China’s EV Battery Industry Faces “Brutal” Consolidation

Only a handful of the dozens Chinese companies that make batteries for electric cars are likely to remain after the government ends subsidies for them in 2020, The Nikkei reports.

China has invested more than $10 billion to develop a domestic battery industry, spawning hundreds of battery makers, according to the newspaper. But the spending began to phase out in 2017, slashing the number of manufacturers by one-third to 90 in a single year.

A research at Mizuho Bank estimates only about 20 domestic producers are likely to survive after the subsidies disappear.

Today, 70% of the world’s largest-volume battery producers are Chinese, The Nikkei points out. But it says companies that survive the industry’s “brutal” consolidation will be those that can supplement their manufacturing know-how with the inhouse ability to innovate their products.

Even big players lack such capability today, the report suggests. It notes that OptimumNano Energy, China’s third-largest battery maker, suspended production in July after government subsidies shrank.

China’s top producer, Contemporary Amperex Technology Ltd., also appears to be struggling, the newspaper adds. It cites CATL Chairman Robin Zeng’s recent question to employees: “Can pigs lifted by a typhoon really fly?”