Ideal Auto Partners with Second-Tier Battery Manufacturer to Form Joint Venture for Electric Vehicle Battery Production

Ideal Automotive has partnered with the second-tier power battery manufacturer Sunwoda to establish a joint venture aimed at producing batteries. This initiative highlights the growing importance of power batteries, which are central to the new energy vehicle industry, as automakers continuously strive to reduce costs and enhance performance. The collaboration between these two entities is expected to have a significant impact on their respective market shares.

According to a public notice from the Shanghai Market Supervision Administration on September 19, Sunwoda Electronics Co., Ltd. (stock code: 300207.SZ), a long-established lithium battery company, is set to form a joint venture with Beijing Ideal Automotive Co., Ltd. The investment will be split evenly, with both companies contributing 50% each. The joint venture will focus on the production, manufacturing, and sales of lithium-ion power batteries for electric vehicles.

Following this announcement, Ideal Automotive has made headlines with two significant developments. In addition to forming the joint venture with Sunwoda, the company signed a comprehensive five-year strategic cooperation agreement with CATL (Contemporary Amperex Technology Co., Ltd.) on September 18, 2023. This agreement, which involves CATL—the leader in the power battery market—will facilitate deep collaboration in battery safety and fast-charging technology, aiming to expand both companies’ domestic and international business and drive innovation in battery technology and global strategies.

As a long-term partner, CATL will provide a range of high-performance, high-safety, and high-quality battery systems for Ideal Automotive’s entire product line, including but not limited to ternary lithium batteries, M3P batteries, lithium iron phosphate batteries, and sodium-ion batteries, thereby injecting core energy into the premium intelligent electric experience of Ideal Automotive. According to CATL, the cumulative delivery of Ideal Automotive vehicles equipped with their batteries has surpassed one million units, with no incidents of thermal runaway due to battery issues.

For reference, Ideal Automotive reported a cumulative delivery of 1,397,070 vehicles as of August 31, 2023. In comparison, Sunwoda, as a second-tier battery manufacturer, has a smaller market presence. Data from the China Automotive Power Battery Industry Innovation Alliance reveals that from January to August this year, the total installed capacity of power batteries in China reached 417.9 GWh, marking a year-on-year growth of 43.1%. CATL led the market with an installed capacity of 178.16 GWh, holding 42.74% of the market share, while Sunwoda ranked sixth with an installed capacity of 13.76 GWh, accounting for 3.30% of the market.

Founded in 1997 by the Wang brothers from Maoming, Guangdong, Sunwoda is a veteran in the lithium-ion battery industry, originally focusing on consumer battery packs before entering the automotive power battery sector in 2008. As of the first half of this year, consumer batteries still constituted the largest segment of Sunwoda‘s business, contributing 51.47% of revenue, while power batteries made up 28.18%.

Public records indicate that the collaboration between Sunwoda and Ideal Automotive began nearly eight years ago. In 2017, the two companies started working closely together in R&D, quality, manufacturing, delivery, and customer service. In 2022, amid a severe “battery shortage,” Ideal Automotive expanded its power battery supply chain and increased its investment in Sunwoda by 400 million yuan, raising its shareholding to 2.14%.

Moreover, Sunwoda‘s shareholder list includes other major players like NIO, Xpeng, and Dongfeng Motor Corporation. According to Sunwoda‘s prospectus, as of late March this year, Ideal Automotive was among its top five clients, contributing 5.8% to its revenue. For larger automakers, ensuring a stable supply of power batteries remains a crucial issue.

Earlier this year, Geely announced the integration of its battery operations to form Geely Yaotong, consolidating its previous battery brands into a unified Shen Dun Jin Zhuan brand. This consolidation aims to focus on the lithium iron phosphate blade technology route, with a target of achieving 70 GWh of battery production capacity by 2027 to support one million new energy vehicles.

As competition among power battery suppliers intensifies, maintaining strong ties with clients becomes increasingly important. Even industry leader CATL is innovating; in June, it launched two CTP 2.0 high-end battery pack production lines at its Silk Road Super Factory, marking its first venture into a “factory within a factory” model to locally produce battery systems for the Wenjie series of vehicles, viewed as a significant transformation in its supply and delivery model.