As the global pandemic hit, the world’s biggest maker of electric car batteries, a Chinese company now worth more than General Motors and Ford combined, suddenly faced its own crisis.
A rival had released a video suggesting that a technology used by the company, CATL, and other manufacturers could cause car fires. Imitating a Chinese government safety test, the rival had driven a nail through a battery cell, one of many in a typical electric car battery. The cell exploded in a fireball.
Chinese officials took swift action — by dropping the nail test, according to documents reviewed by The New York Times. The new regulation, released two months later, listed who had drafted it: First on the list, ahead of the government’s own vehicle testing agency, was CATL.
The battery giant stands as a crucial link in a green-technology supply chain increasingly dominated by China. Chinese companies, particularly CATL, have secured vast supplies of the raw materials that go inside the batteries. That dominance has stirred fears in Washington that Detroit could someday be rendered obsolete, and that Beijing could control American driving in the 21st century the way that oil-producing nations sometimes could in the 20th.
Chinese government officials made sure CATL’s business stayed in Chinese hands. They created a captive market of battery customers. And when CATL needed money, they doled it out.
“CATL definitely seems like it’s the concept and creation of a master plan,” said Michael Dunne, a former G.M. executive in Asia and now an analyst.y
From Detroit to Milan to Wolfsburg, Germany, auto executives who spent their careers trying to perfect pistons and fuel-injection systems are now obsessing about how to compete with a nearly invisible yet formidable industry giant.
“China’s problem with internal combustion engines was they were forever playing the game of catch-up,” said Bill Russo, a former chief of Chrysler in China who is now a Shanghai electric car consultant. “Now, the United States has to play the game of catch-up with electric vehicles.”
While Tesla and its garrulous chairman, Elon Musk, have epitomized the electric car boom, CATL — its legal name in English is Contemporary Amperex Technology Company Limited — has stayed in the shadows.
Its founder and chairman, Robin Zeng, is one of the wealthiest men in Asia, with a fortune of about $60 billion. Its towering headquarters, shaped like an oversize lithium battery, and several of its biggest factories are in his hometown, Ningde, a former fishing village and military base in southeastern China. The municipal government has locked down access to a wide array of documents, particularly from the early days of CATL.
Mr. Zeng, 53, has built a senior management team of longtime employees, many of whom grew up in Ningde. For gifts during holidays, CATL sends lychee and loquat fruit grown on Ningde’s outskirts.
After studying marine engineering at a Shanghai university, Mr. Zeng went to work on battery chemistry for TDK, a Japanese company, in China. In 1999, he joined fellow battery chemistry experts who set up their own company supplying lithium-cobalt batteries for mobile phones, camcorders and other portable consumer electronics. The team sold the company to TDK in 2005 for $100 million and continued to run it as a subsidiary.
The Chinese government, which has long identified batteries as a strategic industry, in 2011 took one of several steps to nurture a homegrown industry. It required that foreign automakers that want to sell electric cars in China transfer crucial technology to a local company. Only then would the government subsidize the sale of their autos, which could amount to up to $19,300 for car buyers.
TDK allowed a group of Chinese investors led by Mr. Zeng to acquire an 85 percent stake in its nascent electric car battery business at the end of 2011. They called it CATL. BMW, its first main customer, switched from A123, a battery supplier in Massachusetts and Michigan.
Four years later, a different group of Chinese investors bought the remaining 15 percent from TDK.
The financial terms of the sale aren’t clear, but Mr. Zeng and his partners reaped a windfall. TDK now has a market capitalization of $16 billion. CATL? Almost $240 billion.