Barry Lawson of Axeon Power on the perils of sourcing your batteries in China.
Attracted largely by the country’s low manufacturing costs, nearly everyone, no matter the industry, seems to be sourcing their products from China these days. Ever since Communist Party Chairman Deng Xiaoping’s visit to Shenzhen in 1984, when he gave the seal of approval to capitalism with his exhortation ‘To get rich is glorious’, China’s economy has boomed. Recent years have seen average annual growth rates of 10%. But that figure, while notable, is misleading. The China’s rural economy, having barely entered the 20th century, has grown very little. On the other hand, the industrial economy is actually growing at a rate much faster than the average of 10%, No wonder then that China is fast establishing an impressive – if also variable – technology base.
Recent reports of serious quality control problems only confirm what many of us have known for some time – that buying Chinese batteries from a product catalogue or specification sheet can prove cause for serious trouble. Certainly China can boast some of the best battery manufacturing plants (turning out excellent product) in the world. Alas, it must also claim some of the worst.
The best suppliers have made considerable investments in both personnel and plants.
Managers tend to be well-qualified engineers with PhDs in materials science or electrochemistry, many of whom have trained in Europe or the USA. Plants are usually fully automated production facilities equipped with Japanese automation equipment, operating in conditions approaching semiconductor clean room standards.
The worst are no better than blacksmith shops that carry out every operation manually with few tools, no automation, no air conditioning, no process controls, no quality systems and no materials technology capabilities. So-called managers have been trained less in matters of production and quality control than in organising an army of young workers living a long way from home. The best companies have materials analysis labs with scanning electron microscopes, mass spectrometers, calorimeters and reliability testing equipment and qualified staff to use them. The worst have nothing. Matters of product design, quality, reliability and safety suffer the same variation in quality, from well-engineered products to the downright dangerous.
Sorting the good from the bad means making a major commitment to supplier qualification requiring a combination of local knowledge, plant visits to potential vendors, and in-depth assessment of their capabilities. The logistics alone can be quite daunting.
But you may find, as we have, that even if you have identified high quality manufacturers, buying from them is not as easy as you might think. Here, based on dozens of plan visits around China over the last few years, we’ve assembled a few words to the wise concerning successful sourcing from that country. we relate a few of our own experiences in sourcing batteries from China based on dozens of plant visits around the country. The names have been omitted to protect the guilty.
One of the first problems we encountered concerned the product catalogues and the specification sheets. Chinese battery companies have wonderful Web sites featuring flash graphics on the home page, and pious mission statements. Photographs show factory buildings, manufacturing equipment, and examples of typical products from a wide model range. The full product range is usually listed with abbreviated specifications and an email link to the company should you want more detailed specification sheets. But can you believe them?
Neat graphs that appear to be drawn with the aid of a flexicurve, don’t show any squiggles and minor deviations that always occur with the use of actual measurements. Performance claims may seem beyond what the current state of the art is capable of achieving, and in any event cannot possibly be proved. A product may claim a seven-year lifetime using a technology that is less than two years old. One supplier quoted a reasonable cycle life of 500 cycles for their product. When we indicated that the application needed 1000 cycles, a return e-mail quoted 1000 cycles for the same product. When we requested a justification of the change, the answer was ‘Don’t worry about it’.
But the biggest problem in believing the specifications is that neither the displayed product nor the factory may even exist. Traders passing themselves up as manufacturers set up fancy web sites, can take your order and perhaps also take your cash in advance. If you are unlucky, the trader could simply disappear with your money, but more likely traders will then purchase the goods from an anonymous supplier, sight unseen, branding the product as their own and taking no responsibility for its performance. Who knows what will actually be shipped or when it will be ready.
You can only find this out by going to China to see for yourself. When the supplier insists on meeting you at your hotel then the game is up, or it should be. The owner of one well-known battery company presenting themselves as manufacturers refused to give up and reluctantly agreed to a plant visit. After a two-hour journey to his facilities, he did in fact have a three-storey factory but apart from his office containing a single desk and a product display shelf, it was completely empty. Not even a secretary to answer the phone.
The dimensions of the company’s products were non-standard and suspiciously similar to those of a better-known manufacturer. Yet even after being confronted by the evidence, the owner continued the pretence by insisting that the products were designed and made in another factory. The actual manufacturer subsequently confirmed that they supplied product to the trader. At least they were good suppliers, but worse was to come. More on this later.
Over one hundred companies make lithium batteries in China. Based upon recent visits to companies offering high capacity lithium cells, we can make the following observations.
Many Chinese manufacturers now offer high capacity polymer (pouch) cells. We reached one particular factory via a two-hour internal flight followed by a two-hour taxi journey. The General Manager (GM) had a PhD in polymer chemistry and materials science. Although he seemed technically competent and looked quite smart, to say he had the mannerisms of a rustic farmer would be an insult to farmers. Part way through my presentation he cleared his throat and spat on the glossy polished tiled floor of the conference room. I wondered if it was something I said.
The largest cells they made had a capacity of 50Ah. Though they did not have lithium phosphate cells, the did use lithium manganese technology. The GM wasted considerable time trying to rubbish phosphate and to persuade us to get our customers to change their preferences.
He claimed that lithium manganese technology was as safe as phosphate but could not provide evidence. When pushed he admitted they had never done DSC measurements on the material and had no equipment to do this; however, he said he would get it done at some university. The plant was disciplined and clean. Supervisors tagged on to you when you entered their department and stayed with you until you left, a practice we would expect in Europe but is not common in China. All the operations were manual except the jelly roll winding, which had simple motorised mandrels.
As with any manual operation, tolerances could be a problem. Though there was evidence of contamination of or minor damage to the electrode coating at several work stations, this did not appear to worry anybody even when it was pointed out. However, the operators removed electrodes found to have major imperfections. There were no quality golden samples.
Business discussions over a friendly lunch are usual during Chinese plant visits, though this particular GM dived into the food without offering any to his guests as most Chinese hosts normally do. After lunch, we resumed talk of our requirements for lithium phosphate cells. They offered to deliver 200 Ah cells with phosphate technology in two months, an offer we felt to be overoptimistic, considering they’re previously worked only with low capacity lithium manganese cells.
We eagerly anticipated our next plant visit even though the facility, located somewhere in the countryside proved hard to get to. It looked brilliant on paper and their specification sheet was impressive.
High capacity LiFePO4 cells in plastic or metal cases manufactured in “first class facilities”.
• Capacities 5Ah, 10 Ah, 40 Ah, 60 Ah and 100 Ah
• Cycle life 2000 cycles.
• Service life 6 to 7 years
• Temperature range -45˚C to +70˚C
• The reality was somewhat different:
The GM was a chemistry graduate, and proved to be the only one on staff with a business card. The Technical Director, also a chemistry graduate, only arrived after lunch. His previous experience had been with another questionable cell maker. The Technical Manager, an electronics graduate, didn’t know what a feedback loop was. A second sales assistant, a business studies graduate, spoke little. The translator was a young lady had recently graduated in English language studies.
Though officially a ‘private’ company, it nonetheless possessed all the hallmarks of a Chinese State Owned Enterprise (SOE), including excessive staff. Except for the translator, none demonstrated any degree of responsibility. That the GM and CTO didn’t speak a word of English was worrying. Usually technical managers at such plants understand a few technical words, and can help the conversation along. Not these two. The company didn’t even have a projector.
The GM had a major shareholding in the business but amazingly played no part in the discussions. Staring blankly into space most of the time, he made no attempt to understand our presentation. Indeed, he spoke only twice: once to make a totally irrelevant comment in the middle of a technical discussion, the second time to ask a question already asked minutes before by the translator.
The only person with any degree of professionalism was the translator, who had been with the company only ten months. Not only did she translate our questions, she also answered them herself and then followed through with pertinent questions of her own that demonstrated a surprising knowledge of the technology, which she said she’d gained from the Internet and from customers (not from her own management). Sadly, her talents were wasted. She had never been to the big city or to any other battery manufacturing plant, and thus she believed all the ridiculous claims printed in their sales literature about their high tech factory and state-of-the-art products.
The company’s 300 member staff worked in a 10,000 sq metre production facility. Their product line included only two cells: a 10 Ah cell and a 50 Ah cell, not the diverse range they claimed. The bigger cells they showed, up to 600 Ah, were all space models. They had produced only 12K cells in the previous month and sales were mostly small volume samples.
Customers were apparently mostly traders who bought from a sales office in Shenzhen. The biggest customer was based in the USA, but nobody, not even the GM, could spell the company’s name, so we could not find it on the Internet.
The GM admitted they had no patent rights on any of the formulations, and no in- house special formulations. When we asked if we could see the engineering labs, we were told they were “in another building”, another way of saying they didn’t have any lab. We also noted the cells’ quoted temperature range was incorrect. It should be -20˚C to plus 60˚C. Cell voltage is 3.15 Volts not 3.2 Volts.
Further, they had never tested any cells to 2000 cycles because ‘it takes too long’.
The longest cycle test they had carried out was 300 cycles when capacity dropped to 93%. Extrapolating would* take this to 53% in 2000 cycles, provided no other failures occurred first. When we questioned this, we got the usual platitudes that quality was their highest priority. Unguarded comments, however, indicated a wide process tolerance spread. It appeared that the case for their 10 Ah cell was too small for the electrode stack. They claimed to be able to produce prototype 200 Ah cells and medium volume within four months, the same time quoted just for prototypes by one of China’s best suppliers that have already been working on the cells for 2 years. Extrapolating what? Something missing in this sentence.
At lunch the GM and the sales assistant tried the old toasting the guests trick – without success – but the sales assistant ended up with a flushed red face. (For those unfamiliar with the practice, each host (in this case six of them) individually toasts the guests, who end up with multiple drinks while the hosts have one each). The GM disappeared after lunch.
The buildings, though only 4 years old, were in a shocking state of disrepair; we noticed tiles falling off the walls. In the men’s toilet in the office block, the U bend was missing from one of the two urinals and the floor was swimming in water.
A main issue of concern for us was that the shop floor (terrazzo, tile or concrete) had been taken up leaving at least 6 mm of dust and rubble everywhere, with no special precautions to keep this contamination out of the coating and assembly rooms. It looked like it had been like that for weeks, as there seemed to be no construction work in progress. For the first time I felt in need of the plastic shoe covers they always hand out on factory visits, not to protect the product and equipment but to protect my shoes.
The factory space occupation was very low, with only a few small batches in production. Work methods and tolerances were uncontrolled. The current take-off tabs on the electrodes were cut freeform with scissors into a variety of shapes. The holes punched to accommodate the clamping bolts were scattered all over the place, including over the edge of the tabs. The clamping pressure plates were mis-oriented and lock-nuts were not used. The electrode plates were creased and dog-eared and corners were turned over.
However, somebody is obviously buying this stuff! Indeed this is the very kind of supplier from whom many battery traders purchase their products. The trader mentioned above was a customer but he had never visited the plant. In view of the low sales volumes, the unacceptable quality and the large headcount to support, the lifetime of the company could be shorter than that of their batteries. We noticed a big poster by the exit proudly proclaiming the company was ISO 9000 approved.
The next factory we visited had been recommended by industry insiders as a suitable supplier of high capacity cells for traction batteries. The company turned out to be a State Owned Enterprise (SOE) run by the Vice General Manager, a party hack who didn’t speak English. She was accompanied by three young ‘sales directors’. The CEO/CTO, based in Beijing University, rarely visited the factory. He was not present during the visit.
Some of their current sales brochure could have been written by Chairman Mao himself. Phrases like ‘(The company) has smashed the monopoly of foreign manufacturers in China’s lithium-ion battery cathode materials market’, and “China’s first and only power battery manufacturer’ ran throughout. Like many of the previous companies visited there was a distinct lack of sales drive???
The Vice GM, a humourless, unsmiling, severe character sporting a look that would frighten the Gang of Four into submission, proved the most senior person on site. Her qualifications consisted of ‘9 years working in the battery industry’. She asked no questions during our presentation. Her presentation started with a long political statement about the glories of her government department. (Not unlike the DTI in the UK). The company is a major lithium cathode materials producer but specialises in spinel based and nickel cobalt powders.
She found 20 ways to avoid answering the question of whether or not they were going to produce lithium phosphate powders or cells. We assumed this meant ‘No’. They made pouch based cells up to 120 Ah and like many others suppliers, claimed to have a contract to make lithium cells for EV buses for the Olympics. (There are many bus manufacturers in China). They said they had converted several cars, vans and buses to demonstrate EVs, and that they’d made 20 batteries for EV buses with capacities between 160 kWh and 200 kWh. They also claimed a European aerospace manufacturer as a customer. Though their brochure showed an impressive BMS, they were interested to buy our product. But since some of the claims they made in their presentation and sales literature seemed inconsistent, we questioned their veracity.
The materials research facility was reasonably well equipped, which is more than can be said of some of the other suppliers we visited. From what we could see externally, the quality and care of the product were not impressive. A large stock of 120 Ah cells lay on the floor in one room.
Having made the long odyssey to the factory, we were surprised to find ourselves confined to the offices and not allowed on the shop floor. Of course, they gave us another 20 reasons why we could not see electrode production or cell assembly. The usual story was that they had confidential technology. More likely they had something to hide. I suspected immediately that we would never be able to agree on objectives. Not a suitable manufacturing partner.
The next visit proved exemplified the frustrations of arranging supplier visits in China.
Despite arranging the meeting several weeks in advance, and after another up-country visit by train, bus and taxi, we found the only person present in the factory when we arrived was the Sales Manager. He had agreed to the meeting on a day when the factory was closed. The Technical Manager was not available to answer questions. Sales people were too busy to attend and the senior site manager was out of town. A wasted day, as we accomplished nothing. As it happened, the company was another supplier to the trader mentioned earlier, and he had not visited the plant either. Now we knew why.
Another plant we visited sent a sales assistant to our hotel to guide us to the facility. She knew almost nothing about the company or its products and was equally useless as a guide. Because she was unable to read maps, what should have been a two-hour journey from the hotel to the plant ended up taking three and a half hours of wrong turns on single lane, dead end country roads. Finally a search party from the factory rescued us sometime after 4.00 p.m.
The GM had studied in the USA and earned a PhD in materials science from Japan. He had also worked for a European cell manufacturer. The quality manager showed us around the plant. The ridiculous plastic bags most factories make you wear on your shoes fell apart on my over-length shoes only 20 metres into the factory and he said just forget it and continued the tour leaving the shoe covers behind on the floor.
The plant, relatively new, had no automation at all. Every activity was manual; even the electrodes were wound by hand on small plastic strips forming the mandrels. The factory was clean but there was poor control of tolerances. Despite the obvious deficiencies, the company claimed to sell to Sony, Philips, Thomson, Creative, Samsung, and MSI.
At one plant making high capacity cells, we found the product to be a copy of another Chinese manufacturer’s design – but with some shortcuts. The electrode stack inside the case was held together by Scotch tape, which deteriorates in a high temperature working environment within 12 months. They did not use the more durable Kapton, and we noticed the stack fit loosely within the case, thus allowing movement and flexing of the current take off tabs connecting the stack to the external terminals. There was no torque control on the clamping mechanism on the current tabs, so uncontrolled, oversized insulating tape could interfere with the connection to the terminals. We also saw examples of physical damage cells in some of the packs. They had not done any vibration testing.
Having the right connections is very important in China, but they can also cause problems. Although the country is a very big place, the battery specialists all seem know each other. For example, since Chinese networks of old friends and old enemies are strong, it’s best to take care what information you give out. You never know where it will end up.
At one meeting with one of our potential suppliers, we found the CTO could not support the development programme we required to produce cells to our customer specification. The supplier was not able to respond to our RFQ. Shortly afterwards our customer in the UK received an unsolicited offer from a trader with whom the CTO also had a business relationship, to supply the cells to the specification we had requested. Confidentiality doesn’t exist, as top engineers regularly switch companies taking technical and commercial secrets with them. Copying each other’s designs is not unknown.
Motorola and Nokia have reported counterfeiting of premium brand batteries, though I have not witnessed this personally. When asked how he won so much business from his major customer, one supplier confessed that the customer’s purchasing director was a shareholder in his company.
Don’t be put off by possible bad experiences. Many high quality energy cell manufacturers in China make excellent products. Manufacturers range from production plants of the major Japanese cell makers to less well-known local companies making huge volumes of cells for the big global players in the electronics business such as GE, Nokia, HP, Dell, Alcatel, Motorola, Philips and Black and Decker. The good cell makers have all invested massively in their Chinese operations, installing high volume fully automated factories. Sales revenues must achieve upwards of $200 million per year to justify such investments, and some of them have sales volumes of over $1 billion. They can only win and retain this business by producing high quality reliable products.
Getting access to this capability is not easy. It’s no use expecting support from any of these companies unless you turn up at their door with a multi-million dollar purchase order in your pocket. After all, you will be competing with the world’s major battery consumers for their manufacturing capacity. Since orders under $100,000 are a nuisance, don’t expect to get them to produce specials for you.
If you want to use cells from one of the major Japanese cell makers you will most likely be referred to the national sales office nearest you, and even though the cells are made in China, you will pay Japanese rather than Chinese prices. If you need technical support, your local sales office will provide it. You will be offered standard products from their catalogue; but if your application demands any special requirements, it is unlikely you will get much help unless you can guarantee you will purchase huge volumes. The last thing a Japanese cell maker wants is to damage their brand name. Because they don’t want to be associated with any product failures, they will want to know in detail what the application is.
(One Korean manufacturer demanded to know the name of our customer. After several weeks of negotiations with both our customer and the vendor we thought we had a supply deal, and we eventually told the supplier who our customer was. Before I got back to Europe they had sent their salesman to visit our customer to cut us out of the deal.)
If there is any chance that your design might be unreliable, especially where high power lithium cells are concerned, many Japanese suppliers will want to audit your circuit design and maybe even your factory before they will sell to you. A start-up company may even be required to provide a bond of several hundred thousand dollars before they will be accepted as a customer.
Chinese companies can offer lower prices but they have no local support in your market. You need to go to them to make your pitch. Even then, unless it is high volume business, it will be met with little enthusiasm. You will most likely be received by a relatively junior sales assistant who will take note of your requirements and take you on a plant tour to show off their wonderful manufacturing operations. Once more, you will be encouraged to buy from their standard product lines. The sales assistant will not have any authority to negotiate technical requirements and on your first visit, it is unlikely that you will get to meet any of the senior technical and commercial management. The likelihood of dealing with anyone further up the management chain depends on the volume of your business.
Unless you want standard products, the specification sheets can also be a problem. Not because you don’t trust them, as we related in our earlier examples. There’s no reason not to trust the claims of the better companies. Problems occur because the specification sheets may not contain as much information as you need to complete your design. They will show dimensions, charge/discharge curves, temperature range, pulse performance for a specified pulse duration and cycle life. But what if you want to know the maximum pulse power capability for longer or shorter pulse durations as in regen braking applications? What if you want to know the effect of operating in a 60ºC ambient temperature, or at different depth of discharge levels, on cycle life? What if you need data on possible thermal runaway?
While you can be sure that these better companies have tested the cells to the limits specified in their literature, they probably do not have the specific data required for your application. If you are a big enough customer, they may set up some tests for you. More likely, they will suggest you purchase some cells and do the tests yourself. If you need to know the cycle life of traction batteries under different operating conditions to determine your warranty liabilities, this could be a long and expensive exercise.
How does Axeon survive in this minefield? One major advantage we have at Axeon is volume. With many customers on our books, we can negotiate from a position of strength so that we can often get cells designed to our specification. We maintain relationships with all the major cell manufacturers and we keep a database of their capabilities and available cell technologies. We do on-site qualification of all potential cell manufacturers and we have the facility to verify their claims with our own in-house testing.
Perhaps our most important capability is that we have our own full time representatives with local knowledge in China to manage our supply chain. They monitor supplier performance to make sure there are no short cuts, that the supplier processes remain under control, that the goods meet the specification and that they are made and shipped on time. As a custom pack maker, we can make these resources available to our customers.
