) off the price of each of its vehicles, the overall profitability of the country’s EV industry would turn negative in 2024.
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‘Overtaking on a bend’: how China’s EV industry charged ahead to dominate the global market
‘Overtaking on a bend’: how China’s EV industry charged ahead to dominate the global market
Last week, David Xu Daquan, president of Bosch China, told reporters in a media briefing that the escalating price war would not only hurt mainland carmakers’ profitability but also dent their stature as global industry leaders.
Bosch, the world’s largest automotive supplier, designs and makes a wide range of car components for home-grown and international assemblers on the mainland, including autopilot software for autonomous-driving systems, electromechanical brake boosters and anti-lock braking products.
CATL, based in Ningde, East China’s Fujian province, counts Tesla, BMW and Nio among its clients. The company installed 81.4 gigawatt-hours (GWh) of batteries in the first four months of this year, up 30 per cent from the same period in 2023, according to Seoul-based SNE Research.
One GWh is enough to supply about 13,000 electric cars with driving ranges of 500km each.
The battery producer holds a 37.7 share of the global market, ahead of BYD which trails with a 15.4 per cent share.
During the Auto China Show in late April, CATL unveiled its Shenxing Plus lithium-iron phosphate battery, which it claims has a range of 1,000km. It uses a “granular gradation” technology to deliver a 600km range after just 10 minutes of ultra-fast charging.
“We are buy rated on the stock, as we are positive on its [upgraded] battery product mix and resilient market share, which we believe will enable CATL to benefit from the sustainable global electrification trend,” Goldman Sachs said in a research report on Sunday.
In February, BYD fired the first salvo in a price war on the mainland, slashing the prices of nearly all of its cars by 5 to 20 per cent.
Since then, the prices of 50 models across a range of brands have dropped by 10 per cent on average, according to Goldman Sachs.
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