BYD Expected To Spin-Off Battery Unit

MAR 31 2018 BY MARK KANE 12

BYD – the world’s biggest plug-in car manufacturer –  is expected to spin-off its battery and photovoltaic units.

BYD battery test

Up until now, BYD produced its own lithium-ion battery cells, modules and packs. the automaker will reach 28 GWh of production capacity in 2018.

But according to the latest reports, both the battery unit and photovoltaic unit are to be spin-off and listed on the stock exchange.

One of the reasons to take this action is competition from other major battery manufacturers like CATL, who are searching for new ways to fuel rapid growth.

Read Also – CATL Announces $2 Billion IPO To Fund New Battery Manufacturing Plants

Since Nissan sold its AESC battery manufacturing unit (founded with NEC), we starting to see that production of cars and batteries seem to be two parallel, but separate businesses and this move by BYD further confirms this.

“BYD intends to spin off its battery and photovoltaic unit and further promote the separated unit to be listed on a stock exchange, aiming to rival with CATL and trying to seize the to-be-lost strategic opportunities in battery industry. Currently, BYD had contacted with Great Wall Motor, BAIC and GAC in terms of power battery area.”

“Once BYD successfully spins off its battery unit and enable it be listed on a stock exchange, it is considered that BYD will commence a new business with a total market value of RMB 100 billion. Moreover, the battery business will help improve BYD’s valuation.”

Source: Gasgoo

Categories: Battery Tech, BYD, China

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12 Comments on "BYD Expected To Spin-Off Battery Unit"

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So the only vertically integrated BEV/Battery company decides vertical integration is not the way to go…

‘Only’ aside from Tesla, you mean…

Not exactly. Tesla owns the Gigafactory, but not the actual cell production taking place there. They made it clear that they want to keep the flexibility of being able to work with different cell suppliers.

Probably a good idea, considering that it’s hard to predict which battery technology will be in the lead a few years from now…

I need what stocks to buy.

This sounds like BYD thinks their battery manufacturing could sell more cells if it was independent from the car / truck / bus side of the company? Or it may mean that BYD thinks another battery manufacturer is going to come up with a breakthrough cell that they would like to buy instead of their in house cell supplier? I don’t know which or why.

What I do know is that there’s going to be a crunch when demand outstrips supply with all the new electric models being announced. And then sales of those electric models will be constrained until the battery manufacturing side catches up with the demand. How long will that last? Nobody knows, but we do know that building cell manufacturing lines takes 6 months to a year after the money is found to finance it.

My guess is your first statement. Methinks they’ll be able to produce/sell more batteries if other car companies don’t feel that they’re buying a component from a direct competitor. It’s not like GM would want to buy V-8s from Ford.

What about Kandi who, I believe, just purchased a battery company?

Perhaps KANDI anticipates auto production to out strip available battery supply, not an unreasonable possibility given the style and design of their new models. Perhaps battery supply, or lack of, was what contributed to a glitch in their business model in the first place. Perhaps they see that access to a reliable source for batteries is imperative; especially so when operating in an environment where unscrupulous battery supply outlets can alter or redesign their product without notice, notice to some and not others, and cost a company billions.

If they anticipate growing need for batteries, they can strike supply deals with battery makers, who in turn build the factories to fulfil them. Owning their own fabs doesn’t really help with that — if anything, it makes them less flexible…

It is cut-throat in China, cut-throat big time, and it is sometimes the case that the biggest operators excel at it.

Thus, if you control the batteries, you control the industry. So, it’s possible, despite your very reasonable observation about GM buying motors from Ford, that the primary motivation here is just that. Control, control, control and, down the line, more control. I think that BYD can, by way of proprietary contracts, get away with it; i.e. with ensuring a supply and having first shot at the latest in battery developments while, at the same time, keeping those competitors who come to rely on their spun off battery business compliant.

The irony is that BYD was originally just a battery maker…