Why are foreign battery companies losing ground in China as new energy vehicles are gaining momentum?

Recently, foreign media reported that "Hyundai Motor's domestically produced Sonata 9 plug-in hybrid version will use power batteries from Chinese battery manufacturers." According to reports, the model previously used new energy power batteries produced by South Korea's LG, and this replacement will delay the launch of the new car.

In this regard, Beijing Hyundai said: "The launch time of the Sonata plug-in hybrid version has not been determined yet, and there is no delay." As for whether the Sonata plug-in hybrid model will change the domestic battery supplier, Beijing Hyundai said that "it has replaced the domestic battery according to the established plan."

Judging from the choice of Beijing Hyundai Sonata plug-in hybrid, foreign power battery suppliers represented by Korean brands seem to be "abandoned" again. While China's new energy vehicles are developing rapidly, they have entered a bottleneck period. What are the reasons behind the "hot and cold"?

Foreign-funded batteries are frequently abandoned in China

In fact, many automobile companies such as JAC and SAIC have previously abandoned Korean power batteries.

As early as July 2016, JAC New Energy Automobile iEV6S switched to "order production" due to the change of battery supplier. Terminal dealers could only feedback the order to the manufacturer when selling the car before picking up the car for delivery, which had a great impact on the sales of iEV6S.

In 2016, Samsung Galaxy 7 phones frequently "exploded" and made headlines, and its battery supplier Samsung SDI was also pushed to the forefront. It is understood that Samsung SDI was also the power battery supplier of JAC New Energy Vehicles at the time, which also led to JAC New Energy Vehicles urgently changing its battery supplier, which had a huge impact on the terminal market.

In addition to JAC, BAIC New Energy also stated that the power battery supplier has long replaced the companies in the public list of "Automotive Power Battery Industry Standard Conditions", and "all models use domestic batteries". At the same time, SAIC Passenger Vehicle also confirmed to Auto Headlines APP that eRX5 and ei6 have now replaced domestic batteries. In addition, Auto Headlines APP learned from many Roewe 4S stores that eRX5 has now begun to accept reservations and enjoy government subsidies.

Behind the car companies' shift to domestic batteries

"We couldn't get subsidies, so we replaced it with domestic batteries." When talking about the reason for replacing the power battery, an insider of a domestic new energy vehicle manufacturer confirmed to Auto Headlines APP.
On December 28, 2016, the Ministry of Industry and Information Technology issued the 291st batch of "Announcement on Road Motor Vehicle Manufacturers and Products", and the "Recommended Model Catalog for the Promotion and Application of New Energy Vehicles (Fifth Batch)" was also released at the same time. It is worth noting that before the release of this announcement, the Ministry of Industry and Information Technology had briefly released a version of the recommended catalog, which had a total of 498 models, while the "Catalog (Fifth Batch)" only had 493 models.

Judging from public information, the "Recommended Model Catalog for the Promotion and Application of New Energy Vehicles" that determines whether new energy vehicles can enjoy subsidy policies has no direct connection with the "Automotive Power Battery Industry Standard Conditions" aimed at guiding and regulating the healthy development of the automotive power battery industry. The Ministry of Industry and Information Technology has also refuted the rumor that "the two are not linked", and only stated that "the quality and safety of power batteries will definitely become the focus of subsidy considerations in the next stage."

At present, China's new energy vehicles are still developing rapidly, and the Ministry of Industry and Information Technology has also set a clear goal of "achieving 2 million new energy vehicle production in 2020". In this regard, industry insiders pointed out that under such a big environment, Chinese vehicle manufacturers and parts manufacturers should seize the opportunity to grab market share; both vehicle manufacturers and parts manufacturers should not rely too much on foreign companies' funds and technology to expand their scale and grab short-term profits.

As Miao Wei, Minister of Industry and Information Technology, said at the Electric Vehicle Hundred People Conference: "Our core technology of power batteries has not yet achieved a revolutionary breakthrough, its performance needs to be greatly improved, and the construction of charging infrastructure still needs to be accelerated."

Regarding the "cold reception" of foreign-funded battery companies in China, Cui Dongshu, secretary-general of the China Passenger Car Association, believes that this is a positive signal for Chinese parts companies to avoid repeating the mistake of "hollowing out".

In an interview with Auto Headlines APP, Cui Dongshu said: "The implementation of the "Recommended Model Catalog for the Promotion and Application of New Energy Vehicles" and the "Regulation Conditions for the Automotive Power Battery Industry" will help Chinese automotive power battery companies to become better and stronger. With the rapid development of new energy vehicles, the level of product research and development and manufacturing can be improved, which can effectively avoid the "hollowing out" of the parts industry during the development of new energy vehicles."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.