In China, the battery is the most expensive single component in an electric car, and the cost of replacing one can be staggering. According to a 2025 report from the China Insurance Research Institute, the average ratio of a battery pack's replacement cost to the vehicle's total price is 49.59% for BEVs (battery-electric vehicles). That means replacing a battery can cost nearly half as much as the car itself.
This has pushed many automakers to consider making their own cells, hoping to cut costs and control the core component. Over the past few years, Geely, GAC, and GWM have all set up battery ventures. But as an analysis from the Chinese outlet Huxiu points out, being able to define what a battery should do is not the same as being able to build it profitably.
The brutal economics of cell manufacturing
Building a competitive cell factory requires billions of yuan. A production line with 1 GWh of capacity costs about 200 to 300 million yuan ($28 to $42 million), and a 30 GWh plant takes at least two to three years to complete. Even Porsche's Cellforce division abandoned mass production after concluding it lacked scale economies, laying off around 200 people and reverting to a pure R&D role.
McKinsey estimates that automakers only gain a cost advantage from in-house cell production if they build at least 500,000 vehicles a year or produce more than 15 GWh of batteries annually. As Li Auto executives have noted, battery pack lines are hard to share across models, especially with highly integrated CTP and CTB designs, so profitability depends on the automaker's own sales volume. Except for a few top players, most brands simply cannot achieve the necessary scale.
Even if scale and cost could be managed, the deeper challenges are manufacturing consistency and fundamental electrochemistry. In the automotive industry, defect rates are typically measured in parts per million, but a car with hundreds or thousands of cells demands parts-per-billion quality. Coating a 5-micron copper foil at 100 meters per minute with nanometer-level uniformity is incredibly difficult. Tesla's 4680 cells, launched with great fanfare in 2020, suffered from dry-electrode yield issues, and CEO Elon Musk admitted in 2025 that the company had paid a five-year price for underestimating the chemistry and process challenges.
Patents and consumer trust
Beyond manufacturing, patent barriers are often underestimated. Leading battery makers have built extensive intellectual property networks covering materials, cell structures, and integrated pack designs. Automakers trying to "self-develop" face a dilemma: either circumvent patents and accept inferior, costlier alternatives, or risk infringement lawsuits and product bans. Hiring away engineers does not transfer patents, so this path exposes automakers to serious legal and commercial risks.
Consumer perception is another wall. According to a NielsenIQ report, global consumers already trust a handful of battery brands, with CATL leading in China at 81% trust. About 40% of Chinese respondents said they would abandon a car model if it did not use CATL batteries. In the used-car market, vehicles with CATL batteries command a 5% to 10% premium. For example, after 150,000 km, a CATL-equipped AION S Plus retains about 14-17% of its usable capacity, while a version with CALB batteries retains 18-22%, a difference that translates into a 25-40% gap in used-car prices.
Some automakers' self-developed batteries have not lowered prices for consumers but have hurt the experience. In March 2026, complaints about OTA "battery locking" exceeded 12,000 on China's 12315 platform, up 273% year-on-year, leading to eight automakers being summoned and three investigated. One owner reported that his car's claimed 510 km range dropped to under 300 km after an overnight update, and fast charging slowed from 40 minutes to over an hour.
The numbers tell the story: Nio spent 10.6 billion yuan on R&D in 2025, with over 1 billion on batteries (about 9%); Xpeng spent 9.5 billion yuan total, with 300 million on 5C batteries (about 3%); Li Auto spent 11.3 billion yuan, with just 100 million annually on batteries (under 1%). In contrast, CATL invested 22.1 billion yuan in R&D in 2025, and CALB spent 2.1 billion. New automakers are investing pocket change, while battery makers are betting their entire business.
Huxiu argues that the smartest approach is deep cooperation with battery giants. During the IAA Mobility show in Germany, Nio CEO William Li and CATL CEO Robin Zeng discussed expanding their partnership. The article concludes that automakers should define the product and scenarios, while battery makers translate those needs into materials and chemistry. As the old saying goes, letting carmakers build cars and battery makers build batteries is the most efficient path to quality.
