In Good Company with Nicolai Tangen - CATL CEO & Founder Robin Zeng:  The journey to market dominance and powering the future of batteries

Episode Date: September 18, 2024

In this episode, Nicolai is joined by Robin Zeng , founder and CEO of CATL, the world's largest battery producer. The company has a staggering 37.5% market share, and CATL has revolutionised the battery industry, powering millions of electric vehicles and contributing significantly to renewable energy storage. But how does a Chinese company view differences between their home market, the US and Europe? Tune in learn more from Robin about the importance of understanding consumer needs, the innovative technologies behind CATLs success, and the companys vision for a zero-carbon future. This episode offers a true deep dive into the challenges and triumphs of leading a global battery powerhouse, the complexities of scaling production, and the critical role of research and development in driving sustainable energy solutions.In Good Company is hosted by Nicolai Tangen, CEO of Norges Bank Investment Management.New episode out every Wednesday.The production team for this episode includes PLAN-Bs Pål Huuse and Niklas Figenschau Johansen. Background research was conducted by Kristian Haga and Arnab Seal.Watch the episode on YouTube: Norges Bank Investment Management - YouTubeWant to learn more about the fund? The fund | Norges Bank Investment Management (nbim.no)Follow Nicolai Tangen on LinkedIn: Nicolai Tangen | LinkedInFollow NBIM on LinkedIn: Norges Bank Investment Management: Administrator for bedriftsside | LinkedInFollow NBIM on Instagram: Explore Norges Bank Investment Management on Instagram Hosted on Acast. See acast.com/privacy for more information.

Hi everybody and welcome to InGood Company. I'm Nicolai Tangjian and the CEO of the Norwegian Wealth Fund. And today we have an incredible guest, Robin Zeng, the founder and CEO of CATL, the world largest battery producer. Now, it's not only the world's largest, it's got a whopping 40% of this mega market. Wow. Robin, how did this come about? No, no, not yet 40%, okay, to be correct, 37.5%, something less than 40. But I think the most important is right products.

Definitely the market needs a lot of right products to do the immobility. So right product you need the right technology. So in our world it's more like right chemical, right material, which really have a good product. So this good product is a fitness to the purpose of the consumer. That's why consumers really love that. That's why the customers, OEMs, would like to make these products and put this product into their car. That's why we can power millions of cars. So despite your incredible market position, there may be some listeners who don't know what your products are. So just very briefly, what type of products do you have?

We have two major products. One is the battery. We call it a battery for immobility. So you can have the product in people like Tesla's car, Model 3, Model 1. So in all Chinese car makers, also in many of OEM cars. So this battery we call it to power the whole car. So it's a BEV. Another product is we make a battery for the energy storage. You know, all the renewable energy like wind turbine and solar cell, that's why you need a storage battery who can storage regulate the unstable renewable energy supplies, which make these energy supply become very stable, very predictable and very fitness to the industry user and other use.

What's been the main steps from going from kind of zero to 37.5% world market share? What's been the important steps here? How long has it taken you? Yeah, we take almost 12 years from zero to this 37.5%. It's not because of this, only this 12 years, because our team have been working on this industry for now it's a quarter century. 25 years ago we started business

with this lithium ion battery, which is definitely for mobile phone, for the notebook, for all the consumer electronic applications. So we have the similar technology from 25 years ago. Who do you consider your competitors? Today, I think the competitor is ourself because we don't have, we still have a lot of to do,

especially on the electrical, chemical side., you know the material today, we're still in the castle material like at least some ion phosphate and NCM, and the material is still on the graphite or some silicon. Most important is the new chemistry we have to invent. So only invent new chemistry that can also fit more usage, more requirements from consumers, for example, low temperature performance. You say that your competitors are yourself. Are you not worried about any other competitors? I don't consider them as competitors. Actually, we love to have more people join in this journey, which really can have the inventions. It's not a copycat.

It's the inventions which can help to make the consumer, make the customer happy with their real good performance of the products and technologies. Because only the competitions in invention, competitions in the creativity, which can help this industry very healthy to grow in the future. And how important is state support in getting to that type of position? In China, it's more complicated because Chinese try to make a lot of products which fit to

the consumer usage. So Chinese OEM more like we call it hearing more requests from the consumer, then they make a good design faster than anyone else in the world. That's why they can roll out a lot of good products. So in order to support the Chinese OEM on this aspect, Seattle has been well-trained on how to quicker, faster grasp the needs and how to quicker, faster to landmark the production

to support the cost performance effectively and the high-quality products to our customer. That's the whole story, make a difference. Yeah, it's complicated. That's why it's good that you have a PhD. But how many people have you got in research and development? Yeah, we have more than 20,000 people, engineers, very good talents in my area because they need a focus on many aspects.

But I mean 20,000 is nearly as many people as live in my home town. So what do they do? These 20,000 people is, some people is focused on the basic material structures. Some people is focused on the siloations. Some people is focused on the siloations, some people is focused on the interrelation of the materials. Some people is focused on the future chemistry. For example, we call AI for science. I need to use artificial intelligence to try to find out the next revolutionary material and chemical system beyond the lithium ions. We need to have some research guy on the battery management systems and the software.

Altogether like 20, 21,000 engineers. They have several hundred PhDs, many, many masters. So Lucy Yankees have been working here for, average, more than three or five years. They have become very good talent, and I hope they can have more innovations in the future to help the human climate changing focus on these renewable energies. The talent pool you have is incredible, right?

I saw that two out of three widely cited papers on battery technology came out of China, only 12% coming out of the US. Also you in China have more than 50 graduate programs in batteries compared to only a few in the US. So how can the rest of the world possibly compete with you? You know, almost 12 years ago How can the rest of the world possibly compete with you? Almost 12 years ago when Angela Merkel visited China,

we had some discussions among that. At that time, the German people were already thinking about why they cannot make good batteries because they make very good engines, they make very good gear bars. So German people think they can make very good engines, they make very good gear bars. So you know, German people think they can make very good batteries. That's why when we have some discussions on that, I told them, fortunately or unfortunately,

it is China have a lot of universities still working on electrical chemical. So usually electrical chemistry is very low end, people looking at it. Because if you graduated from electrical chemistry, you cannot find a good job, you know. You can only find people for less disabilities. You can only find a job for anti-corrosion. So all these kinds of low-paid jobs. That's why they have been very old theory.

But I know United States, a lot of good universities and the students, they don't want to focus on this. They want to focus on finance, focus on the semiconductors. Yeah, they need to get a higher pay from the lease. But China, there's a lot of students who have to go into university. That's why they find more study on electrical chemistries.

That's why we have a lot of talents compared to US, compared to Germany. So if US, Germany want to catch up or want to overtake in the better side, probably they have to start from education. Have you got a view on the amount of talent we have in Norway? I think all 20,000 people in your hometown are all talents, so we need to find out what kind of talents to fit, what kind of use. It may not be electrical chemistry. What's the most difficult thing?

Is it to invent a battery or is it the scaling of battery production? Is it more difficult to make one or to make a thousand? So most difficult things is understanding of electrical chemical system in the real world. And other things is follow is like, as I mentioned, you have to last 20, 25 years. That's how you predict that. And accurately, a saturation test to indicate that it's ready can reach that kind of level. It's another difficulty in the liabilities.

So, and the scale up the productions, and you know, low cost. Everyone looking for very low cost battery because they always compare the battery with the gasoline engine, internal combustion engine, which have developed more than 100 years, optimized and optimized. That's why they push too much burden on the batteries. It just seems like in Europe there is such a problem scaling up production.

Is that one common thing that's particularly difficult here? Not only that. I talk to many people, European battery makers, CEOs, why they cannot make a good product. It's because they have a wrong design. And secondly, they have a wrong process. And thirdly, they have wrong equipment. How can they scale up? If they want to scale up a lat, they will have a yield problem, utilization problem, and later on they will have a reliability problem. And two years, three years later, there will be a safety problem. So almost all mistakes together. That doesn't sound so good. But if we start with the first one, you said they got the

wrong design. What do you mean? Yes, start from the wrong design. It means that if they don't understand the electrical chemistry or side reaction, as I mentioned, the design will be wrong. They never cover the risk of the future risk. That's why the performance testing in one day looks good. Then you want to scale up. They want to put the process, and the process never cover what you need in the future.

What are the implications for European battery production then, given what you are saying? Where do you think Europe is going to be in 10 years' time? For the battery application side, we will just tell about at least e-mobility and boat also and E-Voto also, even the bullet train. And since Norway is definitely a very advanced nation for this renewable energy, maybe we can work together to make a planning to make Norway, the whole Norway become a zero carbon society. So I have confidence how to map it up.

The electricity, zero carbon is important. You have almost 90% hydro power, right? Then you add up another 10% maybe from the wind turbine from the sea. And another size is immobilities. Your passenger car penetration already 90-95% for the new cars. Then we can also help you to make these trucks to be zero carbon by our swapping battery system. And also we can make a pot, electrification.

And also can help also even the vessel with what we call the range extender. So we can planning together to make a whole Norway as a number one in the world to be the zero carbon technology, renewable energy nations in the world. I think it take around 10 years in 2025. We work together, we'll be making it.

And also you will be very happy to have a lot of income from all these kinds of different things. Well, sounds very interesting. Unfortunately, it's above my pay grade. It's not my decision. I only invest money, you know, and of course we are happy that we have invested a lot of money with you. Now, you've been doing batteries for a long time. Do you feel that innovation is accelerating or decelerating?

I don't see too much. It's actually accelerating's a situation. You know when the industry is small, when we start from mobile phone, the technology like growing like a line. It's not a situation. But when they put more money, more people inside now, everyone looking for innovations. So innovation space is a situation. And we believe believe will be another

new industry, new chemistry come out. That's why when we put our product, when we invest our production line, we have to put the production, you know, the production line have to depreciate faster. The depreciation have to be five years. Otherwise, we won't need it. So new things come out. So a lot of companies push kind of solid-state batteries as a game changer. What are the

showstoppers here? Well, I have been in TauLis for many, many times of different people. The basic show stopper is a steel layer. Steel is the interface, solid and solid interface. Whenever castor material with the electrolyte. So solid electrolyte, solid powder. So you know, any material, solid powder, solid interface is definitely the problem of the diffusion.

The speed of the diffusion is almost two orders less than liquid electrolyte. That's why people have to put the pressure to put the two solid powder together, very heavy pressures, then make it work. But in real application days, how can you get the heavy pressures, they make it work. But in a real application days, how can you get the heavy pressures? So that's why it is a fundamental science and technology issues, but we have to overcome by different things,

different new invention of materials, a new invention of a process, so it take time. So in terms of technology readiness level, I put it at level four. You're also in sodium ion and condensed matter batteries. How do you view these technologies? The sodium ion is quite mature now. We already have the production, small production to some of the car makers. The only problem is a little bit lower energy density compared with ion phosphate today. That's why when ion phosphate is cheaper, people tend to select the ion phosphate rather

than sodium ion. But we have developed the second generation of sodium ion, which can be very good compared with the first generation. So we believe it will be 20 to 30 percent of replacement of lithium ion phosphate in a smaller car or a shorter range of cars at an initial stage. That's on the condensed matter battery, I'm proud of that because it is very good in the E-Voto application. It's very expensive today and we are working hard on that.

Try to make it maybe two times compared to today or 1.5 times. So we can use this battery to the very high-end car which needs energy density for the speed on the higher range. When you look at your process and so on, what's the key to your successful supply chain? I mean you for instance own your own lithium mine, right? What are your advantages when you look at your supply chain? I mean, you for instance own your own lithium mine, right? What are your advantages when you look at your supply chain? For the supply chain, usually people have to look at the supply chain by the applications. For example, several years ago, people say, wow, nickel, cobalt is very important because the battery will go into big applications.

That's why you need to have an investment in nickel, especially in cobalt mining. What they don't understand is we can have making the structure change innovations to reduce the cobalt applications. So cobalt from 33% reduced to 3%. And also, even now, we can remove the cobalt, then we use the ion phosphate, then the cobalt becomes zero, nickel becomes zero. So, the only technology people who understand the trend of developing applications in the future, who to know, who to choose, what kind of mining is a good mining investment.

That probably is our advantage. So we have to very carefully understand the advantage of the different material, especially with the chemistry system, who will be the winner, then we can judge. And how do you benefit from this, when you set up factories in Europe? Yeah, I have two factories in Europe. One is in Germany, and now one is in Hungary. Now, the supply chain, we established the supply chain gradually. Now still majority from China. For example, in Norway, we definitely can work together because you have a very low cost of hydropower, so we can make graphite together.

So, you know, graphite is one of the most important is energy consumption. Changing tech a bit, energy storage, how do you see that market developing? Energy storage in my mind is similar or maybe half, maybe half size of transportation. But energy storage is more difficult than transportation, you know, because they need lasting 20-25 years. But many people think this is easier because they say this is a stationary, puller, don't move. Yes or no? Number two is the energy study, usually it's a huge pack.

For example, one gigawatt battery pack, the whole system, it contains at least 1.5 million cells. If you think about 1.5 million cells plus all the electronics, mechanicals, thermal management put into the system and plus in this software, the whole 1 gigawatt hour batteries energy storage system contains maybe 7 to maybe 9 million of the components, similar as the Boeing 787. When you control your quality in one out of PPM, that means every day you have the components a problem. You have to maintain that, you have to repair that.

You have a lot of maintenance costs in the future, and also degradation is different. Consistency is very, very difficult to control. That's why for Seattle we want to put the battery manufacturing quality up to PPB level. One defect parts per billion. So three orders increase the quality level to fit for the usage of this energy storage.

So it's difficult. Everyone if everyone tells you it's good, 10 years later they will pay. Maybe five years later they have to pay a lot of money. How much time do you spend on the corporate culture at Seattle? What do you think defines the corporate culture at CATL? What do you think defines the culture compared to other companies? Our culture is we have a vision. We try to be a very innovative technology company in the world, especially focused on renewable energy and try to do an excellent contribution to the human

society in renewable energies. On the other hand, we try to create a platform which helps individuals to fight to grow their spirit and material well-being. Actually, it's money. So we need to give them more star options and also help them to really fighting for their growth, especially innovations, and also the confidence by themselves, become a better man. The focus on renewable energy.

So people believe very meaningful in this journey, especially working in Seattle. Now it's one 15 million cars, 15 million cars in the world powered by Seattle batteries. So think about that. You already help to reduce a lot of carbon, you know. On the other hand, we are keep on doing these innovations to help the climate change and also sustainability for the human development. We try to gain the same vision and also we are using also Chinese culture we call the refine. So everyone have to refine themselves and enable others. Then strive in innovation. We always, how to say, successfully introduce Chinese traditional thinking of

refine, enable, and strive innovation. And Robin, how are you still trying to refine the way you work? For me, there's two ways. One is my philosophy. I don't want to be the rich guy, the richest guy or whatever. It doesn't mean it. So I want to share that this rich or wealthy to many peoples to try to create a good society, especially for sustainability. This is the number one we find from my view of my wealthy.

Second is I need to refine myself to be a stronger body, you know. Otherwise, I'm always tired, you know, you cannot fight. The passion is very important, otherwise it cannot last for longer. The third thing is I'm now trying very hard to find the successors. So these are the three things that are in my mind now. It's my top priorities. So Robin, I believe you and I, we share one thing in common. We both sleep a bit in the middle of the day. We take a little nap in the office. Yes, this is a long time. Usually we sleep maybe 30 minutes in the office.

When during the day do you sleep? 1 p.m. Something like that. Start sleeping maybe 30 minutes. It's good enough to recover. And what does that do to you? You become more energetic. Maybe the body is physically needed.

No, you grew up in rural China, right? In Ningde. What do you think that has done to you as a person, to come from a rural place, move in, being very successful? How has it helped in your business? We have a very difficult economics and my hometown is very poor. For me, in day one, I think we have confidence because we believe we can overcome all the difficulties once we have a very strong mind. We are not easy to be beat anywhere because we have experience. Number three is we are not much too much looking at the wealthiest because we have experience so poor and we have no problem on that. So we say that if we... people almost told me, they said Robin, why don't you enjoy your life? You know, you can buy a yard. For me, there is not much joy, you know. We have to overcome

the difficulties to do something great to support the people, poor people, and also support the least renewable energy in the world, you will be very happy. So usually I like to invest the manufacturing plant in the related poor area. What kind of projects do you support? For my donations, usually go to these very, very poor children. We donate some money for them to have some people to care, just talk, touch, or play together. So I join some international program for the children. So I believe if we can,

Seattle can invest the manufacturing plant in some poor area, so their family no need to move out, to come out to the, you know, big city to work, to leave the children in the hometown. So that's why we invest the manufacturing place in Guizhou, in Henan, all these areas. To help them there, they can have a family there. So such kind of things is, for me, is much happier and maybe more stronger in the rural area. When you meet young Chinese people, what advice do you give them? My advice is strife. Be patient, strife. If you were to give advice to young people in Europe and the US, what would you tell

them? I think it's similar. Usually today's young kids, they want to become rich very fast. So be patient, but strive. Everyone has a chance, I believe. Very good. Robin, it's been tremendous talking to you. It's incredible what you have achieved.

And I have to say, I am pretty happy I'm not your competitor. Thanks a million.