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BYD Pulls Plug on Problem-Plagued Pouch Batteries

BYD's transition from pouch to prismatic batteries in its hybrids reflects the dynamic nature of battery technology, driven by safety concerns and the company's determination to remain a global contender in the EV market

BYD Blade Battery

Chinese automaker BYD is making a major change to the batteries used in its hybrid electric vehicles. According to sources familiar with the matter, BYD plans to stop producing the pouch-type batteries currently used in its popular hybrid models and switch to prismatic batteries instead.

The move comes as BYD aims to address concerns over the durability and potential leakage risks of pouch batteries. While no public cases of battery leaks have been reported, BYD and experts believe the thin, flexible wrapping around pouch cells may be more prone to leaks over time compared to the hard casing around prismatic batteries.

BYD, backed by Berkshire Hathaway, started converting production at two battery factories last month and intends to make the full transition by 2025. For now, some pouch battery production continues at a third plant to avoid major disruptions to hybrid vehicle output.

The changes illustrate the challenges BYD faces even as it emerges as a global rival to Tesla. Hybrids accounted for nearly half of BYD’s sales last year, predominantly in its home China market. Most exports so far have been pure electric vehicles.

In 2021, BYD debuted self-developed hybrid technologies including a blade-shaped pouch battery touted for efficiency. But pouch batteries have faced scrutiny from other automakers, with VW moving away from them and Tesla’s Elon Musk advising against their use due to overheating risks.

In 2022, BYD recalled over 60,000 hybrid Tang models citing a defect that could cause “thermal runaway” in the pouch batteries. Still, the company has stood by the safety of its designs and there have been no public reports of fires or explosions.

The production switch marks a notable strategy shift for BYD and its battery arm. As an vertically integrated company, BYD produces batteries primarily for its own vehicle models rather than external buyers. Its hybrids have proven immensely popular in China, taking eight of the top ten plug-in hybrid spots last year.

Moving forward, BYD aims to replace pouch batteries with a shorter prismatic type, similar to what it already uses in its pure EVs. While not without flaws, prismatic batteries are seen as more stable and resistant to leaks. The transition may impact BYD’s bottom line, but the company posted record profits last quarter as its sales surged.

The shakeup illustrates how battery technology remains a moving target even for industry leaders. As the market and regulations evolve, automakers are adapting to maintain the performance, safety and durability consumers expect. For BYD, that means pivoting from a customized pouch design to an alternative it had previously avoided for hybrids. While a sizable undertaking, the move aims to keep BYD on the cutting edge as it expands globally in the EV era.

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