China’s electric vehicle battery manufacturing industry, after a period of overdevelopment, has encountered an alarming situation when the capacity exceeds three times the actual demand in 2025.

The South China Morning Post (SCMP) has just cited a report from the Economic Daily website of the State Council, which said that electric vehicle (EV) battery manufacturers in the country will produce about 3,000GWh (gigawatt hour) in 2025.

The above figure is six times higher than the estimated output for this year of 500GWh and three times the expected electric vehicle battery demand for 2025 from domestic electric car manufacturers.

According to the founder of electric vehicle news site CnEVpost, Phate Zhang, China’s electric vehicle industry has overcome the bottleneck that once hindered development. But battery companies may need to look beyond the domestic market to find more demand for their products as China already leads in battery technology.

Financial rating agency Fitch Ratings predicts that in 2022, Chinese consumers are expected to buy about 6 million battery-powered electric cars, more than double the figure of 2.99 million vehicles last year.

From 2023, electric car sales in China will account for about 35% of total car sales, which means 1 in 3 cars will be electric. At the same time, China’s electric vehicle market will maintain a steady annual growth rate of over 30% over the next few years.

“2023 will be a year in which the new energy vehicle industry continues to grow in China. With the entry of many new brands, next year will be a year of fierce competition,” said Yang Jing, director of Asia-Pacific corporate research at Fitch Ratings.

According to the medium and long-term forecast, the Chinese auto market will accelerate the progress of electrification. Consumer acceptance of new energy vehicles is growing, and automakers are constantly turning to electric vehicles.

However, the development of electric vehicle battery production in China is being overdeveloped, far beyond the natural development of the market and the needs of car manufacturers, leading to the alarming risk of battery overcapacity.

This forces battery manufacturers to find more customers who are electric vehicle manufacturers other than mainland China to cooperate if they do not want to stop production or worse, go bankrupt.

From data from the China Association of Automobile Manufacturers (CAAM), as of September 2022 there are 48 electric vehicle battery suppliers operating in China, a sharp decrease from more than 200 suppliers in 2017. Thus, a lot of small companies and startups have been wiped out in the past 4 years. In China today, the top 10 battery companies supply up to 94.4% to the domestic market. After a decade of efforts to improve production technology and techniques, a group of Chinese electric vehicle battery manufacturers have gained global market leadership.

Some major companies specializing in the production of electric vehicle batteries include Contemporary Amperex Technology Limited (CATL) – the world’s largest manufacturer of electric vehicle batteries, accounting for about a third of the global market share. This company has big customers including Tesla of the US, BMW of Germany… and has just collaborated with Vietnam’s VinFast.

In addition, other companies such as BYD, CALB, Gotian, Sunwoda and Svolt are also among the top 10 manufacturers of electric vehicle batteries in the world.

Chinese companies mainly produce two types of batteries widely used for electric vehicles: NCM batteries, which have lithium, nickel, cobalt, and manganese components; and LFP batteries, using lithium, iron, and phosphate.

Source: vietnamnet.vn