China puts electric-vehicle eggs in Battery Basket

China puts electric-vehicle eggs in Battery Basket

China pushes ahead with a campaign to be the leader in electric vehicles’ main component. China may not build the electric car of the future. But it sure wants to corner the market for its batteries

There are signs Beijing is stepping back from its hard sales target for electric vehicles—two million in 2020—which is a good thing, as the number looks increasingly fanciful. More time would be welcome both by foreign auto makers, which have hesitated to go full-throttle on the country’s green ambitions, and China’s own makers, which can use it to build up technology rather than rush to market with inferior products.

Yet China is continuing with a campaign to be the market leader in electric vehicles’ main component, cost and technology: the batteries. The Ministry of Industry and Information Technology earlier this month set aggressive production-capacity targets for the next three years, and recently approved newer types of batteries for its subsidy programme.


The question is whether the country can make the technological shift. China has 40 % of the world market for batteries based on lithium and iron, but the world has moved on toward more-sophisticated nickel-based technology whose higher energy density allows cars to travel farther.

Beijing last year essentially shut out global market leaders like South Korea’s Samsung SDI and Japan’s Panasonic, leaving Chinese makers to push the technological envelope alone. Contemporary Amperex Technology—just six years old but already China’s No. 2, with more than 20% of the domestic market—could show the way, but so far it is the country’s only battery maker to venture into different types of batteries at international standards. The private company counts BMW as a customer.

Battery 2The newer technologies are far more exacting to produce. Chinese companies have struggled with one complex part of the lithium battery—the separator, the highest-margin component, which prevents short circuits. Its battery makers still import the upgraded versions of these and its share of the global separator market remains small.

Beijing wants car makers to more than double the capacity of their batteries in the next four years while cutting production costs. It may have to throttle back on its ambitions again or fail to achieve them.

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