Gasgoo Munich- "Is in-house battery development by automakers a genuine necessity or a false proposition?" That question has roiled the auto industry for years.
In September, CATL's Chief Manufacturing Officer Ni Jun weighed in on the trend of automakers developing their own batteries. "Knowing how to build cars doesn't mean knowing how to build batteries," he said. "It takes professionals to do professional work." Around the same time, Chairman Robin Zeng added a sharper perspective: "Making one good battery isn't hard; the hard part is making 1 billion batteries that are all equally good."
Some automakers, however, see things differently. Li Xiang, founder, chairman, and CEO of Li Auto, recently argued that deep research into core battery technology by automakers benefits both industry development and consumer interests. Behind Li Auto's self-developed batteries lie significant contributions from partners Sunwoda and CALB.
On October 20, at its Power Day event, Li Auto unveiled its "Lianshan" electric technology architecture and introduced a warranty plan for its proprietary batteries: if a self-developed battery catches fire due to a quality defect and the vehicle is totaled, the company will replace it with a new car of the same configuration.
Li's stance emphasizes the role of automakers in mastering core technologies, while giants like CATL prioritize their expertise in cell development and volume manufacturing. The arguments may sound diametrically opposed, but they address different links in the chain: automakers want earlier involvement in product definition, vehicle integration, and quality control.
At its core, this debate is a battle for control—and for a bigger slice of the profit pie.
43.28 Billion vs. 21.8 Billion
The struggle by automakers to seize control of core components didn't begin with the electric era.
From engines and transmissions to chips and batteries, automakers have always sought to keep key technologies in-house. What makes the power battery unique is its simultaneous impact on cost, range, fast-charging, safety, and product development cycles. Especially in an overheated market, where overall automaker profitability is slipping while mainstream battery makers remain highly profitable, the case for automakers entering the battery arena becomes compelling.
CATL's first-half 2026 report shows net profit attributable to shareholders reached 43.28 billion yuan—a 42% year-on-year jump. Revenue from its power battery system business stood at 192.125 billion yuan, with a gross margin of 20.6%.
CATL net profit trend. Image source: EastMoney
In vehicle manufacturing, the most profitable domestic listed automaker barely cleared 10 billion yuan in net profit during the same period. Combined, 15 mainstream listed automakers totaled just 21.8 billion yuan. Saddled with an intense price war and rising upstream costs, several leading automakers actually swung from profit to loss.
While the statistical baselines differ, there is no denying the operational pressure weighing on automakers. More telling is their position in the supply chain. Automakers face consumers directly and are exposed to the whims of market pricing. Battery companies, meanwhile, leverage their technology, capacity, and customer base to command a distinct advantage.
Image source: CATL
For automakers, the battery is a major cost driver and a critical factor in fast-charging, cold-weather performance, range, and safety. If restricted to off-the-shelf supplier solutions, vehicle engineering becomes an exercise in fitting existing cell sizes, chemistries, and performance limits. By participating early in cell and pack development, automakers can integrate vehicle architecture, thermal management, energy control, and charging needs from the ground up.
Supply security is another practical concern. Batteries require long-term investment and capacity planning; a supplier's technology roadmap and production schedules directly dictate an automaker's product cadence. Mastering cell design while maintaining multiple manufacturing partners gives automakers greater leverage in the supply chain.
Cao Guangping, a partner at Chifu Consulting, told Gasgoo that automaker investment in batteries is both tactical and strategic. Tactically, a dual approach of in-house development and outsourcing secures supply, lowers costs, and mitigates disruption risks. Strategically, mastering core battery technology reduces reliance on dominant suppliers. In the long run, it also positions automakers for the impending battle over solid-state batteries.
Thus, the push by automakers to ramp up battery R&D is driven by both technical imperatives and business realities. Squeezing purchase prices alone won't solve every problem. Deep involvement in cell design—tailoring the battery to the vehicle's specific needs—offers an alternative path.
From Buying Batteries to Defining Them
Li Auto offers a case study in this shift.
Li Auto President and Chief Engineer Ma Donghui has clarified that in-house development does not mean in-house manufacturing. Automakers can lead cell design and R&D, then outsource production to partners, while retaining control over battery packs, BMS, and thermal management. Li Auto describes this model as "in-house cell design with outsourced manufacturing; in-house pack design and manufacturing." Once again, partners like Sunwoda and CALB have played a major role behind the scenes.
Image source: Li Auto
An analysis by Gasgoo's research arm suggests Li Auto has chosen a relatively asset-light approach: keeping cell chemistry, design, structure, and 5C fast-charging targets in-house while outsourcing production to specialized suppliers. The company retains control over packs, BMS, thermal management, and OTA updates.
This division of labor allows automakers to enter the development cycle earlier. Under traditional procurement, an automaker specifies requirements and then fits the battery to the car. With co-development, they start from vehicle requirements and validate cells, packs, thermal systems, and energy control in parallel. Manufacturing remains with the specialist, but design and verification responsibilities shift toward the automaker.
In September, Li Auto reported progress on its self-developed batteries, noting they are already used in the L8, L6, and i8, with plans to expand deployment across more models based on delivery schedules.
At Power Day, the company released detailed specs for its Lianshan batteries. The new L8, equipped with a proprietary 5C ternary lithium battery, achieves a CLTC range of 430 kilometers. Li Auto claims a 10-minute charge adds approximately 500 kilometers of range. The 2026 i6, set to launch on October 28, will boast a maximum CLTC range of 780 kilometers.
Li Auto's ATR algorithm keeps state-of-charge estimation errors for lithium iron phosphate (LFP) batteries within 3%. Combined with waste heat recovery and optimized air conditioning, winter effective range increases by roughly 30 kilometers.
For its 2026 range-extended and pure-electric models featuring 5C batteries, Li Auto has set a design target of retaining over 75% battery health after eight years or 160,000 kilometers. The event also highlighted test results for impact resistance, water ingress, and thermal failure, alongside plans for cell data tracing and cloud-based early warnings.
The warranty plan comes with strict conditions: if a self-developed battery catches fire due to a quality defect resulting in a total loss, Li Auto provides a replacement vehicle. If a fire results from a collision or undercarriage damage leading to a total loss, the company covers the gap between the motor vehicle insurance payout and the insured value.
To bring its cell designs to mass production, Li Auto took a stake in Sunwoda. In September, Sunwoda announced that Li Auto planned to inject 2.65 billion yuan into Sunwoda Power. Post-transaction, Li Auto-related entities will hold approximately 11.17% of Sunwoda, further intertwining R&D, supply, and equity interests.
Not every automaker is taking the same path. BYD has long housed battery R&D and vehicle manufacturing under the same corporate umbrella, with its Blade battery exemplifying a vertically integrated strategy.
Image source: Guangzhou Juwan Technology Research Co., Ltd.
NIO is positioning itself for next-generation technologies by investing in Weilan New Energy. In early 2026, a semi-solid-state battery co-developed by Weilan and NIO was fitted to the ET7, completing real-world testing with a CLTC range exceeding 1,000 kilometers and entering small-batch delivery. This illustrates the strategy of early involvement in emerging technologies. Similar dynamics exist between Great Wall Motor and SVOLT, Volkswagen and Gotion High-Tech, and GAC Group and Guangzhou Juwan Technology Research Co., Ltd..
These approaches—internal manufacturing, joint development, and investment incubation—each have their place. The level of investment and control varies, and there is no simple hierarchy ranking one above another.
The Four Calculations of In-House Development
The Product Calculation First, the vehicle experience. Fast charging requires coordination between cells, packs, thermal management, charging piles, and control strategies. Cold-weather performance involves battery characteristics, thermal systems, and energy management. Pack dimensions and structure affect chassis layout, interior space, and vehicle weight.
Given this, the earlier automakers participate in development, the sooner these targets can be integrated into the vehicle architecture. As Ma Donghui noted, achieving 5C supercharging requires bridging the battery, powertrain, charging, and cloud data—the core lies in system coordination.
There are also trade-offs between parameters. Fast charging, range, lifespan, safety, weight, and cost all constrain one another. Improving one metric may introduce new demands on materials, thermal management, or manufacturing processes. Setting targets doesn't allow automakers to skip the necessary validation of electrochemistry, materials, and production techniques.
The Supply Chain Calculation It's about weighing control against switching costs. Mastering cell design and technical standards reduces reliance on a single solution and aligns battery development more closely with vehicle planning.
However, identical designs don't guarantee that cells from different factories are interchangeable. Variations in material batches, equipment precision, process parameters, and yield rates can all create differences. Switching manufacturers requires re-verification of samples, vehicle integration, and reliability testing. While more battery suppliers increase options, they also add to the burden of coordination and validation.
The R&D and Quality Liability Calculation is often obscured by the term "asset-light." Gasgoo Research points out that asset-light does not mean low difficulty. Battery quality, mass production yields, supplier coordination, and stable supply all directly impact vehicle delivery and the user experience.
Cell design involves electrochemistry, materials, structural engineering, manufacturing processes, and vehicle validation. Even with outsourced production, automakers must build R&D teams, testing systems, and failure analysis capabilities to monitor partner quality and drive improvements.
When quality issues arise, the vehicle brand is the first line of defense facing the customer. While liability is determined by design, manufacturing, procurement contracts, and the cause of the accident, the burden of communication, after-sales service, and reputation management does not transfer away with the manufacturing contract.
Image source: Li Auto
Ni Jun has emphasized that overall pack performance hinges on the consistency of individual cells. There is a vast difference between producing a high-performance cell in a lab and consistently producing qualified cells at scale. Product potential is determined by material formulation and structural design, but the ability to deliver at volume depends on equipment precision, process control, quality traceability, and yield rates.
Scalability is the battery supplier's stronghold. In the first half of the year, CATL produced 498 GWh of battery systems with a capacity of 525 GWh, achieving a utilization rate of 94.86%, with another 764 GWh under construction. This is a level of scale that a single automaker's in-house battery efforts would struggle to match.
Finally, the Financial Calculation, covers production lines, R&D, verification, and liability costs. Building a cell factory requires capital expenditure on plants, equipment, and teams, plus ongoing utilization. Even if automakers use contract manufacturing to reduce direct capital outlay, they still bear costs for design, testing, supplier management, and vehicle validation.
Capital allocation follows the technology roadmap. If automakers build their own cell factories, capital flows into facilities, equipment, and manufacturing teams. If they opt for contract manufacturing, funds are concentrated on cell R&D, validation, supplier collaboration, and vehicle integration.
Li Auto, for instance, has integrated quality management and after-sales service into its warranty program. It is also building a fast-charging network; as of October 20, it had constructed 4,200 supercharging stations with over 23,000 piles.
Is the Battery Maker's Moat Still Intact?
As automakers expand into battery R&D, the division of labor shifts. But the manufacturing expertise of specialized battery companies doesn't simply vanish.
CATL's 2026 report reveals high output, utilization, and capacity under construction, indicating its manufacturing system is running at massive scale. Large-scale production allows for continuous optimization of equipment parameters, process control, and supply chain coordination, while building experience in quality traceability and batch management. These capabilities require long-term investment and cannot be replicated simply by obtaining a set of design blueprints.
Image source: CATL
Technology licensing offers another model of cooperation—and potentially a new growth engine for battery makers. At Ford's Michigan LFP battery plant, Ford owns the assets while CATL provides technology licensing and support.
From this perspective, in-house development by automakers and specialized manufacturing by battery companies can coexist. Automakers, closer to users and the vehicle system, are well-positioned to set product goals, manage system integration, and shoulder brand responsibility. Battery companies, focused on cell R&D, process development, and mass production, hold the edge in consistency, yield rates, and delivery. It is no surprise Li Xiang has referred to CATL as a "comrade."
However, if the cooperation model evolves, both sides must renegotiate their boundaries—and deliver on their respective promises.
Image source: China Automotive Power Battery Industry Innovation Alliance
Automakers can push for deeper involvement in product definition and verification while leaving manufacturing to mature suppliers. Whether it's vertical integration, joint development, contract manufacturing, or technology licensing, each model has its place.
In short, in-house battery development is not a mandatory milestone for every automaker. The real question is which capabilities an automaker intends to reclaim, how much resources it is willing to commit, and whether it can deliver verifiable improvements in performance, cost, supply security, and quality accountability. Li Auto has put its cell strategy, system integration, and warranty plan on the table. The questions that remain are about production consistency, long-term degradation, real-world performance, and return on investment.
For consumers, safety remains paramount. For automakers, having decided to design batteries more deeply and accept greater responsibility, the challenge is ensuring that every public metric stands the test of time and real-world delivery.
Ultimately, the boundaries of battery self-development will be measured by production yields, actual failure rates, cost structures, and the track record of user guarantees.
