Powerful CATL dominates electric car battery sector

How CATL made it

Its fast rise to stardom is the result of a combination of numerous factors, including a bit of luck.

Its deal soon after its establishment in 2011 with BMW's Chinese joint venture BMW Brilliance, which was planning an indigenous electric car brand Zinoro, later proved to be a major landmark in its development.

As cars sporting Chinese batteries are qualified for subsidies from the government, it followed that a local supplier would be a better choice than international ones. But why an obscure one like CATL?

"That is because we had years of experiences as a high-end lithiumion battery maker, at ATL," Huang Shilin, vice-chairman of CATL, told Tencent. ATL, which was founded in 1999 by Zeng Yuqun and later sold to Japan's TDK, had been specializing in lithiumion batteries for consumer electronics, including the iPhone.

Zeng, a Ningde local, later decided to move into power batteries when China's new energy vehicle started to show a rising trajectory.

He took ATL out of TDK and turned it into CATL in his home city in 2011. It turned out to be a good guess.

China surpassed the United States as the largest market for such vehicles in 2015, and last year, more than 1.2 million were sold, with the figure expected to reach 1.6 million in 2019.

Yale Zhang, managing director of Shanghai-based consulting firm Automotive Foresight, said a more important reason for BMW's choice might be associated with BYD, which was then the country's largest battery and electric car maker.

BYD, Zhang said, "was reluctant to sell batteries so as to keep its own position in the industry," thus forcing BMW Brilliance and other carmakers to look elsewhere.

As soon as the two inked their deal, BMW Brilliance sent engineers to work with the CATL team on batteries it needed and thus helped the battery maker improve its technical procedures and raise its quality standards.

Both were happy with the results of their cooperation. CATL has made it into the list of suppliers allowed to provide batteries to BMW-branded models, and BMW's reputation in the industry has helped lift CATL out of obscurity and into stardom.

From then on, a number of major Chinese carmakers have rushed to sign deals with CATL, and its name is frequently mentioned when electric cars are unveiled as proof of good quality.

"Smaller carmakers usually turn to other battery providers, because they have to wait in line if they want batteries from CATL," said a Chinese auto executive who asked to remain anonymous.