Main China battery makers to actively expand production capacities

First-tier China-based lithium battery makers, in view of booming demand for batteries used in electric vehicles and energy storage systems, will actively expand production capacities in China, according to industry sources.

Contemporary Amperex Technology (CATL) will invest CNY14.0 billion (US$1.9 billion) to set up a battery factory in northern China, while Gotion High-Tech will invest CNY11.5 billion to set up a ternary lithium battery factory with annual production capacity of 20GWh in central China and LFP (lithium iron phosphate) battery one with that of 10GWh in southern China, the sources said.

Gotion has completed a battery factory with annual production capacity of 20GWh in eastern China and another with that of 10GWh in central China, a cathode material factory with that of 200,000 tons and a lithium carbonate factory with that of 120,000 tons in central China so far in 2022, the sources noted.

Sunwoda Electric will invest CNY21.3 billion to set up a battery factory in eastern China and invest CNY12.0 billion to set up another in central China. EVE Energy will invest CNY10.0 billion to set up a battery factory with annual production capacity of 40GWh in northeastern China. Gangfeng Lithium will set up a battery factory with annual production capacity of 30GWh in central China.

According to the China Association of Automobile Manufacturers, batteries newly installed in new energy cars in China in September 2022 had a total energy storage capacity of 31.6GWh, hiking 101.6% on year, while that of 193.7GWh in January-September soared 110.5% on year.

According to China-based chuneng.bjx.com.cn, 59 China-based battery makers have so far planned to expand production capacities in China and abroad to an annual total of 5,171.4GWh over the next few years and 4,630.4GWh of which is for power batteries used in new energy cars.

Based on the estimation that 1GWh of batteries can be installed in 20,000 new energy cars, the planned total annual production capacity of 4,630.4GWh can be installed in 92.6 million new energy cars a year. However, International Energy Agency forecasts global sales of 11.430 million new energy cars in 2025 and of 22.425 million in 2030, implying that China-based makers' planned expansion of production capacities will far exceed global demand.

China-based battery analysts do not much worry about the oversupply, however. Because battery makers usually overestimate future demand for their planned expansion of production capacities and expansion in the first phase will be realized, while actual expansion in the subsequent phases will depend on utilization of expanded production capacities and market demand then, they explained.

According to president Chi Hai-sheng for China-based THE Solar Tech, the development of China's battery manufacturing industry is likely to lead to insufficient total production capacity for batteries of superior quality but overcapacity for batteries of inferior quality.

Source: Industry, compiled by Digitimes Asia, October 2022