Title: Specialised vertical integration: the value-chain strategy of EV lithium-ion battery firms in China

Authors: Xieshu Wang; Wei Zhao; Joël Ruet

Addresses: Centre de recherche en Économie de l'Université Paris Nord (CNRS, UMR 7234), Université Sorbonne Paris Nord, 99 Avenue Jean-Baptiste Clément, 93430 Villetaneuse, France ' Department of Economics, Law and Society, ESSCA School of Management, 1, Rue Joseph Lakanal – BP 40348, 49003 Angers Cedex 01, France ' The Interdisciplinary Institute for Innovation, Centre de Recherche en Gestion (CNRS, UMR 9217), Ecole Polytechnique – Institut Polytechique, 828 boulevard des Maréchaux, F-91762, Palaiseau cedex, France

Abstract: China has developed a fully-fledged industrial value chain for electric vehicle (EV) batteries within a short period. Such industrial dynamics are often seen as the product of a policy of protecting infant industries. However, extensive empirical observations from the field show that firms' value-chain strategies can also help answer the question of why China is so far the only country to have formed a complete and dynamic value chain for EV batteries so quickly. This paper explores the driving forces behind the emerging Chinese EV lithium-ion battery industry. Based on the analysis of the main moves made by actors along the battery value chain, we identify that many Chinese firms deploy a strategy that we term 'specialised vertical integration', i.e., actively entering related upstream and/or downstream segments within the EV lithium-ion battery supply chain, while continuing to reinforce their existing capacity using specific established assets in the original segment of the value chain, which serves as an expansion base. This specific approach, which is typical of strategies rooted in the resource-based view of the firm, has given the Chinese EV lithium-ion battery sector a unique internal dynamism, helping to secure its competitive advantage in the global value chain.

Keywords: EV industry; lithium-ion battery; value chain; vertical integration; specialisation; China.

DOI: 10.1504/IJATM.2022.10048322

International Journal of Automotive Technology and Management, 2022 Vol.22 No.2, pp.178 - 201

Received: 03 Sep 2021
Accepted: 09 Jan 2022

Published online: 25 Jul 2022 *

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