EV Suppliers Benefiting From Strong Demand For Battery Components
EV suppliers are benefiting from strong demand for battery components. Their revenues are rising faster than those of carmakers.
To ensure fail-safe batteries and other EV parts, automakers must develop new approaches to sourcing. This involves stockpiling critical parts, implementing dual-sourcing strategies, and collaborating with suppliers on innovation. The US can also reduce its reliance on overseas supplies.
SK On
The electric vehicle battery company SK On is one of the fastest growing businesses in the world. Its cutting-edge lithium-ion batteries help make EVs safer, charge faster, and travel farther on each charge. The company’s growth has also helped propel it to second place among South Korea’s major conglomerates by assets, putting it ahead of Samsung, another traditional energy giant. Its expansion underscores SK’s pivot into green energy, a radical shift for an empire that generates more than half its business from oil and petrochemicals.
SK On is already in the process of building two EV battery plants in the US, and has an enviable order backlog of 1,600 GWh. The company is also expanding globally. It recently opened a plant in China and Hungary. The company’s co-CEO, Jee Dong-seob, has big ambitions for SK On. He says the company wants to be the largest EV battery maker in the world by 2030.
Hyundai Motor Group, which controls Hyundai Motor, Kia, and Genesis, has selected SK On to supply batteries for its EVs in North America. This will reduce the company’s reliance on Chinese suppliers and allow it to meet the new US climate change law.
The company’s first US plant, in Commerce, Georgia, began production in 2022. It has a capacity of 22 GWh per year, enough to power electric car makers about 300,000 vehicles. It will employ around 2,600 high-skilled workers.
BYD
BYD started as a battery company, and it still produces the most important-and costliest-components of any electric vehicle. This has given the Chinese maker a huge advantage in its home market, where it is selling more than five million NEVs a year (which includes cars under its own brand and those made for other carmakers).
However, the company faces a big challenge as it expands outside China. It will have to compete with established companies, as well as upstart rivals, and convince consumers that BYD’s EVs are worth the premium. In addition, the company’s profit margins will likely shrink as China reduces its subsidies on NEV sales and replaces them with a cap-and-trade program in 2020.
In a bid to boost its international presence, BYD has already launched a network of charging stations across Europe and Asia. The company is also working with city governments to bring in a fleet of electric buses, including those in Montevideo, Uruguay and Bogota, Colombia.
The success of BYD’s global expansion will be a significant test for the Chinese economy, which many believe is in danger of becoming a house of cards propped up by state money. Whether BYD can become the Toyota, VW or GM of the EV era will electric vehicle supplier be a major indicator of whether China’s economic model is sustainable or not.
TE Connectivity
The company has a global workforce of about 89,000 people, including more than 8,000 engineers. The company’s products are used in transportation, industrial applications, medical devices, data communication systems, and home appliances. TE Connectivity provides solutions that power electric vehicles, aircraft, digital factories, and smart homes. The company also delivers innovation that enables life-saving medical care, efficient utility networks, and the global communications infrastructure.
TE Connectivity’s automotive solutions include electrical connectivity products for body and chassis systems, convenience applications, infotainment systems, miniaturization solutions, and motor and powertrain solutions. Its wireless technology enables cellular vehicle-to-vehicle communication, and its battery technologies allow for increased energy density and longer range.
In its communications segment, TE Connectivity offers connectors and cables for broadband networks and telecommunications infrastructure. Its electronics components are used in many household devices, such as washers and dryers, refrigerators, air conditioners, microwaves, and cooking appliances. Its industrial and commercial transportation divisions supply electronic components for buses, trucks, railcars, and airplanes.
TE Connectivity is an American-based company that designs and manufactures connectors and sensors. Its product portfolio includes over 500,000 stock-keeping units, making it the largest interconnect supplier in the world. The company has operations in more than 150 countries, and it produces products for a wide variety of industries. Its consolidated revenues for fiscal 2022 were nearly US$7 billion.
LG Chem
LG Chem, which makes cylindrical battery cells used by Tesla and others, is seeking to boost production capacity to meet soaring demand fanned by governments promoting EVs to cut air pollution. The company is also expanding a plant in Poland and opening a facility in Morocco to serve global automakers. It is fighting for market share with China’s Contemporary Amperex Technology (CATL) and South Korea’s Samsung SDI and SK Innovation.
Besides providing lithium-ion cathode materials, LG Chem also offers battery modules for electric vehicles. Its batteries are used by Changan Automobile, which is one of China’s largest carmakers, and by Great Wall Motors and Dongfeng Motor. The Chinese companies are focusing on plug-in hybrid and pure electric cars, which require more advanced battery technologies.
Geely Auto, a leading Chinese automaker, has signed a deal to use LG’s battery products in its pure electric and plug-in hybrid vehicles starting from 2020. The partnership will help Geely achieve its Blue Geely Initiative, which aims for 90% of the company’s sales to be from electrified vehicles.
LG Chem has partnered with GM to build a new battery factory in the United States that will produce 30 GWh of capacity annually. This factory will supply GM’s upcoming generation of electric vehicles, which are expected to be priced at a competitive cost per kilowatt hour.
