Bai Houshan deepens China’s EV dominance with his electrode empire

A self-made Chinese billionaire with a fascination for metallurgy is posing a fundamental challenge to a traditional auto industry already struggling to compete with China in the development of electric vehicles and batteries.

Bai Houshan, the 59-year-old founder and chairman of Shanghai-listed Ronbe Technology, dominates a major share of the global market for cathode electrodes, which are the core building block in EV batteries and account for 30 to 50 percent of component costs. ,

With battery chemistries and components continually evolving in the pursuit of lower material cost and higher energy density, RonBe has led the shift from low-nickel content cathodes to better-performing high-nickel cathode materials.

Analysts at investment manager Bernstein say there has been “clear movement” by the industry in this direction. About three-quarters of new EV models at the 2021 Shanghai Motor Show will feature the technology, according to RonBe, which holds about a third of the global market for high-nickel cathodes.

The company’s dominance is just one example of the challenge facing US President Joe Biden and his counterparts in Europe as they seek to chase China’s lead in cleantech with hundreds of billions of dollars in taxpayer-funded subsidies.

Corey Combs, associate director at Beijing-based Trivium China consultancy, said technology to process battery materials was “the number one thing” the US and Europe needed as they played catch-up with China. Yet achieving this and reaching the economies of scale boasted by Chinese content groups is not guaranteed.

“China didn’t invent the battery industry overnight. There’s an entire industrial chain and value chain that took decades to build.”

IDTechEx, a UK research group, predicts that the demand for EV battery materials will increase more than 12 times in the coming decade and will be worth more than $230 billion by 2033. America and Europe.

RonBe is currently examining sites in Europe and North America with the aim of setting up factories to serve those markets, it told the Financial Times.

Meanwhile, in the landlocked South Korean province of Chungcheongbuk-do, a model for Bai’s vision can be seen taking shape.

In a mountainous industrial park on the outskirts of Chungju city, Ronbay is commissioning a factory that will form a key pillar in Bai’s plans to increase the company’s high-nickel cathode capacity sixfold by 2025 compared with 2021 levels. represents.

Its biggest immediate competition is local – coming from South Korean rivals such as Seoul-listed Ecopro BM and Chaebol LG, Korea’s biggest producer of battery materials and batteries. LG said this month it aims to increase sales of its battery materials sixfold to $25.5 billion by 2030. Central to its strategy is targeting that same high-nickel cathode market.

The rapid development of the EV supply chain in China has already propelled Bai to rank among the 500 richest people in the country of 1.4 billion people, with a net worth of $1.45 billion.

In his early days, he studied at top Chinese universities, including Tsinghua – the alma mater of President Xi Jinping – before taking on a series of technical and leadership roles at state-owned content processors during the 1980s and 1990s.

Bai founded Ronbay 10 years ago as part of a new generation of billionaire industrial tycoons along with Wang Chuanfu, founder of China’s biggest EV maker BYD, and Robin Zeng, founder of CATL, the world’s biggest EV battery maker. Xi is helping. Technology and energy independence goals for China.

According to Bernstein, Bai’s company not only has the cathode industry’s most ambitious capacity expansion plan but also has the lowest capital cost.

In a corporate filing released in March, the company with a market capitalization of $4.4 billion pointed to an EV “explosion.”

“The penetration rate of new energy vehicles in European and North American markets is much lower than that of China. As the company is rapidly pursuing its internationalization strategy, its products are mainly applied to overseas markets, Which has huge room for future development.

This expansion into the US and Europe will mark a significant shift for the group. With production bases in the Chinese provinces of Hubei, Guizhou and Zhejiang, and now also in South Korea, Ronbay’s largest customers have been China’s largest battery manufacturers including CATL, SVOLT, Farasis and Eve. It also has a contract to supply SK, Korea’s second largest battery maker.

Bai’s overseas aspirations could be complicated by the Biden administration’s Inflation Reduction Act, where the US government is providing $370 billion in subsidies to promote domestic cleantech manufacturing and reduce US economic dependence on China. Similar measures are being considered in Brussels.

The IRA is meant to impose a 25 percent tariff on Chinese cleantech exports to the US, but RonBe is counting on the exemption for its overseas production base. In its March filing, it said it believed the shipments from its South Korean factory “do not fall under the restrictions set out in the Act”.

Despite those assurances, investors are wary about the company’s prospects for operations given anti-China sentiment in the US and parts of Europe. However, the backdrop of growing demand in the global EV transition means that many countries will still rely on RonBe for cathode supplies.

Chan Lee said, “While the market is still hot, it’s probably a good move for them to expand as much as they can, get to a level where they’re more competitive than others, then get people to come to you.” Will be,” said Chan Lee, managing partner at Petra Capital Management, a Seoul-based hedge fund with investments in the Asian EV supply chain.

Additional reporting by Kang Buseong in Seoul and Gloria Lee in Hong Kong

A self-made Chinese billionaire with a fascination for metallurgy is posing a fundamental challenge to a traditional auto industry already struggling to compete with China in the development of electric vehicles and batteries.

Bai Houshan, the 59-year-old founder and chairman of Shanghai-listed Ronbe Technology, dominates a major share of the global market for cathode electrodes, which are the core building block in EV batteries and account for 30 to 50 percent of component costs. ,

With battery chemistries and components continually evolving in the pursuit of lower material cost and higher energy density, RonBe has led the shift from low-nickel content cathodes to better-performing high-nickel cathode materials.

Analysts at investment manager Bernstein say there has been “clear movement” by the industry in this direction. About three-quarters of new EV models at the 2021 Shanghai Motor Show will feature the technology, according to RonBe, which holds about a third of the global market for high-nickel cathodes.

The company’s dominance is just one example of the challenge facing US President Joe Biden and his counterparts in Europe as they seek to chase China’s lead in cleantech with hundreds of billions of dollars in taxpayer-funded subsidies.

Corey Combs, associate director at Beijing-based Trivium China consultancy, said technology to process battery materials was “the number one thing” the US and Europe needed as they played catch-up with China. Yet achieving this and reaching the economies of scale boasted by Chinese content groups is not guaranteed.

“China didn’t invent the battery industry overnight. There’s an entire industrial chain and value chain that took decades to build.”

IDTechEx, a UK research group, predicts that the demand for EV battery materials will increase more than 12 times in the coming decade and will be worth more than $230 billion by 2033. America and Europe.

RonBe is currently examining sites in Europe and North America with the aim of setting up factories to serve those markets, it told the Financial Times.

Meanwhile, in the landlocked South Korean province of Chungcheongbuk-do, a model for Bai’s vision can be seen taking shape.

In a mountainous industrial park on the outskirts of Chungju city, Ronbay is commissioning a factory that will form a key pillar in Bai’s plans to increase the company’s high-nickel cathode capacity sixfold by 2025 compared with 2021 levels. represents.

Its biggest immediate competition is local – coming from South Korean rivals such as Seoul-listed Ecopro BM and Chaebol LG, Korea’s biggest producer of battery materials and batteries. LG said this month it aims to increase sales of its battery materials sixfold to $25.5 billion by 2030. Central to its strategy is targeting that same high-nickel cathode market.

The rapid development of the EV supply chain in China has already propelled Bai to rank among the 500 richest people in the country of 1.4 billion people, with a net worth of $1.45 billion.

In his early days, he studied at top Chinese universities, including Tsinghua – the alma mater of President Xi Jinping – before taking on a series of technical and leadership roles at state-owned content processors during the 1980s and 1990s.

Bai founded Ronbay 10 years ago as part of a new generation of billionaire industrial tycoons along with Wang Chuanfu, founder of China’s biggest EV maker BYD, and Robin Zeng, founder of CATL, the world’s biggest EV battery maker. Xi is helping. Technology and energy independence goals for China.

According to Bernstein, Bai’s company not only has the cathode industry’s most ambitious capacity expansion plan but also has the lowest capital cost.

In a corporate filing released in March, the company with a market capitalization of $4.4 billion pointed to an EV “explosion.”

“The penetration rate of new energy vehicles in European and North American markets is much lower than that of China. As the company is rapidly pursuing its internationalization strategy, its products are mainly applied to overseas markets, Which has huge room for future development.

This expansion into the US and Europe will mark a significant shift for the group. With production bases in the Chinese provinces of Hubei, Guizhou and Zhejiang, and now also in South Korea, Ronbay’s largest customers have been China’s largest battery manufacturers including CATL, SVOLT, Farasis and Eve. It also has a contract to supply SK, Korea’s second largest battery maker.

Bai’s overseas aspirations could be complicated by the Biden administration’s Inflation Reduction Act, where the US government is providing $370 billion in subsidies to promote domestic cleantech manufacturing and reduce US economic dependence on China. Similar measures are being considered in Brussels.

The IRA is meant to impose a 25 percent tariff on Chinese cleantech exports to the US, but RonBe is counting on the exemption for its overseas production base. In its March filing, it said it believed the shipments from its South Korean factory “do not fall under the restrictions set out in the Act”.

Despite those assurances, investors are wary about the company’s prospects for operations given anti-China sentiment in the US and parts of Europe. However, the backdrop of growing demand in the global EV transition means that many countries will still rely on RonBe for cathode supplies.

Chan Lee said, “While the market is still hot, it’s probably a good move for them to expand as much as they can, get to a level where they’re more competitive than others, then get people to come to you.” Will be,” said Chan Lee, managing partner at Petra Capital Management, a Seoul-based hedge fund with investments in the Asian EV supply chain.

Additional reporting by Kang Buseong in Seoul and Gloria Lee in Hong Kong