Batteries is one of the main systems of electric vehicle. Batteries determine the total performance and define the capabilities of the electric vehicle regardless it is a passenger vehicle or heavy truck. Batteries are also determining the total price of the electric vehicle to large extend. In our first two reports on battery-swapping, Exploring Battery-Swapping For Electric Vehicles in China 1.0, and Exploring Battery-Swapping for Heavy Trucks in China 1.0, our focus was on passengers’ vehicles, and heavy trucks and the development and estab- lishment of large-scale battery-swapping systems in the Chinese context.

Due to the importance of batteries for the performance of electric vehicles, it is important to explore and understand the development of technologies for batteries in China as China is not only largest manufacturer of electric vehicles but also one of the largest developers and manufacturers of batteries used in electric vehicles.

In this report we are focusing on the technology development in historic perspective of the last 15 years in China. We see that the lithium-ion technology is the dominant technology, but we also see new emerging battery technologies that might be the game changer for the performance of electric vehicles. We demonstrate the dynamics of main battery technologies, LFP (lithium iron manganese, LiFeO4, battery cell) battery and NMC (lithium nickel manga- nese cobalt oxide battery cell) battery, the distribution of installed volumes between LFP and NMC in the Chinese market. During the early days of modern battery, the LFP battery technology were dominant with 69% of the market while NMC had 27% of the market. Over the last 5 years we can see big change where NMC is moving to the 67% level and LFP is going down to 32%. During the emerging stage of the China’s new energy vehicle development, LFP batteries account for 69-72% of the installed capacity due to their low cost and mature technology.With the introduction of NMC batteries into the mar- ket, their energy density, capacity and operational vehicle range and safety performance have been improved compared with LFP batteries. In recent years, the installed capacity of NMC battery technology accounts for two-thirds of the market in China. With the intensification of competition in the new energy vehicle market, NMC batteries with higher energy density and better cost efficiency ratio have become the new favorite and are still the mainstream of the market until now.

The CTP (cell to pack) technology of CATL (Contemporary Amperex Technology Co., Limited) improves the energy density and group efficiency of NMC battery, and the blade battery developed by BYD improves the energy density and safety performance based on the low cost of LFP battery. LFP battery market share expected to grow.

However, professionals in the industry point out that the energy density of LFP battery and NMC battery is close to the theoretical limit, the energy density limit of high nickel material + silicon carbon negative cell is about 300Wh/Kg At current time only CATL and GOTION High-Tech have reached this level.

New battery technologies are emerging, such as the Li-S (Lithium-Sulfur) battery that was first proposed in the 1960s, but progress has been slow so far; it was not until the 21st century that China’s research on Li-S batteries began gradually to develop. Solid-state lithium and lithium-rich manganese-based battery technologies are becoming the new hot-spots of battery development in China.

Beside capacity and performance, the main challenges for battery development that we have identified are:

Safety issues, especially the risk of fire during battery charging. The need to improve battery-management systems in collaborative settings between vehicle OEMs and key partners such as battery manufacturers and battery swapping technology developers. The management of batteries in their second and third lifecycles, as well as the decommissioning and recycling of old batteries.According to the development of the existing market, the market size of power lithium battery pack recycling will reach about 6.5 billion yuan by 2020, of which the market size of ladder utilization is about 4.1 billion yuan, and the market size of recycling is 2.4 billion yuan. By 2023, the total market size for battery decommissioning will reach 15 billion yuan, of which the market size of ladder utilization is about 5.7 billion yuan, and the market size of recycling is about 9.3 billion yuan.