Cases: Tesla and CATL Battery Supply Chains - MacroPolo Cases: Tesla and CATL Battery Supply Chains - MacroPolo

Cases: Tesla and CATL Battery Supply Chains

Comparing the Battery Supply Chains of Tesla and CATL

A global leader in the EV industry, Tesla is currently the only American company capable of staking out a position in li-ion battery supply chains. Through its partnership with Japan’s Panasonic, Tesla has been able to manufacture some of the highest density and lowest cost li-ion battery packs in the industry. Across the Pacific, CATL is a leader in China’s li-ion battery market, currently the world’s largest and fastest-growing. The private Chinese company is a supplier to a number of automakers in China, including state-owned BAIC Motors Corp.

To further illustrate East Asia’s importance in the li-ion battery supply chain, we zero in on two cases to show the difference between Tesla and CATL batteries and detail their respective suppliers. We focus on two models: the Tesla Model X and the BAIC EU-5.

  • Battery chemistry: Tesla exclusively uses NCA batteries, while CATL primarily relies on NMC batteries. While NCA batteries are more technically challenging to manufacture, it has the advantage of higher energy density.
  • Energy density: On this metric Tesla/Panasonic has a significant edge over not only CATL but also virtually all other leading EV battery manufacturers. The energy density of the latest battery Tesla uses (Panasonic’s 21700) and the latest CATL battery are respectively 300Wh/kg and 250Wh/kg.
  • Cost: Tesla also claims to have a lead over other battery makers in terms of cost. It is estimated that Tesla’s battery cost/kWh is about 20% lower than CATL’s.
  • Production capacity: Tesla/Panasonic and CATL are the top two EV battery producers in the world. In 2017, annual battery production was 10 GWh for Tesla/Panasonic and 12 GWh for CATL. In 2018, both have likely enjoyed almost 100% growth.
exploded Tesla
Powertrain

The Model X powertrain (85 kwh) is composed of 16 battery modules, each containing 444 battery cells, for a total of 7,104 cells. The battery has a range of 270 miles on a single charge, comparable to a full tank of gasoline. Recharging the battery to 50% capacity only takes 20 minutes using Tesla’s supercharging stations. A standard Model X currently starts at a base price of $84,000 (excluding incentives and rebates).

Tesla battery
Battery Pack

The Model X currently uses the 18650 battery. Although its energy density of 214Wh/kg is lower than the latest 21700 battery (300Wh/kg), it is still comparable to most other EV batteries on the market.

tesla_battery_final
Click on each of the battery components to see suppliers for Tesla
Battery Cell

Chemistry composition: NCA

Energy density: The Model X currently uses the 18650 battery. Although its energy density of 214Wh/kg is lower than the latest 21700 battery (300Wh/kg), it is still superior to most other EV batteries on the market. This advantage allows Tesla to build lighter battery packs relative to other EVs. This in turn reduces the weight of the Model X, leading to performance improvements in energy consumption and handling.

Tesla also enjoys cost advantages over its competitors, in large part because it produces and uses a single type of battery cell to achieve economies of scale. Its competitors, on the other hand, supply battery cells of different specifications to various auto manufacturers. Short of another significant breakthrough in battery technology, there appears to be industry consensus that reducing the cost of batteries largely depends on scale and vertical integration.

exploded BAIC
Powertrain

The EU-5 powertrain (60.2 kWh) is composed of 9 battery modules, each containing 12 battery cells, for a total of 108 cells. An individual CATL battery cell is much larger than Tesla’s, meaning a single CATL cell holds more energy and therefore fewer cells are required. The fully charged battery has a range of 260 miles, comparable to a full tank of gasoline. Recharging the battery to 50% takes 30 minutes using high-voltage charging stations built by China’s State Grid. The standard EU-5 model starts at a base price of about $32,000 (excluding incentives and rebates).

Since 2018, foreign EV producers have been allowed to operate wholly-owned factories in China, though consumer subsidies for EVs that use domestic batteries are expected to be phased out by 2020. This will likely lead to intensified competition in both China’s EV and battery markets. Tesla’s Shanghai factory is expected to begin EV production in late 2019 and Panasonic has decided to double its battery production in China, which will likely create competitive pressures for Chinese battery makers.

BAIC battery
Battery Pack

Since the battery pack is usually designed through collaboration between battery and auto manufacturers, CATL has formed many partnerships with automakers that source its batteries. For instance, CATL has a major joint venture with Beijing Automotive Industry Corporation (BAIC), which produces the EU-5 model and became CATL’s second-largest customer in 2017.

baic_battery_final
Click on each of the battery components to see suppliers for CATL
Battery Cell

Chemistry composition: NMC

Energy density: 151Wh/kg at the battery cell level. CATL has announced that it is now capable of manufacturing the higher nickel content NMC 811 battery, which has an energy density on par with Tesla’s latest 21700 battery. But since CATL has not yet begun mass production of the NMC 811 battery, its current batteries are still of much lower energy density. That gap with Tesla will likely be reduced in the coming years.

Japan flagSumitomo Mining

  • Sumitomo Mining is one of the few companies in the world that is able to produce the cathode for NCA batteries.
  • Sumitomo Mining owns nickel mines in the Philippines.

Japan flagHitachi Chemical

  • A world leader in producing high-quality artificial graphite for anode.
  • Hitachi's anode has two advantages over competitors: it charges faster and doesn’t short-circuit as easily.

Japan flagSumitomo Chemical

  • Sumitomo Chemical’s separator has exceptional heat and chemical resistance. Since batteries catching fire is the top concern for EVs, heat resistance is a crucial factor in battery safety.

Japan flagMitsubishi Chemical

  • Mitsubishi Chemical’s electrolyte is known to be able to maintain safety and capacity under extreme voltage and temperature conditions.
  • Mitsubishi Chemical has an electrolyte production facility in Memphis, Tennessee.

China flagGEM

  • The cathode accounted for more than half of CATL’s purchases from suppliers in 2017. And GEM is CATL’s largest supplier of cathode materials by value.
  • Beyond sourcing from mining companies, GEM also relies to some extent on recycled raw material for cathodes.
  • To expand production, GEM recently established a cathode production JV with CATL.

China flagBTR

  • BTR is the largest battery anode producer in China.
  • CATL is BTR’s largest client.

China flag Shanghai Energy New Materials Technology

  • This firm is the largest battery separator producer in the world by volume.

China flag Guotai Huarong

  • Huarong supplies more than 60% of CATL’s electrolyte.