In Part 1, I went through the basics of CATL. And started to detail some of their more well-known battery innovations. Here are four more.

Innovation 2: CATL’s Qilin Cell-to-Pack (CTP) Architecture

Power battery systems are made of cells, which go into plastic boxes called modules. The modules are bolted together inside a massive metal pack on the car floor.

A CATL innovation you hear a lot about is their cell-to-pack (CTP) architecture. They basically have bypassed the module, removed the internal layers and the cells combine directly into packs. The removal of the module walls reduces barriers and also let you put cooling between the cells (instead of as an external plate). This makes heat exchange way more efficient. Introduced originally in 2019, CATL’s third generation of its Qilin architecture now achieves a volume utilization efficiency of 72%.

And I believe they are also safer but I’m not sure I understand why. The concern is thermal runaway, when one cell catches fire and it spreads to the other cells.

Innovation 3: The Shenxing Superfast Charging Battery

The Shenxing battery (神行电池) is CATL’s flagship LFP (lithium iron phosphate) superfast-charging battery platform. It was launched in August 2023 as the world’s first 4C superfast-charging LFP battery. It had 700km range.

The latest version (v2) has a 6C charging speed. Basically, the charging time has dropped to 10 minutes (6C means 6x in 1 hour).

The problem with fast charging is you are driving the lithium ions into the graphite anodes too quickly. It degrades the battery and its lifespan.

The Shenxing battery has a modified graphite anode surface with a “fully nano-crystallized” ring structure. It’s like an open highway system that allows lithium ions to insert themselves into the anode rapidly. This is coupled with a high-conductivity liquid electrolyte.

Innovation 4: The Freevoy AB Battery Pack Mixing

For years, automakers had to make choices: choose sodium chemistry for low temperature or LFP for safety and low cost or NMC for long driving range. CATL has started mixing both chemistries inside hybrid battery packs.

For example, the original Freevoy hybrid battery combined LFP cells and Sodium-ion cells in the same pack. The sodium cells act as a low-temperature fallback system, allowing the vehicle to maintain steady power delivery at temperatures where traditional LFP packs freeze up.

Innovation 5: CATL’s Semi Solid-State Battery

Batteries use liquid electrolytes, which has lots of limitations. Including size and thermal runaway. And solid-state batteries are not quite ready.

But in between is semi-solid state. Basically, a battery made of jelly. It uses a highly conductive, polymer-based gel electrolyte that flows like liquid during manufacturing but locks into a stable condensed state once sealed.

By pairing this gel with a high-nickel cathode, a low-expansion silicon-carbon anode, and an aviation-grade titanium alloy casing, CATL achieved a record-breaking mass-production energy density of 350 Wh/kg. This chemical stability eliminates the risk of liquid leakage or combustion, pushing sedan ranges up to 1,500 km.

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Ok. Back to business thinking (my area).

Final Point: How I Think About R&D

The common pattern for the Chinese manufacturing giants has been:

1. Get to large scale in manufacturing domestically first.
   • Having superior scale in manufacturing creates a cost advantage (versus rivals) and enables competitive pricing that is hard to match. Having lower prices his fuels further growth. Which creates increased scale. And so on.
2. Use superior scale to outspend rivals in R&D over time.
   • R&D is usually a fixed cost (10% of revenue). So larger players can outspend smaller rivals in R&D. This creates cost and other advantages over time. Especially in products with lots of technology and room for innovation. You can lean into this in batteries and cars. It’s harder in refrigerators.
3. Use domestic scale to support global expansion. This further increases scale.
   • China’s giants get large at home first (usually). When they go abroad they are already large in terms of both manufacturing and R&D capabilities. This makes them formidable competitors abroad. And they usually start by targeting smaller markets (like SE Asia, the Middle East and Latin America).

This is a simple summary of Chinese manufacturing since the 1990’s. What we are seeing now is a high-tech version of this same approach. We’ve seen it in drones, EVs and now batteries. I expect it to play out the same in robotics. It’s my explanation for why so many Chinese high-tech products are both cheaper and better.

However, that second point about R&D is actually kind of complicated. R&D in a business is usually described by the amount of spending. Or by the headcount of the R&D department. But spending money doesn’t necessarily give you valuable breakthroughs.

If you spend 5x as much as a rival in pharmaceuticals, it doesn’t mean you will get 5x as many blockbuster drugs. It turns out science and drug development are difficult. The team really, really matters. Keep in mind, Steve Jobs and his team beat giants like IBM while working out of a garage.

McKinsey & Co has a good framework for thinking about innovation and R&D. They break innovation into 4 levels based on difficulty.

1. Cost innovation
   • This is about making things cheaper. This is very important. China excels at cost innovation.
2. Customer-facing innovation
   • This is about assembling existing technologies into new configurations. Steve Jobs excelled at this. He never created new technologies. He just put things together and made them useable for customers. Most of Silicon Valley and software innovation is here.
3. Engineering innovation
   • This is about creating new machines. Elon Musk excels at this. He builds entirely new types of cars and rockets. This is much harder than the previous two. Most venture capitalists avoid this.
4. Science innovation
   • This is the hardest level. Chemistry, physics, biology and other sciences are investigations of the natural world. Most of these products fail.

When I look at CATL’s innovations, I see an interesting mix of these four levels.

The R&D on battery chemistry is definitely science innovation (Level 4).

This is about making breakthroughs in chemistry and metallurgy. This is very difficult. And progress in this type of science innovation tends to be slow. Think years and decades. The physical world is far more complicated than man-made environments. This is why software improves every year but batteries are not that different than 5 years ago.

But when CATL talks about innovation in Structure Systems and combining different types of chemistries in new configurations, I think Elon Musk. That is engineering level innovation (Level 3).

I expect them to be much faster here.

I think the innovation at CATL that is underappreciated is cost innovation (Level 1).

When I toured one of the CATL battery factories, I asked about why their assembly line was cheaper and with higher quality and reliability than competitors?

The answer I got was that it is due to a thousand small things. They have made lots of little process changes over time that result in their batteries being cheaper and more reliable. That’s cost innovation. You fine tune the processes to make this cheaper over time. They call this Manufacturing Innovation. I think process engineering is a big part of how CATL has won. I’ll discuss that in the next article.

That’s it for Part 2. Here’s part 3.

-Jeff

• Beyond EVs: Why Energy Storage is CATL’s Next Growth Engine (3 of 5) (Tech Strategy)
• What I Learned About Battery Innovation at the CATL Headquarters (1 of 5) (Tech Strategy)

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Related articles:

• More High-Tech Flex by Huawei R&D (4 of 4) (Tech Strategy)
• 6 Big Events in AI Agentic Ecommerce (Tech Strategy)

From the Concept Library, concepts for this article are:

• Innovation
• Batteries and Energy Storage

From the Company Library, companies for this article are:

• CATL

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I am a consultant & keynote speaker on how to increase digital growth and strengthen digital AI moats.

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