[Correspondent Column] China's Hidden Hydrogen Car Ambition Behind Electric Vehicle Sales

[Asia Economy Beijing=Special Correspondent Jo Young-shin] As of the end of September, the total number of electric vehicle (EV) sales in China reached 2.157 million units. The annual sales target of 2 million units was achieved in just nine months this year. If the current trend continues, the total EV sales in China by the end of the year are expected to approach 3 million units. Last year, China’s EV sales volume was 1.109 million units.

Photo by Tencent Capture

In November last year, the Chinese government announced plans to expand the sales proportion of new energy vehicles (NEVs), including EVs, to 20% of total new car sales by 2025 and to replace all public transportation vehicles with NEVs by 2035. Considering China’s annual new car sales of 26 million units (based on 2019 data), it is estimated that NEV sales will reach 5 million units by 2025. According to China First Financial, NEV sales in China are expected to reach 10 million units by 2030, the year China aims to peak its carbon emissions.

The high sales of EVs imply a corresponding increase in battery sales, indicating that battery demand will explode in the future. The core of EVs is the battery, which accounts for 40-50% of the vehicle’s price. Korean battery companies have led the global battery market so far, with Korean battery technology becoming the de facto standard. However, changes are being detected in this battery market. The world’s largest EV manufacturer, US-based Tesla, announced that it will use lithium iron phosphate (LFP) batteries for its main models, the Model 3 and Model Y. Mercedes-Benz also announced plans to equip its next-generation EV models with LFP batteries starting in 2024. This signals their intention to enter the Chinese EV market by lowering prices.

Lithium iron phosphate batteries stand in contrast to the ternary (NCM) batteries produced by Korean battery companies such as LG. Ternary batteries use nickel, cobalt, and manganese as cathode materials and offer longer driving ranges compared to LFP batteries. The energy density of ternary batteries is 240 Wh/kg, but they are more expensive due to the higher costs of nickel, cobalt, and manganese compared to the relatively abundant iron.

On the other hand, the main raw materials for LFP batteries are lithium and iron. LFP batteries have the advantage of being cheaper but the disadvantage of shorter driving ranges because their energy density (180 Wh/kg) is lower than that of ternary batteries. Chinese EV manufacturers use LFP batteries. More than 90% of the LFP battery market is dominated by Chinese battery companies such as CATL, BYD, and Guoxuan.

To overcome the short driving range disadvantage of LFP batteries, China has come up with a clever idea called “battery swapping.” The Ministry of Industry and Information Technology recently designated 11 cities, including Beijing, Nanjing, and Wuhan, as pilot areas for the EV battery swapping business. Battery swapping stations are installed throughout urban areas, where EVs in need of charging can immediately exchange their depleted batteries for fully charged ones. Vehicles are shipped without batteries installed; instead, batteries are leased. This system prevents the unfairness of swapping new batteries for used ones. By applying a detachable system, charging time is minimized, and the shortcomings of LFP batteries are compensated for.

Does this mean China is going all-in on EVs? Not exactly. China knows that the truly eco-friendly vehicle is the hydrogen fuel cell vehicle. It also knows well that it lacks hydrogen vehicle technology. Korea, Europe, and Japan, which possess hydrogen fuel cell technology, should not be swayed by China’s figure of 10 million EVs. China estimates that it will take at least 10 to 20 years for hydrogen fuel cell vehicles to be commercialized. The EV numbers are a dazzling numbers game by China to buy time until it secures hydrogen vehicle technology. If China does not hasten the commercialization of hydrogen vehicles, the leadership in hydrogen vehicles will also shift to China in 10 to 20 years.

This content was produced with the assistance of AI translation services.