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Chinese manufacturers have a long history of using soft pack power lithium batteries, but so far, there are not many manufacturers that follow this route. In 2015, only 24 manufacturers had product supply, mainly due to the relatively high manufacturing cost of soft pack lithium batteries. The participation of fewer manufacturers also leads to a high degree of industrial concentration along this route, with the top five manufacturers having a combined market share of over 60%.

Before the rise of TSLA, no battery manufacturer considered using cylindrical batteries in new energy vehicles, and an important concern was safety. After TSLA utilized the advanced IT technology of Silicon Valley in California to solve security issues from outside the battery, this route began to become popular globally, with lithium battery giants such as LG Chemical and Samsung SDI participating. As more and more Silicon Valley returnees (especially Chinese engineers who have participated in TSLA module technology development) return to China to start businesses or join battery factories to develop module products using 18650 cylindrical batteries, a group of manufacturers developing cylindrical power lithium batteries has rapidly emerged in the Chinese market. In 2015, the cylindrical products of 34 manufacturers were applied in the new energy vehicle market in China.

Among the 10 manufacturers in Figure 7, except for Waterma, Suzhou Yuliang, New Taihang, Zhuhai Yinlong, and Boston Power, all of the other 5 cylindrical power lithium battery products are 18650 models. Among them, Waterma stands out with a supply volume of 926600 kWh, occupying 27.55% of the market share. Although Samsung SDI has built a square power lithium battery production base in Xi'an and officially put it into production in October 2015, over 80% of its products supplied to the new energy vehicle market in China in 2015 were cylindrical batteries. It is reported that this is mainly driven by Chinese car companies and module manufacturers. The remaining 24 manufacturers that did not enter the top 10 are all 18650 products.

The battery routes of important power lithium battery manufacturers in China's new energy vehicle market are shown in Table 3:

Table 3: Battery routes of important battery manufacturers in China's new energy vehicle market

Data source: True Lithium Research. August 20th, 2016. Note: Excluding production bases from foreign manufacturers in China.

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