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China's CATL to start mass output of M3P batteries this year

CATL's logo seen at an exhibition

SHANGHAI (Reuters) -Chinese battery giant CATL plans to start this year the mass production and delivery of batteries based on a new materials technology, M3P, which will perform better and cost less than nickel and cobalt-based ones, its chairman said.

M3P batteries will have greater energy density and perform better than lithium-ion phosphate batteries, a market CATL dominates. They will also be cheaper than nickel and cobalt-based batteries, Zeng Yuqun told an online investor briefing on Friday.

CATL disclosed in August last year that it was working on M3P technology, which can enable an electric vehicle to run 700 km (430 miles) per charge when combined with CATL's next generation of battery-pack technology.

Zeng said CATL was finding it difficult to come up with a technologically feasible and competitive product based on solid state batteries, a competing technology that is also being researched by Japan's Toyota Motor Corp and Germany's Volkswagen.

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CATL, whose clients include Tesla, Volkswagen, BMW and Ford, is the world's biggest battery maker accounting for more than a third of the sales of batteries for electric vehicles (EV) worldwide.

The company's dominance attracted attention from Chinese President Xi Jinping, who said earlier this month he was both "pleased and concerned" over its rise.

Since last year, a number of CATL's customers have complained about its market position, with some opting for alternative suppliers or choosing to develop their own batteries, Reuters has reported.

Asked on Friday how these rival batteries could affect CATL's market share, Zeng said that he expected them to have more impact on second-tier and third-tier battery-makers and that CATL would remain the primary battery supplier.

He said new energy vehicle sales in China have been recently affected by inventory clearance efforts by combustion engine car makers ahead of a change in emissions rules, but he remained confident about the overall EV sales outlook.

More than 40 brands have slashed vehicle prices in China in recent months, deepening a price war ignited by Tesla's first salvo in January.

(Reporting by Zhang Yan and Brenda Goh; Editing by Barbara Lewis and Muralikumar Anantharaman)