“Market and Challenges in Power Batteries Power batteries account for up to 60% of the cost of a car—are we just working for CATL?!" — Zeng Qinghong, GAC Group.
2025, the penetration rate of new energy vehicles in China is expected to exceed 50%
Despite significant challenges such as rising raw material prices, reduced subsidies, and production setbacks due to the pandemic, the new energy vehicle and power battery sectors in China have experienced strong growth.
From January to August 2022, China's power battery production soared to 303.8 GWh, a 172.3% increase year-over-year. The installed capacity during this period was 162.1 GWh, marking a 112.3% increase. In August alone, the installed capacity grew by 121.0%. The penetration rate of new energy vehicles reached a record 22.9%. Industry experts predict that by 2025, more than 50% of new vehicles in China will be powered by new energy sources. Production expansion in the power battery sector remains robust.
In recent years, the installed capacity of power batteries in China has been measured in gigawatt-hours (GWh) and percentage.
Data is provided by the Power Battery Innovation Alliance
In the first half of 2022, China launched 9 power and energy storage battery projects, started 22, and signed 21, planning capacities of over 118 GWh, 638 GWh, and 367 GWh, totaling more than 1100 GWh, which is 4.1 times the total shipments of 2021.
Under cost pressures, must we resort to global mining?
The market's demand far outstrips supply, and the rising costs of raw materials are driving the cost of power batteries to new heights.
On July 22, 2022, at the World Power Battery Conference, Zeng Qinghong, chairman of GAC Group, expressed frustration, noting that power battery costs now make up 40%, 50%, and even 60% of car manufacturing costs. He joked, "If 60% of my car's cost is the battery, aren't I just working for CATL?" Zeng further stated that GAC aims not only to manufacture power batteries but also to join the global effort in mining to reduce costs from the supply chain end.
Power battery manufacturers find themselves in a difficult position. The massive demand for batteries is driving raw material prices through the roof, with some increasing more than tenfold in recent years.
Within the power battery supply chain, battery manufacturing companies see the highest increase in revenue, yet their profit growth is the lowest. According to Wind data, from January to June 2022, these companies saw their total revenue grow by 116.4%, but net profits only grew by 49.28%.
Is joining the global mining effort the only way to reduce costs in power battery production?
Returning to Production: Reducing Staff and Increasing Efficiency
Returning to the basics of production, using robots and smart manufacturing to reduce staff and increase efficiency offers an effective solution. For example, the Tianji robot-operated production line for new energy square battery busbars directly supplies top industry companies.
Each line has a capacity of 25,000 pieces per shift, with a production beat of 1.4 seconds per piece, achieving a yield of 99.5%. Only one person is needed to manage and operate the entire line. This compact workshop houses four such production lines working continuously.
Previously, customers tried manual lines which required at least 13 skilled workers to achieve similar capacity. Because manual operations couldn't match the robot's pace, two additional injection molding machines were needed. The production manager revealed that the cost of manual labor is approximately 85,000 to 95,000 RMB per year, not including hidden costs like recruitment and training. The cost for one injection molding machine is 350,000 RMB, and two cost 700,000 RMB.
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In other words, the robot-operated line saves 12 workers and two injection machines, cutting costs by 1.8 million RMB annually with an ROI of just six months. Compared to manual lines, the automated line is more stable and efficient, with a 7.5% higher yield, meaning it produces 593,000 fewer defective items annually.
Space-wise, the production line is compact, utilizing space efficiently. Manual lines, restricted by workbench and equipment sizes, require more space. When factory space is limited, automation becomes the optimal solution.
Processes: Automatic loading/unloading - Injection molding - Labeling - Visual inspection - Dimension inspection - Automatic loading/unloading
Robots:
- SR20 * 2 (20kg load capacity)
- SR6 * 3 (6kg load capacity)
Advantages:High capacity, high yield, efficient space utilization, significant reduction in hardware costs.