China&#;s lithium battery industry is seeing rapid growth amid sky-high demand from the electric car and renewable energy industries. However, a reliance on imports for key materials leaves the industry vulnerable to price fluctuations and imbalanced development within the domestic supply chain. The government is now calling on local authorities and industry players to address issues such as the high cost of raw materials, quality inconsistencies, and lopsided supply and demand.
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China has been the single largest consumer of lithium-ion (or li-ion) batteries for five consecutive years. It is also the world&#;s undisputed king of battery production, with China&#;s largest battery manufacturer Contemporary Amperex Technology Co. (CATL) alone holding around 35 percent of the global li-ion battery market in the first quarter of . In the field of solar battery modules, Chinese companies hold around 71 percent global market share.
The country&#;s booming new energy vehicle (NEV) industry and decarbonization-driven solar industry are contributing to China&#;s insatiable appetite for batteries. However, despite China&#;s dominant position in manufacturing, the country remains reliant on imports for key materials and components for their production, which makes the industry vulnerable to price fluctuations and supply chain crunches.
In addition, issues within the domestic industry, such as lopsided supply chain development, an imbalance in supply and demand, local protectionism, and quality inconsistencies are hampering the healthy growth of the industry. These inefficiencies are likely to exacerbate battery supply shortages for industries such as NEVs and solar, which may in turn slow the growth of these industries.
To promptly address these issues, China&#;s Ministry of Industry and Information Technology (MIIT) and State Administration of Market Regulation (SAMR) released a notice with a range of suggestions for improving the domestic li-ion market. These range from increasing capacity in fields that are lacking to improving quality control supervision to encouraging collaboration between industry players.
Below, we look at the growth of China&#;s li-ion battery industry and the current hindrances to the industry&#;s growth and discuss how the government hopes to overcome current difficulties.
Growth of China&#;s lithium-ion battery industry
Despite the current headwinds, China&#;s lithium-ion battery industry has experienced multiple years of double-digit growth. In , the total output of li-ion batteries reached a new high of 324GWh, an increase 106 percent from the previous year, according to data from the MIIT. is set to reach a new record, with total output in the first half of the year already at 280GWh, an increase of 150 percent from the first half of .
Of the total output in H1 , the output of energy storage li-ion batteries reached 32GWh, while the installed capacity of power batteries for NEVs reached approximately 110GWh.
According to the China Lithium-Ion Battery Industry Development Index White Paper published by the China Electronic Information Industry Development (CCID) Group, a research institute under the MIIT, China&#;s power battery production capacity accounts for about 70 percent of the world&#;s total and Chinese companies account for six of the world&#;s top 10 lithium-ion battery manufacturers.
China lithium imports and rising lithium carbonate prices
China has a wealth of natural resources, including many of the raw materials needed for the production of li-ion batteries, such as lithium, cobalt, and nickel. However, in many cases, China&#;s strength in these industries lies not in the number of resources and scale of extraction, but in its processing and refining capabilities. China held only around 7.9 percent of the world&#;s lithium reserves at the end of , according to BP&#;s Statistical Review of World Energy . However, the country is estimated to have 60 percent of the world&#;s capacity for processing and refining.
For this reason &#; and the extremely high demand for batteries &#; China is still reliant on imports for many of these materials. China&#;s main sources of lithium carbonate are countries such as Australia, Chile, and Argentina.
Reliance on imports makes China&#;s battery industry vulnerable to price fluctuations of raw materials, and due to the high demand and production shortfall, prices of certain materials are sky-high.
The price of battery-grade lithium carbonate, one of the core ingredients for making li-ion batteries, reached a record high of RMB 597,500 (US$89,019) per ton on November 11, according to data from Shanghai Ganglian E-Commerce Holdings, a provider of steel information services. The average price in November at the time of writing this article (November 28) was RMB 580,676 (US$86,513) per ton, a year-on-year growth rate of 201.08 percent.
Rebalancing the li-ion supply chain
On November 10, , the MIIT and the SAMR released a notice on achieving coordinated and stable development of the lithium-ion battery industry supply chain. The notice is not a concrete policy document, but rather a call to various government departments and industry groups to take measures to address the issues discussed above.
Specifically, the notice seeks to address five key issues in the li-ion supply chain, which we will discuss below.
Factors such as explosive downstream demand and industrial growth, the complex and ever-changing pandemic situation, and increasing economic downward pressure are contributing to a recent imbalance between supply and demand and excessive price fluctuations of some intermediate products and materials in the domestic lithium-ion battery industry supply chain. In addition, the connection between upstream and downstream industries is inadequate, and hoarding and unfair competition has been seen in some areas. Production capacity has blindly expanded in some fields, while low-quality and low-price competition has occasionally taken place.
&#; Notice on achieving the coordinated and stable development of the lithium-ion battery industry supply chain
Rebalancing regional development of li-ion battery production
To tackle the issue of imbalanced development of different links in the supply chain, the notice calls on the responsible regional departments to identify the development of li-ion manufacturing, as well as the development of the &#;primary&#; materials (such as positive and negative electrode materials, separators, and electrolytes, among others) and &#;secondary&#; materials (such as battery-grade lithium carbonate and lithium hydroxide) within their jurisdiction. The purpose of this is to identify which areas of the supply chain may be underdeveloped and which areas are in oversupply and then seek to rebalance the development through targeted policy.
Specifically, the notice calls on developing the industry in accordance with the various 14th Five-Year Plans related to manufacturing (manufacturing development plans for the period from to ) and the Guiding Opinions on Promoting the Development of the Energy Electronics Industry (the &#;Guiding Opinions&#;). The Guiding Opinions stress the importance of &#;coordinated development&#; of industry chains and ensuring a balance of supply and demand.
The notice also proposes for government departments to then help battery companies set realistic development goals based upon the current industry trends and local industry conditions to ensure resources and efforts are placed in the right areas of the industry. Measures include providing sufficient investment in R&D and innovation, providing sufficient supporting funds, expanding the scale of production for different materials and components in accordance with demand, optimizing regional industry structure and avoiding &#;low-level simultaneous development&#; of different fields, so as to prevent inefficient and uncoordinated growth.
Balancing supply and demand to ensure the stability of the industry supply chain
To ensure stable development of supply and demand, the notice calls on government departments to promote communication and collaboration between upstream and downstream companies in the li-ion battery industry. This includes producers of li-ion batteries (battery cells and packs), primary and secondary materials companies, companies in upstream resources, such as lithium nickel and cobalt, li-ion battery recycling companies, lithium battery terminal application companies, and companies engaged in system integration, channel distribution, logistics, and transportation of li-ion battery products.
It also calls on companies in upstream and downstream fields to cultivate more in-depth and sustainable relationships by signing long-term contracts for orders, engaging in technical cooperation, and helping to stabilize the market by setting realistic expectations, clarifying product quantities and prices, and guaranteeing the supply of products.
The notice also states that the industry needs to adhere to the 14th Five Year Plan for Green Development (&#;Green Development FYP&#;) when it comes to battery recycling. The Green Development FYP calls for improving laws and regulations for battery recycling and &#;encouraging upstream and downstream companies in the industry chain to jointly build shared recycling channels and build a number of centralized recycling service outlets&#;
Finally, local market regulators are also tasked with increasing supervision and strictly investigating and addressing issues of product hoarding, price gouging, and unfair competition in the upstream and downstream li-ion battery industry in order to &#;maintain market order&#;.
Improving industry data monitoring
A major component of the effort to improve the li-ion battery industry&#;s development is improving data management. As such, the notice states that the relevant government departments are required to strictly implement the &#;Statistical Survey System for the Electronic Information Manufacturing Industry&#;. This system tracks the main indicators of key electronic information manufacturing companies, including the main financial and economic indicators, the production capacity of main products, sales, inventory, and more. It was formulated in order for stakeholders to get an accurate and timely understanding of the various industries in order to effectively implement industry management, ensure the safety and stability of industrial supply chains, and provide a basis for decision-making by leaders and government authorities.
The notice clearly states that the relevant government departments are responsible for using these industry statistics, better monitoring the production capacity and investment in the li-ion battery industry, and identifying issues such as abnormal price fluctuations, production capacity shortages, and over-investment.
Strengthening supervision and inspection to ensure the supply of high-quality li-ion battery products
In order to improve the overall quality of the li-ion battery industry, the notice calls on regulators to increase monitoring and take steps to ensure that companies and their products adhere to industry standards and regulations.
Local industry and information technology authorities and market supervision departments guide lithium battery enterprises to carry out technological innovation, strengthen quality control, optimize process flows, obtain quality certification, and improve testing capabilities of li-ion battery products. It also encourages companies to implement quality management systems, such as ISO (international quality management standards) and Six Sigma (techniques of improving business processes), to improve the one-time inspection pass rate of products and ensure product reliability, stability, and consistency.
Local market supervision departments are also tasked with carrying out product quality supervision and inspection of lithium battery manufacturers and organizing for the manufacturers to carry out product quality self-inspection and disclose the results of the self-inspection.
The local authorities are also encouraged to investigate and punish companies whose products do not meet mandatory national quality standards and violate regulations such as the Product Quality Law and mandatory national standards. Mandatory national standards include the Safety Requirements for Lithium-Ion Batteries and Batteries [No. GB ] and Safety Technical Specifications for Lithium-Ion Batteries and Batteries for Stationary Electronic Equipment [No. GB ].
The notice also states that SAMR and MIIT may organize for inspection and testing agencies to carry out spot checks on the quality of li-ion battery products.
Improving the environment to allow industry growth
The last section of the notice focuses on breaking down behavior and phenomena that may be hindering the coordinated development of the li-ion battery industry in China. This includes tackling issues such as local protectionism, unfair competitive practices among market players, and the adverse impact of COVID-19 measures on companies.
The notice doesn&#;t offer concrete ways to overcome these issues, but calls on local government departments to jointly build &#;an efficient, standardized, fair, and fully open national unified market for li-ion batteries&#;.
In relation to COVID-19 prevention measures, the notice states that COVID-19 prevention measures must be in coordination with industry development and that local government departments are required to help companies implement COVID-19 prevention and response measures in order to handle issues that may arise in the production, transportation, sales, and other phases of the production process in the event of a COVID-19 outbreak.
Will China be able to stabilize the lithium-ion battery market?
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The notice on improving China&#;s li-ion battery market is only the latest of a series of efforts to achieve coordinated development of supply chains for key industries. On August 24, , the MIIT, along with SAMR and the National Energy Administration (NEA) issued a similar notice calling for the coordinated development of the photovoltaic industry supply chain. This shows the government is keen to address shortcomings within domestic supply chains.
However, there are other factors that may help to cool the battery market besides direct government intervention in the industry. One is a decrease in demand for batteries from other industries, such as solar and NEVs. For instance, continued increases in the cost of NEVs may in turn reduce demand, and thereby ease demand for lithium. In the longer term, a reduction in the Chinese government&#;s NEV subsidies would further cool demand for car batteries.
In addition to the proposals mentioned in this notice, China is and will continue to make efforts to increase the extraction of key minerals, both in China and abroad, in order to meet domestic demand. A combination of increasing the supply of key minerals and keeping demand reasonable will be key for stabilizing the market and ensuring sustainable industry growth.
In addition to power batteries, energy storage batteries, 3C batteries, etc. also occupy a certain proportion in the lithium battery structure, but currently power batteries have occupied an absolute dominant position in the consumption structure. This article sorts out the top 10 lithium battery cell companies in China, with a production capacity of over 890GWh.
Total market value: .723 billion RMB
Company website: https://www.catl.com/
CATL was established in . Through years of operation, CATL has built a leading R&D and manufacturing base for power batteries and energy storage systems in China. CATL has the core technology of the whole industry chain of materials, batteries, battery systems, and battery recycling, and is committed to providing solutions for global green energy applications and energy storage through advanced battery technology.
As one of the top 10 lithium battery cell companies in China, CATL has put into production a cell production capacity of 307GWh. According to the company's plan, the cell production capacity will reach 670GWh by . The main production bases are Ningde, Fujian, Liyang, Jiangsu, Xining, Qinghai, Zhaoqing, Guangdong, and Chengdu/Yibin, Sichuan. In addition, battery production lines in Xiamen, Fujian, Gui'an New District, Guizhou, and Yichun, Jiangxi are also under construction.
Registered capital: 500 million RMB
Company website: http://www.fdbatt.com
FinDreams Battery is a wholly-owned subsidiary of BYD. It has large battery R&D, design and production capabilities. Its products include power batteries, energy storage batteries, and 3C batteries. It is one of the top 10 lithium battery cell companies in China. It also has many scientific research achievements in new battery materials. BYD is the world's leading manufacturer of secondary rechargeable batteries.
In the field of power batteries, the Group has developed a highly safe lithium iron phosphate battery-blade battery, which can better solve the pain points of market safety and accelerate the return of lifepo4 batteries to the mainstream track of power batteries . At present, FinDreams Battery has more than 20 subsidiaries producing lithium batteries. By the end of , the production capacity of batteries has reached 200GWh.
According to the company's plan, the production capacity of batteries will reach 600GWh by . The main production bases include Guangdong Shenzhen/Huizhou, Chongqing, Qinghai Xining, Hunan Changsha, Hubei Xiangyang, Shandong Jinan, Guiyang Guizhou, Zhejiang Shaoxing, and other planning projects under construction.
Registered capital: 1. billion RMB
Company website: http://www.calb-tech.com/
CALB was established in and is currently headquartered in Jintan City, Jiangsu Province. It will be listed in Hong Kong in October . CALB is one of the fastest growing power battery companies in the world. By the end of , CALB in lithium battery cell companies in China has put into production a cell production capacity of 89GWh.
According to the company's plan, the cell production capacity will reach 500GWh by . The main cell production bases are Jintan, Jiangsu, Xiamen, Fujian, Wuhan, Hubei, Chengdu, Sichuan, and Hefei, Anhui. In addition, there are projects under construction in Jiangmen, Guangdong, and Pengshan, Sichuan, as well as planned projects in Guangzhou, Guangdong, and Heilongjiang.
Total market value: 71.932 billion RMB
Company website: https://www.gotion.com.cn/
GOTION HIGH-TECH was established in May and is headquartered in Baohe District, Hefei City. GOTION HIGH-TECH is the earliest companies in China's power battery industry to enter the capital market. GOTION HIGH-TECH has new energy vehicle power lithium batteries, energy storage, power transmission and distribution equipment and other business sectors, and has established an independent and mature R&D, procurement, production, and sales system.
By the end of , as a company of the top 10 lithium battery cell companies in China, GOTION HIGH-TECH has put into production a cell production capacity of 67GWh. According to the company's plan, by , China's cell production capacity will reach 200GWh, and the production capacity of overseas production bases will reach 100GWh. The main production bases of batteries are Hefei/Tongcheng/Lujiang, Anhui, Nanjing, Jiangsu, Qingdao, Shandong, and Yichun, Jiangxi. In addition, there are projects under construction in Tangshan, Hebei, Liuzhou, Guangxi, and Chuzhou, Anhui.
Total market value: 93.83 trillion KRW
Company website: https://www.lgensol.com/en/
LG Energy Solution's China production base is located in Nanjing, Jiangsu Province, including Qixia District/Nanjing Economic and Technological Development Zone and Jiangning Binjiang Development Zone. Lithium battery products include energy storage, power, and 3C.
By the end of , LG Energy Solution has put into production battery cell production capacity of 63GWh. According to the company's plan, as one of lithium battery cell companies in China, the production capacity of battery cells in China will reach 110GWh by .
Total market value: 202.601 billion RMB
Company website: https://www.evebattery.com/
EVE was established in and is headquartered in Huizhou City, Guangdong Province. After 21 years of rapid development, EVE has become a globally competitive lithium battery platform company. The main business of EVE is the R&D, production and sales of consumer batteries (including lithium primary batteries, small lithium-ion batteries, cylindrical batteries) and power batteries (including new energy vehicle batteries and their battery systems, and energy storage batteries). Also, EVE is one of the top 10 lithium battery cell companies in China.
As of the end of , EVE has put into production a cell production capacity of 49GWh. According to the company's plan, by , China's planned cell production capacity will reach 300GWh. The main production bases are Huizhou in Guangdong, Jingmen in Hubei, and Qidong in Jiangsu. In addition, there are projects under construction and planning in Golmud in Qinghai, Chengdu in Sichuan, Shenyang in Liaoning, and Chengdu in Sichuan.
Registered capital: . million RMB
Company website: http://www.svolt.cn
Originating from Great Wall Motors, SVOLT is a new energy high-tech company specializing in R&D and manufacturing of automotive power batteries and energy storage systems. SVOLT's main products include batteries, modules, battery packs and energy storage battery systems.
By the end of , SVOLT in top 10 lithium battery cell companies has put into production a lithium battery cell production capacity of 40GWh, according to the company's plan. By , China's planned cell production capacity will reach 250GWh. The main production bases of SVOLT are Jintan/Yancheng/Nanjing in Jiangsu, Suining in Sichuan, Shangrao in Jiangxi, and Ma'anshan in Anhui. In addition, there are projects under construction and planning in Huzhou, Zhejiang, and Chengdu, Sichuan.
Total market value: 47.434 billion RMB
Company website: http://www.sunwoda.com
Founded in , Sunwoda is mainly engaged in the R&D, design, production and sales of lithium battery cells and modules. It is one of the top 10 lithium battery cell companies in China. The company's traditional core business is consumer batteries. In terms of power batteries, the company's power battery shipments in the first half of totaled 3.95Gwh, a year-on-year increase of 631.92%. The installed capacity of power batteries in will be the fastest growing among all the top ten companies on the list.
By the end of , Sunwoda has put into production cell production capacity of 30GWh. According to the company's plan, China's cell production capacity will reach 150GWh by . The main production bases are Shenzhen, Guangdong and Zaozhuang, Shandong. In addition, there are projects under construction in Nanchang, Jiangxi, and Yiwu, Zhejiang.
Registered capital: 1. billion RMB
Company website: http://www.calb-tech.com/
Founded in , REPT is the first company that Tsingshan Industrial has combined its own rich mineral resources to invest in the field of new energy. REPT is mainly engaged in the R&D, production and sales of power/energy storage lithium-ion battery cells to system applications, it is one of the top 10 lithium battery cell companies in China. The main products are square aluminum shell blade lithium iron phosphate batteries and ternary batteries, which are oriented to the fields of passenger cars, commercial vehicles, construction machinery and energy storage.
By the end of , REPT has put into production a cell production capacity of 26GWh. According to the company's plan, by , China's planned cell production capacity will reach 180GWh. At present, the main production base of REPT is in Wenzhou, Zhejiang. In addition, there are projects under construction and planning in Liuzhou, Guangxi, Jiashan, Zhejiang, and Foshan, Guangdong.
Total market value: 29.955 billion RMB
Company website: http://www.farasisenergy.com.cn
Farasis was established in . Farasis is one of the first companies in China to realize the mass production of ternary pouch power batteries, and has ranked first in the country in terms of installed capacity of ternary soft pack power batteries for four consecutive years. The main customers of Farasis battery include GAC, Daimler, FAW, Geely, etc.
As of the end of , Farasis has put into production a cell production capacity of 21.8GWh. According to the company's plan, by , China's planned cell production capacity will reach 130GWh. Farasis currently has major production bases in Ganzhou, Jiangxi and Yancheng, Jiangsu. In addition, projects such as Anning in Yunnan and Wuhu in Anhui are also under construction.
According to the plan of top 10 lithium battery companies in China, the total production capacity of lithium battery cells of these ten companies will reach GWh by , an increase of nearly 250% from , with an average annual growth rate of 51%. The next few years will still be the peak period for the development of the power battery industry, but we should also be alert to the problem of overcapacity caused by excessive industrial development.
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