Tech Giants: Starting from Bankrupt Companies

61: Chapter 61: Chinese Standards, Global EchoesTesla’s people arrived much more quietly.

A Model S drove into the park, and only three people got out. The leader, Michael Chen, was around forty, wearing rimless glasses and carrying a backpack. He looked more like a Silicon Valley programmer than a vice president of a multinational corporation.

”Mr. Su, sorry for the lack of prior notice.” Michael’s first sentence in the conference room was an apology. ”Mr. Musk requested that we handle this matter discreetly. Tesla purchasing core components from a competitor would be headline news in the American media.”

Su Chen nodded understandingly: ”Then let’s keep the discussion within a small group.”

Michael opened his laptop and, skipping the pleasantries, went straight into technical details: ”We disassembled the samples of the Divine Travel 2. The energy density of 210Wh/kg is real. More importantly, the capacity standard deviation of your 100 cell samples is only 0.8%, while our current supplier is at 1.5%.”

He pulled up Tesla’s internal test report: ”In fast-charging tests, the Divine Travel 2 underwent 10 consecutive fast charges at 250kW power with a capacity degradation of only 1.2%, whereas our existing supplier is at 2.8%. Mr. Su, this set of data almost made our battery team quit—they struggled for three years without reaching this metric, but you did it.”

Zhang Zhen asked: ”So, what are Tesla’s specific requirements?”

”A three-year agreement, with a supply of no less than 50GWh of batteries per year, accounting for 30% of our total demand.” Michael provided the numbers. ”The price can be 5% higher than what you give Geely, but we need an exclusivity clause: batteries of the same specifications cannot be supplied to other American automakers.”

Su Chen shook his head: ”Sorry, Michael. Spark Technology will not sign any regional or customer restriction clauses. Technology should be open to competition.”

”As expected.” Michael was not surprised. ”Then let’s try another plan: Tesla purchases your battery packs, but we use our own BMS (Battery Management System). At the same time, we establish a joint laboratory to share some data—for example, the internal resistance change models of the battery at different temperatures and different cycle counts. This would be beneficial for both of our BMS algorithms.”

This proposal was more constructive. After thinking about it, Su Chen responded: ”Data sharing is fine, but it must follow the principle of reciprocity. We provide battery aging data, and Tesla needs to open up part of the control logic of the thermal management system. After all, battery performance is half dependent on the battery itself and half on the vehicle’s thermal management.”

Michael hesitated. Thermal management was one of Tesla’s core secrets.

”I need to ask for instructions.” He walked to the window to make a call, returning ten minutes later: ”Okay. But data exchange will only take place within the joint laboratory. Both sides will send a five-person team, and no data may be taken out of the laboratory.”

”Reasonable.” Su Chen agreed.

”There is one more thing.” Michael’s expression became somewhat complicated. ”Mr. Musk asked me to ask: Is Spark Technology interested in participating in Tesla’s ’Million Mile Battery’ project? We plan to launch a battery with a lifespan exceeding 1 million miles (1.6 million kilometers) in 2020, and we are looking for partners in the materials field.”

This time it was Su Chen’s turn to be surprised. Tesla was actually taking the initiative to invite a competitor to participate in its most core R&D project.

”Aren’t you worried about technology leakage?” Zhang Zhen couldn’t help but ask.

Michael gave a wry smile: ”To be honest, yes. But Musk said that if we don’t cooperate because of worry, humanity will never be able to build a spaceship to immigrate to Mars. His exact words were: ’Spark Technology has already proven its innovation capability in battery materials. Either we cooperate to make a breakthrough together, or one day in the future they will make the breakthrough alone—which is worse?’”

Su Chen laughed. This founder of Tesla truly had a mindset different from ordinary people.

”We can participate.” Su Chen provided the conditions. ”Spark Technology will provide new electrolyte additives and anode binder technology, and Tesla will open up part of the silicon anode preparation process. Patents will be jointly held, and we will prioritize supplying each other during commercialization.”

”Deal.” Michael breathed a sigh of relief. ”Then shall we sign the battery procurement agreement today? I brought an electronic seal.”

At five o’clock that afternoon, a simple two-page agreement was signed. There was no press conference, no group photo, and Michael and his two colleagues left quietly. But Su Chen knew that the weight of this agreement was no less than the multi-billion joint venture with Volkswagen.

June 10, Shenzhen, Spark Technology Headquarters.

On this day, three conference rooms had their ”In Meeting” indicator lights on simultaneously.

At nine in the morning, Sato Kenichi, a senior general manager of Toyota’s purchasing headquarters, arrived on time with a five-person team. This fifty-five-year-old negotiator, who started as a Japanese engineer, was known for being rigorous and critical.

”Mr. Su, Mr. Zhang.” Sato bowed slightly, his movement so standard it looked like it had been measured with a ruler. ”Toyota is interested in the Divine Travel 2 battery pack, especially its data on 210Wh/kg energy density and 1500-cycle lifespan.”

He opened a thick folder containing an eighty-page test report from the president of Toyota’s Technical Research Institute.

”Our tests show that your company’s battery performance fully meets the claims under standard conditions at 25 degrees Celsius.” Sato changed the subject. ”However, during continuous high-speed discharge at a high temperature of 45 degrees Celsius and 100% SOC (state of charge), the temperature gradient of individual cells reached 7.2 degrees Celsius, which exceeds your company’s claim of ’within 5 degrees Celsius’.”

Zhang Zhen took the report and glanced at it, then smiled: ”Mr. Sato, what you are seeing is data from our A3 samples from three months ago. Please look at this—”

He asked his assistant to play a video, which was actual test footage from Turpan, Xinjiang, two weeks ago. Monitoring data showed that at an ambient temperature of 48 degrees Celsius, after the vehicle had been driving continuously at 120km/h for two hours, the maximum temperature difference within the battery pack was 4.8 degrees Celsius.

”We improved the flow channel design of the liquid cooling plate and added a phase-change material layer between the cells.” Zhang Zhen explained. ”The B2 batch has already solved the high-temperature uniformity issue. If Toyota needs it, we can provide a third-party certification report for the B2 samples.”

The young engineer behind Sato whispered in Japanese: ”Manager, their iteration speed is too fast...”

Sato was silent for a moment, then pushed up his glasses: ”Then, regarding the BMS (Battery Management System) adaptation issue. Toyota has its own motor control algorithms and vehicle energy management strategies. Can your company’s BMS open the underlying control interface?”

This was the core issue. Toyota did not want to fully use Spark Technology’s ”black box”; they hoped to use Spark Technology’s BMS as a hardware platform and run their own control software on it.

Yang Yang, the chief architect of Spark Technology’s BMS, took over the topic: ”We can. We can provide three levels of cooperation plans: First, a complete solution, where Spark Technology provides a turnkey project from hardware to algorithms; second, a semi-open solution, where we provide hardware and basic drivers, and Toyota develops application layer algorithms on top of it; third, a fully open solution, where we only provide hardware and communication protocols, and all software is developed independently by Toyota.”

”And the cost?” Sato asked directly.

”The higher the degree of openness, the higher the unit price, and the higher the technical support fees.” Yang Yang pulled up the price list. ”The unit price of the fully open solution is 35% more expensive than the complete solution because we need to customize the dedicated hardware architecture and debugging toolchain for Toyota.”

Sato and his team members exchanged words quickly in Japanese. Three minutes later, he looked up: ”We choose the second option—semi-open. But we need to add a clause: Spark Technology must send a technical team of no less than ten people to be stationed at the Toyota Nagoya Technical Center for at least six months to assist us in system integration and calibration.”

”We can do that.” Zhang Zhen nodded. ”But Toyota needs to pay for all the team’s expenses in Japan and pay a technical consulting fee on an hourly basis. At the same time, Spark Technology shall have non-exclusive, free usage rights to all improved algorithms that Toyota develops based on our platform.”

This was a typical negotiation between engineers—not much emotion, just technical details and interest exchanges. In the end, both sides finalized: Toyota would purchase the first batch of 50,000 Divine Travel 2 battery packs using the semi-open BMS solution, and Spark Technology would send a twelve-person team to Japan, with the contract amount being 2.8 billion rmb.

When signing, Sato said a rare, emotional sentence: ”Mr. Zhang, ten years ago, it was us exporting technology to Chinese companies. Now it’s the other way around. The world is changing too fast.”

Zhang Zhen smiled: ”Technology has no borders, Mr. Sato. Whoever can make a better product should lead the industry.”

At the same time, the atmosphere in the second conference room was completely different.

Watanabe Junichi, the managing director of the Honda Technical Research Institute, fifty-three years old, was a fanatical ”tech nerd.” His first sentence upon seeing the Spark Technology team was: ”I have seen your Qingtian 2 Permanent Magnet Synchronous Motor and Control System’s top speed data of 15500rpm—can you share the rotor centrifugal stress calculation model at this speed?”

Asking directly for core algorithms.

Wu Hao, the chief scientist of Spark Technology’s motors, laughed: ”Mr. Watanabe, that model involves our original anisotropic material mechanics analysis for the carbon fiber-wrapped rotor, which is core intellectual property. However, we can provide the measured data of the rotor deformation at that speed, as well as the design standards that ensure safety redundancy.”

Watanabe’s eyes lit up: ”Measured data? You really achieved stable operation at 15500rpm?”

Wu Hao asked his assistant to play a video shot by a high-speed camera: the motor rotor accelerating in a vacuum chamber, the speed numbers jumping rapidly—10000, 12000, 14000, and finally stopping steadily at 15500rpm. The stress sensor data on the side showed that the centrifugal stress at the outer edge of the rotor was 412MPa, which was 60% lower than the material’s yield limit.

”We use a composite rotor structure of T800-grade carbon fiber and special aerospace aluminum alloy.” Wu Hao explained. ”The carbon fiber is responsible for withstanding centrifugal force, and the aluminum alloy is responsible for conducting the magnetic field. This structure is 43% lighter than traditional pure silicon steel sheet rotors, yet its mechanical strength is increased by two times.”

Watanabe almost pressed his face against the screen: ”What is the winding angle of the carbon fiber? What adhesive is used? Do you have the modulus degradation data at high temperatures?”

A series of professional questions were thrown out.

Wu Hao looked at Su Chen, who nodded slightly. Some edge technologies could be shared; this was part of building trust.

”The winding angle is ±45 degrees alternating, with four-layer cross-ply. The adhesive is our self-developed epoxy-polyimide hybrid system, with a modulus retention rate of 85% at 200 degrees Celsius.” Wu Hao provided some data. ”More detailed material formulas cannot be disclosed, but we can supply finished rotor components to Honda, and the price can be discussed.”

Watanabe was silent for a long time, then finally sighed: ”Honda is also developing high-speed motors, but our target speed is 13500rpm, and it is still in the laboratory stage. Your mass-produced product has already achieved 15500rpm...” He shook his head. ”We lost this round.”

He looked up, his expression serious: ”Honda needs to purchase the Qingtian 2 Permanent Magnet Synchronous Motor and Control System assembly, the first batch of 30,000 sets, for the next generation CR-V hybrid and Accord pure electric version. But we have a special request—please allow our engineers to study at your factory for three months, without touching the core processes, just studying the production flow and quality control system. We can pay high study fees.”

This was a ”technology absorption” strategy commonly used by Japanese companies—buying products while learning the manufacturing system.

Su Chen did not agree immediately this time. He thought for two minutes and said: ”Okay, but with restrictions: First, you can only visit the final assembly line; core processes such as front-end armature winding and magnetic steel assembly will not be open. Second, the daily visit time will not exceed two hours. Third, Honda needs to share part of its database on high-efficiency combustion control for internal combustion engines as an exchange.”

Watanabe’s eyes lit up. Honda’s i-VTEC technology and Atkinson cycle optimization were their signature skills, but that was fuel vehicle technology, and its value was declining in the era of electrification. Exchanging this for electric vehicle manufacturing experience was worth it.

”Deal.” Watanabe reached out with both hands to shake Su Chen’s hand. ”Mr. Su, I hope that one day, we can compete again on new technology.”