The power battery industry is undoubtedly going through a fierce elimination roundOver the past year, various issues such as overcapacity, declining financing conditions, intense price competition, and management challenges have become increasingly pronouncedCompanies in the battery sector are no longer just competing on production volumes; in this silent battlefield, technology wars and price wars have made way for branding to emerge as a key arena for battery manufacturers.

For instance, CATL has targeted different markets with its line of batteriesThe Kirin and Shenzhou batteries cater to the fast-charging sector, while the Tiankong batteries focus on commercial vehicle applicationsSimilarly, the Scirocco battery is aimed at the augmented hybrid marketOn the other hand, Contemporary Amperex Technology, also known as CATL, has launched its "top-tier" range, which includes an all-weather super electric battery and a high-power super plug-in hybrid battery.

Huangchao Energy, which initially carved out its niche using segmented strategies based on cutting-edge manufacturing processes, is continuing to pursue a strategy of brand and category segmentation

On January 8, 2025, at its fifth Battery Day, Huangchao Energy unveiled new products across four specialized categories: off-road batteries, short blade batteries, long-distance commercial vehicle batteries, and hybrid electric vehicle (HEV) batteries.

Each power battery company possesses varying sizes, status, and resources, which influence their strategic decisions regarding category segmentationHuangchao Energy is relatively new in the field, having been spun off from Great Wall Motors in 2018. Therefore, it is crucial for them to focus on their strengths and avoid getting embroiled in intense price wars or mass homogenization, which could jeopardize sustainability.

The decision to adopt a strategy of category segmentation stems from various considerationsSince its independence, Huangchao Energy has only completed six years in business, especially when compared to powerhouses like BYD, Eve Energy, and Xinwanda, who boast over two decades of experience in battery production.

In 2012, Great Wall Motors formed a power battery project team that eventually evolved into an independent division by 2016. Two years later, Huangchao Energy officially became independent in Changzhou, Jiangsu Province.

As of now, Huangchao Energy ranks tenth in the world regarding installed capacity for power batteries

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According to statistics from the China Automotive Power Battery Innovation Alliance, by the end of November 2024, Huangchao Energy secured sixth place in domestic power battery installationsHowever, a harsh reality remains: while the company’s revenue is on an uptrend, they have yet to achieve profitabilityThus, it is urgent for Huangchao Energy to avoid engaging in direct confrontation on saturated battlegrounds and to focus instead on high-growth sectors with less intense competition.

From a broader industry perspective, predictions for 2024 indicate that the retail penetration rate of new energy passenger cars will reach 47.6%, a 12 percentage point increase year-on-year, with continuous growth expected in the latter half of the year, surpassing 50% over five consecutive monthsThe Passenger Car Association predicts that by 2025, retail sales of new energy passenger vehicles could reach 13.3 million units, representing a 20% year-on-year growth rate, thereby making new energy vehicles the mainstream choice over traditional fuel cars.

Previously, the small percentage of new energy vehicles led to a lack of category differentiation, mainly classified as pure electric, plug-in hybrids, or extended-range vehicles

In contrast, traditional fuel vehicles have clear segmentation, with types such as sedans, SUVs, MPVs, and off-road vehiclesThis suggests that once new energy vehicle penetration exceeds 50%, category innovation will become a crucial area of competition.

Huangchao Energy has strategically targeted the billion-yuan electric off-road market for its segmentation effortsThe decision to spotlight off-road batteries was eloquently articulated by the company's chairman and CEO, Yang Hongxin, who presented four new product categories: off-road batteries, 6C batteries, HEV batteries, and long-range commercial vehicle batteriesAmong them, off-road batteries take the spotlight, with the first product launched being a 59 kWh, 800V hybrid battery.

What led Huangchao Energy to hone in on off-road batteries? The first factor is their roots in Great Wall Motors, where off-road vehicles have long been a dominant theme

Years ago, Great Wall started distinguishing its offerings in the off-road sector, categorizing vehicles into urban SUVs, general off-roading, robust off-roading, and extreme off-roading, with Huangchao Energy developing corresponding battery ranges to match these classifications.

Moreover, it has been reported that by 2024, the penetration rate of new energy in the off-road segment has surpassed 30%, meaning that in every ten off-road vehicles sold, three are now electricThis marks a striking increase from a mere 6-7% penetration in 2023, leading car manufacturers to see further opportunities in the electric domainBrands such as BAIC have released extended-range versions of their BJ60 and BJ40, while Dongfeng has launched both pure electric and extended-range variants of the 917; BYD has introduced new models like the Fangcheng Leopard.

Research conducted by Beijies Consulting revealed that the global market for electric off-road vehicles reached approximately RMB 12.987 billion in 2023, with China's share at about RMB 4.527 billion

It is projected that the global market for electric off-road vehicles will grow at a CAGR of 14.85%, reaching RMB 29.78 billion by 2029.

With significant demand from large clients and the entire market's potential, Huangchao Energy is strategically placing its focus on the off-road vehicle sectorHowever, this burgeoning market also comes with stringent requirements for battery performanceZhang Fangnan, Senior Vice President and Director of the Technology Center at Huangchao Energy, revealed during Battery Day that off-road vehicles often encounter complex terrains, such as rugged mountains, muddy roads, and deserts, necessitating higher standards for battery performance.

Regarding safety, Huangchao Energy's off-road battery utilizes a fortress structural design and new materials, significantly elevating collision protection ratings and thermal safety standardsThe battery's design also incorporates horizontal four-layer and vertical eight-layer protections, enhanced with micro-nano thermal insulation and flame-retardant coatings.

In terms of power output and weather resistance, the off-road battery supports an impressive temperature range from -43°C to 60°C

Under extreme conditions of -40°C, energy discharge increases by 50%, while low-temperature performance boosts power output by 40%. Advanced technologies such as dual-medium integrated cooling plates help maintain optimal operating temperatures, ensuring sustained power output even under harsh conditions like desert rallies at high temperatures.

Currently, Huangchao Energy’s 800V hybrid off-road battery is installed in the Tank 500 Hi4-Z model, with three more models set to launch by 2025, projecting a conservative estimate of around 5,000 units in monthly orders.

Looking back at 2023 and 2024, the “overcapacity” mantra has been prevalent within the power battery sectorHowever, many industry insiders believe that by 2025, there could be structural tightness both in battery supply and raw material sourcingProducts like third-generation lithium iron phosphate and fourth-generation cores are expected to be in short supply, while disparities in supply and demand may grow more pronounced.

Consequently, the year 2025 will test the strategic, product, and capacity deployments of battery companies

Aligning their strategies with market demands could safeguard prices and profitability in areas with tighter capacitiesConversely, firms with excess capacity may face challenges in both pricing and revenue generation.

“We will focus on several niche areas and products, aiming to avoid direct competition and engaging in commoditized warfare,” Yang Hongxin emphasizedNow that Huangchao Energy has established an effective operational model, they foresee launching over 20 vehicle models and starting more than 15 new projects by 2025, with international operations comprising over 30% of their business.

The quantity of power batteries shipped is expected to surmount 50 GWh by 2025, significantly up from 24 GWh in 2024, and coupled with energy storage transitions, the total will leap from 27 GWh in 2024 to 60 GWh, representing over a 100% growth trajectory.

Furthermore, the company's capacity utilization rate is anticipated to hover around 64% by 2025, marking a notable 29% rise from 2024. A significant portion of short blade batteries is projected to exceed 70% of total shipments, with utilizations of L400 and L600 nearing 80% in the latter half of the year, aiming for nearly full capacity utilization.

The industry's answer regarding Huangchao Energy's performance on the off-road front by 2025, particularly if they can replicate their earlier successes with significant product launches, remains to be seen but could soon unfold in the near future.