LG Chem Signs Battery Supply Deal With Changan

AUG 24 2015 BY MARK KANE 8

Wait?  Who Is The Best Battery Maker Again?

LG Chem

Chinese carmaker Changan Automobile, who earlier this year unveiled the concept electric car Raeton CC Concept, intends to introduce on the market a new plug-in hybrid in 2016.

The new Changan PHEV will be equipped with LG Chem lithium-ion batteries.

There are no details on volume, but Changan, as a well established brand in China with a workforce of 80,000 and $34.1 billion in sales, could (like BYD) sell thousands a month. All depends on the product and price.

LG Chem also forged battery supply deals with Great Wall Motor Co. and Dongfeng Motor Corp. Production of LG Chem batteries in Nanjing, China will begin later this year with annual capacity of 100,000 packs of undisclosed size.

Source: koreaherald.com

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8 Comments on "LG Chem Signs Battery Supply Deal With Changan"

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The news about LG Chem batteries keeps pouring in. This is great! It sounds like they are really onto something with the next-gen batteries practically ready to go. Now let’s hope that they can ramp up production quickly without too many problems along the way.

If I was one of the companies which had signed a contract with LG Chem for its new (and I suppose much cheaper per kWh) batteries, then I’d be very worried about the rate at which LG is adding new customers. Unless LG Chem is matching each new contract with building more and more production capacity in its factories, then some customer is going to get shorted. Perhaps several customers. Even if LG is taking steps to keep building out more production to match its delivery contracts, any unforeseen delay in that build-out is going to affect one or more of their customers.

Tesla is smart to built out its own large battery factory, so they don’t have to compete with anyone else for their supply of battery cells.

Sounds like a good problem for LG Chem to have. As for the auto makers, most don’t seem all that interested in pushing large volumes – at least at first. Even the much-lauded Chevy Bolt is only slated for 30,000 copies in the first year. That’s not all that much more than Tesla sells Model S’s today.

“Sounds like a good problem for LG Chem to have.”

Sure, from LG Chem’s viewpoint, this is fantastic. All the EV makers except Tesla wants their new (and presumably cheaper-per-kWh) battery cells. Good for LG Chem, and I have no doubt their stockholders (assuming they do have stockholders) are very happy indeed.

But for the EV revolution, having so many EV makers depend on one single supplier is problematic.

In the long run, of course, whatever new tech LG Chem has will eventually be matched by other battery makers, either by licensing the tech as Nissan/NEC already has, or by developing similar advancements. But in the short term, this looks like a real bottleneck in battery production, and therefore a bottleneck in EV production from just about every non-Tesla auto maker selling EVs in first-world countries.

A lot of China’s cheaper EVs are still using older battery tech — some even lead-acid — so this bottleneck should affect the Chinese market less.

[snark] Besides, Chinese battery makers will reverse engineer LG Chem’s new battery chemistry and/or construction and will be building similar cells within a couple of months anyway. [/snark]

I guess I don’t fully agree that LG Chem will be that much of a bottleneck. The automakers using their battery aren’t looking for very high volume right off the bat. It seems more likely that a single contract would not allow LG Chem to scale up production as fast as they would like, so they are signing more contracts to create as many customers as possible.

And don’t count out their competitors just yet. Panasonic, Samsung, and NEC are still in the game and working on their own next-gen battery.

“It seems more likely that a single contract would not allow LG Chem to scale up production as fast as they would like, so they are signing more contracts to create as many customers as possible.”

Well now that’s an excellent point, thanks. Yes, scaling up volume would help LG Chem lower its unit costs.

I bet that’s why Audi did contracts with LG and Samsung SDI. As soon as manufacturers see that 150+ mile EVs sell like hot cake in early 2016, they all will want to increase volume of their deals. LG Chem will say: “sure, we can deliver more at the end of 2018…”

Blatant 6 series copy. Rich Chinese tend to go for the real deal rather than some home grown knock off so it’s pretty safe for LG to add these copycats to their growing customer list as they won’t be needing large numbers.