Chinese battery makers are expanding their production of pouch batteries and are planning to supplying them to major automobile companies, TheElec has learned.
China’s largest battery maker CATL is planing supply them to Daimler for their new electric vehicles, people familiar with the matter said on Wednesday.
Chinese companies such as CATL and BYD has so far produced circular or prismatic batteries but are diversifying their portfolio to win orders, the people said.
Farasis and Wanxiang made some pouch batteries but has so far accounted for less than 5% of their production.
This changed when China’s Envision Energy acquired Japan’s AESC in 2018. AESC specializes in pouch batteries.
In 2019, the join venture between SK Innovation of South Korean and Eve Energy of China begin producing pouch batteries, which also spurred growth.
Volkswagen and Daimler’s investment into Farasis also became a catalyst for expanded pouch battery production in China.
Pouch battery has so far been an area where South Korean companies such as LG Chem and SK Innovation leads in terms of production volume.
Chinese companies entry into pouch batteries will intensify competition, the people said, and they will likely aim to pouch professionals in the field from South Korea.
According to research firm Battery China, in July, a total of 314MWh of pouch batteries was used, an increase of 24.2% from June.
Prismatic battery usage in July was 3798MWh, or around 3.7GWh.
AESC, now under Envision Energy, was building a 20GWh pouch battery factory in Suzhou. The first stage of construction is expected to be completed on the fourth quarter.
Farasis and Wanxiang were also planning to expand their production capacity in pouch batteries.
Chinese companies lack behind in technology and production capacity in pouch batteries compared to their Korean counterparts as of now, the people said, but they will likely foster the area strategically to diversify their portfolio.