XPeng (“XPeng” or the “Company”, NYSE: XPEV, HKEX: 9868.HK) confirmed to bring in new supplier, possibly CALB, as its new main battery supplier in addition to CATL, according to a 36kr report on December 24.
XPeng’s main battery supplier is currently CATL, and 36kr reported that XPeng’s chairman and CEO He Xiaopeng and CATL founder and chairman Robin Zeng had a mid-year meeting spat, in which Zeng walked from meeting at the heat of the argument to calm down for more than 10 minutes.
In response, Xiaopeng responded that the quarrel was a rumour.
The argument was over He’s plan to bring in CALB as the new main battery supplier, which would cut into CATL’s share of supply. CALB, on the other hand, is seen by CATL as a serious threat to its dominating market share
CATL remains as dominate player in EV battery supply worldwide
Data released earlier this month by the China Automotive Battery Innovation Alliance showed that CATL had 11.45 GWh of power batteries installed in China in November, giving it a 55 percent market share, up 5.1 percentage points from 49.9 percent in October.
CALB ranked third with 1.09 GWh and a 5.2 percent market share, up from 5.0 percent in October, moving it up one spot from October.
According to 36kr, almost all Chinese car companies are CATL customers, but CALB’s rapid rise this year is posing a potential threat to CATL’s dominance.
It is reported that the outbreak of new energy vehicle sales has brought a surge in demand for power batteries, power battery capacity is in short supply, and CATL has adopted a strong business strategy, making new energy vehicle companies face greater pressure on capital turnover, while also unable to ensure adequate battery supply, in this case, XPeng, NIO and other car companies have begun to cultivate their own battery suppliers to reduce costs and ensure supply chain security.
According to Dennis, vice president of finance at XPeng, switching to a lower-cost battery is expected to bring a 1-2% contribution to gross margin improvement.
After Peng’s IPO, gross margins have hovered around 10% year-round.
Analysts pointed out that the speed of power battery capacity expansion can not keep up with the growth rate of new energy vehicle demand, this may be the cause of the conflict. CATL is in competitive advantage in production capacity, hence dominated the market. Many downstream car companies appear to have no other compromise on the battery supply.
After all, if demand capacity exceeds supply, the market may also enter pierce price competition.
As of press time on December 24, XPeng share price of $46.09, up 0.77%. CATL shares were at $572.17, down 8.03%.