China’s battery strategy and disappointing Spacs

Hello everyone, this is Akito in Singapore with this week’s #techAsia.

Japanese automakers, which have seriously lagged behind the global competition in electric vehicles, are pinning their hopes on solid-state batteries, with many executives predicting that such tech will be a “game changer”.

Toyota Motor, the world’s largest automobile group, plans to start selling EVs equipped with solid-state batteries by 2027 or 2028. The company says EVs with these types of batteries will be able to travel around 1,200 kilometres on a charge of less than 10 minutes, about twice the range of vehicles equipped with current lithium-ion batteries. Nissan Motor and Honda Motor are also competing to develop solid-state batteries, and commercialising the technology would be a boon for Japanese automakers, which are trailing China’s BYD and Tesla of the US in global EV sales.

But Japan’s auto giants are not the only ones working on this “game-changing” innovation. German auto group Volkswagen is also developing it through a US start-up it has invested in, and even Microsoft is getting in the game. The American tech titan announced in January that it had used advanced artificial intelligence to discover new materials for solid-state batteries.

Microsoft says it used artificial intelligence to screen over 32mn candidate materials with the potential to make better batteries. According to the company, AI has accelerated the material discovery process “from years to weeks to just days”. Its research suggests that the game change that Japanese car companies are betting on may come from an unexpected source.

Meanwhile, China — home to a major share of the world’s lithium-ion batteries installed in existing EVs as well as to major electric car manufacturers such as BYD — has unveiled a grand strategy to chase the same technology as Toyota and its peers.

Charged-up strategy

China’s battery and carmakers have united as part of a government-led drive to build a supply chain for solid-state batteries by 2030, writes Nikkei’s Shunsuke Tabeta. In January, Beijing set up the China All-Solid-State Battery Collaborative Innovation Platform (Casip), a consortium that brings together government, academia and industry, including EV battery rivals CATL and BYD.

Casip aims to develop and manufacture solid-state batteries that can compete globally, with Chinese companies as the centre. Battery makers such as CATL, formally Contemporary Amperex Technology Co. Ltd., and BYD subsidiary FinDreams Battery are participating in this alliance, which counts six of the top 10 automotive battery makers globally.

“We need to be prepared for the risk that all solid-state battery technology could overturn” China’s advantage in automotive batteries, said a Tsinghua University professor specialising in automotive-related technologies during a ceremony marking the consortium’s establishment.

Like Microsoft, China also has plans to utilise AI to accelerate the development of next-generation batteries. “AI is changing the way we do materials research and development, and it will vastly accelerate the speed of all-solid-state battery R&D,” the professor added.

Temu’s playbook

China’s Temu has spent tens of billions of dollars with Meta and Google as part of an enormous advertising push in the west that included splashing out on a series of Super Bowl ads last Sunday.

Behind the scenes, meanwhile, the online marketplace owned by PDD Holdings is busy snapping up rivals’ suppliers as it drives down costs and secures a stable supply of cheap goods for its rapidly expanding platform, writes Eleanor Olcott of the Financial Times.

Temu’s rival Shein ditched several suppliers based in southern China last year after auditors found they had been violating the company’s certification standards. Temu moved in to grab many of them.

Shein’s move to clean up its supply chains comes as it pitches for a blockbuster initial public offering in the US this year.

Temu, meanwhile, is making an effort to speed up delivery to customers. After targeting Shein’s suppliers in China, it is now going after Amazon’s.

Spacs fall flat

Two years ago, Singapore and Hong Kong gave the greenlight to so-called blank-cheque companies as a way to help fast-growing tech start-ups and others go public. The results have fallen short of the financial hubs’ expectations, writes Nikkei Asia’s Dylan Loh.

Known as special-purpose acquisition companies, or Spacs, these fundraising vehicles raise money with a promise to invest in an operating company. But most Spacs in Singapore and Hong Kong have failed to bring privately held companies on to the stock exchanges. Nor did any new Spac make its debut in Singapore or Hong Kong last year.

The picture is not much better for those that have completed a merger. 17Live’s share price in Singapore, for instance, has dived more than 70 per cent from the benchmark set by the shell company it merged with.

Cooling on components

Japanese motor giant Nidec has invested heavily in the EV parts business for years, but with a price war in China battering margins, the company is changing tack, writes Nikkei’s Yuji Ohira.

Nidec says it will now pour resources into developing water cooling devices for processors used in data centre servers. The aim is to capture “indirect” demand from US companies like Google, Microsoft and Amazon that operate massive data centres.

Data centre power consumption is rising sharply due to the rapid adoption of generative AI, which requires the processing of massive amounts of data. Greater power consumption means more heat is generated, which means more advanced cooling technologies are needed.

Nidec currently supplies cooling fans for processors, but the company will shift to devices that cool semiconductors with water pumped through tubes, which is 20-30 per cent more energy-efficient than air cooling.

Due to the costs associated with reorganising operations, Nidec’s EV components business in China is expected to record an operating loss of nearly ¥60bn ($398mn) this financial year ending March.

Chair and CEO Shigenobu Nagamori explained the reason for the change in strategy in blunt terms: “It was a mistake leaning too heavily on traction motors [used in EVs].”

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6. Abu Dhabi AI group G42 sells its China stakes to appease US (FT)

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10. China slump drags on for Japan’s chip and component suppliers (Nikkei Asia)

#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with assistance from the FT tech desk in London.

Sign up here at Nikkei Asia to receive #techAsia each week. The editorial team can be reached at techasia@nex.nikkei.co.jp.