Forget Tesla, the disruption in battery market is more likely to come from Chinese companies like BYD and CATL. The FT has a nice article that highlights China's massive industrial policy push to promote battery makers for electric cards and dominate the global market estimated to reach $40 bn by 2025. The country is already the world's largest supplier of lithium-ion batteries.
Backed by aggressive government policies —ranging from subsidies for electric vehicles to restrictions on foreign rivals — China’s battery companies are beginning to dominate an industry which has been led for three decades by South Korean and Japanese manufacturers such as Panasonic, which makes the battery cells for Tesla cars. Beijing last week called for companies to double electric vehicle battery capacity by 2020 and encouraged them to invest in factories overseas... China’s approach has echoes of the one it took on solar power a decade ago. It dominated the industry by lowering costs and driving prices down by 70 per cent and could do the same for batteries...
Beijing released a list of companies allowed to supply batteries in the country. Not a single foreign company was included. Separately Beijing released draft guidelines at the end of last year that said car battery manufacturers would need to have at least 8 GWh of production capacity in China to qualify for subsidies — a target that only BYD and CATL can meet... China seeks to acquire world-class foreign battery technology while keeping overall Chinese ownership and control... It has been very careful to cultivate local battery champions while using licensing procedures to hold foreign companies at bay... Because the Chinese have artificial government protection they are able to grow scale that’s bigger than the Koreans..
And the scope of industrial policy goes far beyond the conventional use of such policies,
Even more than the subsidies or barriers to foreign operators, the greatest advantage for Chinese battery manufacturers over rivals such as Tesla is access to raw materials. Chinese companies have been making inroads over the past year into the lithium-ion supply chain, buying up mining assets from cobalt to lithium to help cut costs. This year Ganfeng Lithium, one of the country’s largest producers of the battery chemical, bought a 19.9 per cent stake in an Argentine lithium project. The deal followed on the heels of a purchase last year of a 2.1 per cent stake in Chile’s SQM, the world’s largest lithium producer, by Tianqi Lithium. Similarly in cobalt, China Molybdenum, a mining company partially owned by a Chinese local government, paid $2.65bn last year for the Tenke mine in the Democratic Republic of Congo. The mine contains one of the world’s largest concentrations of cobalt and offers “security of supply of a critical battery material for decades to come”.
When India pursues industrial policy, it would do well to look beyond the likes of Apple and Amazon and promote the likes of battery cars and artificial intelligence.