China’s Battery King’s Progress and Precarious Reign | MarketingwithAnoy

The headquarters of the battery giant CATL towers over the Chinese coastal city of Ningde. To the untrained eye, the building looks like a huge roller coaster that rises out of the city spread. It is, in fact, a huge monument to the company’s raison d’être: the Lithium-ion battery pack.

You may have never heard of CATL, but you have certainly heard of the brands that rely on their batteries. The company delivers more than 30 percent of the world’s EV batteries and counts Tesla, Kia and BMW among its customers. Its founder and chairman, 54-year-old Zeng Yuqun, also known as Robin Zeng, has quickly emerged as the industry’s kingmaker. Insiders describe Zeng as knowledgeable, direct and even abrasive. Under his leadership, CATL’s valuation has risen to 1.2 trillion Chinese yuan ($ 179 billion), more than General Motors and Ford combined. Part of that wealth is built on owning shares in mining projects in China, Democratic Republic of the Congoand Indonesiawhich gives CATL a tighter grip on one already strained global battery supply chain.

Such a scale gives CATL enormous influence – and allows the company to be picky about its contracts and push the rising prices of raw materials on its customers. “They largely dictate the terms,” ​​says Mark Greeven, professor of innovation and strategy at the IMD Business School in Lausanne, Switzerland. CATL is pushing customers for long-term, five-year agreements. and it is reluctant to adapt its batteries to different car manufacturers, he adds.

So far, these decisions have helped make Zeng rich – very rich. He’s number 29 Forbes‘2022 list of the world’s richest people. On Bloomberg’s 2021 list of the world’s best green billionaires, he is next to Tesla’s CEO Elon Musk. Musk may make more headlines, but Zeng has almost as much power.

But Zeng is not Musk. He avoids the limelight and rarely gives interviews. Insiders point out that Zeng operates in an environment where notoriety could hinder, not help, his business. “In the West, the personality cult of leadership is something that is valued, encouraged and celebrated. In China, it’s dangerous,” said Bill Russo, former head of automaker Chrysler’s Northeast Asian business in Beijing, which now runs Shanghai-based consulting firm Automobility. You can not be bigger than Beijing. “Automakers are also becoming wary of how much power CATL has when searching elsewhere for batteries to power their vehicles.


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Zeng’s arrival d The EV battery scene can be traced back to 2010 – and a meeting with Herbert Diess, who was purchasing manager for BMW at the time. Diess, now CEO of Volkswagen, had embarked on an international mission to persuade companies that manufacture mobile phone batteries to turn to electric cars. He tried European companies, including Germany’s Bosch. But he also approached Zeng, who at the time ran a subsidiary of the Japanese electronics company TDK. Retells the story at an internal meeting in May 2022. Diess described Zeng’s initial reaction as dismissive – it was, Zeng said, impossible for him to build such large batteries.

But that’s the story, Diess’ plea for batteries stuck. In 2011, Zeng led a group of Chinese investors to acquire a 85 percent stake in TDK’s EV battery business, which they called CATL. BMW was its first key account. “Diess brought our business into the automotive battery industry,” Zeng said told Handelsblatt in 2020. “I am grateful to him for that.”

Diess could have inspired CATL to enter the electricity market, but over the years, Zeng gained a reputation as a founder who could master batteries as well as business. When he bought a U.S. patent on cell phone batteries in the early 2000s, he worked to improve the battery design himself, according to Lei Xing, former editor of Beijing-based media. China Auto Review. When BMW agreed to use CATL as its battery supplier, it was Zeng who read the 800-page requirements line by line, according to Yunfei Feng, a research fellow at IMD Business School.

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