Foreign Media: "This Week's No.1 in China BYD Negotiates Sale of German Factory with US Ford"
Amid Electric Vehicle Subsidy Cuts and Domestic Market Competitiveness
"Chinese Companies Self-De-Chinaing, Full-Scale Globalization This Year"
[Asia Economy Reporter Choi Seoyoon] The Chinese "Anbang Tiger" is aiming to enter Europe. This refers to BYD, the number one electric vehicle (EV) manufacturer in China, which is attempting to acquire Ford's German factory, the second-largest player in the U.S. electric vehicle market. Major foreign media reported on the 24th (local time) that Ford executives will visit China this week to enter negotiations with BYD regarding the sale of the German production plant.
BYD is the top automaker in the Chinese market by electric vehicle sales, having surpassed U.S. Tesla last year. It is the only company in the world with a vertically integrated EV production system covering everything from batteries to vehicle semiconductors and manufacturing processes. As they sell cars, they also sell their own batteries. BYD sold 1.86 million electric vehicles last year, marking a 184% increase compared to the previous year. Tesla managed only 1.3 million units. Riding on this momentum, BYD surpassed LG Energy Solution last year to become the second-largest player in the global battery market.
Europe has been a stronghold for K-batteries. In 2017, LG Energy Solution (then LG Chem) established a key production base for electric vehicle batteries in Poland. It is a lithium battery factory with the largest production capacity in Europe and the first complete production system. In the same year, Samsung SDI completed a battery factory with an annual capacity of 30 GWh in Hungary. Four years later, they invested an additional 1.2 trillion KRW to build a second plant. In 2018, SK On (then SK Innovation) began construction of a battery factory in Hungary with an annual capacity of 7.5 GWh. The world's largest battery manufacturer, China's CATL, started building a battery factory in Europe (Germany) in 2019.
Although China started later than Korea, its pace surpasses Korea. CATL began operating its first overseas production base, a German factory with an annual capacity of 14 GWh, last year. It is also building a 100 GWh factory in Hungary, scheduled for completion in 2027. Other Chinese battery companies are also rushing to plant their flags in Europe. SVOLT, spun off from Chinese automaker Changcheng Automobile, announced plans in September last year to establish a second battery factory in Germany. The factory is targeted for completion in 2025 with an annual capacity of 16 GWh.
Europe will ban the sale of new internal combustion engine vehicles starting in 2035. Before then, it must secure an electric vehicle battery supply chain. European battery companies started their businesses later than Chinese or Korean companies and thus lack mass production capacity, experience, and investment funds. This is why European automakers, despite recognizing the threat posed by Chinese battery companies, enter into supply contracts with them. Securing battery supply for electric vehicle production takes precedence over reducing dependence on China.
Experts believe that if BYD, which has battery internalization capabilities, establishes a base in Europe, competition in both the electric vehicle and battery markets will intensify further. Professor Park Cheolwan of Seojeong University said, "While only battery companies have entered the European market so far, the establishment of a base by an electric vehicle company like BYD means that China's battery and electric vehicle industries are beginning to globalize in earnest this year."
As the status of Chinese battery companies in the European market rises, the position of currently dominant Korean battery companies weakens. The Korea Battery Industry Association reported that Korean companies account for 64.2% of battery production facilities in Europe, and last year, the three major domestic battery companies held a 71.4% share of the European market sales. For a while, optimism prevailed that by dominating the U.S. and European markets while China faltered due to the Inflation Reduction Act (IRA), Korea could surpass China in global market share. However, the situation has recently changed. A battery industry insider said, "Chinese companies, having secured competitiveness in the domestic market, are moving overseas following the Chinese government's reduction of electric vehicle subsidies. The so-called strong players have started to move, and the real competition begins this year."
Battery information company Benchmark Mineral Intelligence (BMI) forecasts that CATL will be the number one in battery production capacity in Europe by 2031 with 180 GWh. This is comparable to the combined scale of LG Energy Solution (115 GWh, ranked 5th), SK On (47.3 GWh, 9th), and Samsung SDI (30 GWh, 13th). BYD, as both an automaker and battery manufacturer, can serve as a foothold for Chinese electric vehicles entering Europe.
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