China’s third largest battery maker says auto recovery needed by May

China’s electric carmakers need to return production to normal levels in the next few months to prevent a bigger hit to supply chains already pressured by an unprecedented plunge in auto sales, according to the country’s third-biggest producer of batteries for the sector.

File photo (REUTERS)
File photo

Guoxuan High-Tech Co.’s operations have been negatively affected by the coronavirus crisis, Chairman Li Zhen said in a phone interview, as the outbreak paralyzed swathes of Asia’s top economy and triggered a record fall in auto sales. The firm makes rechargeable batteries for Chinese carmakers including SAIC Motor Corp. and Chery Automobile Co.

“It’s still manageable at the moment, and will be OK if customers such as car companies can quickly resume production this month," he said. “But if that is not improved between March and May, it will bring relatively greater challenges to our sales goals."

Also check these Vehicles

Find more Cars
Mercedes Benz Amg Eqs (HT Auto photo)
107.8 kWh | Electric | Automatic | 529 Km
₹ 2.45 Cr* **Ex-showroom price
Add to compare
Check latest offers
Byd Seal (HT Auto photo)
₹ 55 - 60 Lakhs* *Expected Price
View Details
Byd E6 (HT Auto photo)
₹ 29.15 Lakhs* **Ex-showroom price
Add to compare
Check latest offers
Byd Atto 3 (HT Auto photo)
₹ 33.90 Lakhs* **Ex-showroom price
Add to compare
Check latest offers
Hyundai Kona Electric (HT Auto photo)
₹ 23.79 - 23.98 Lakhs* *Ex-showroom price
Add to compare
Check latest offers
Odysse Electric Odysse Electric Hawk (HT Auto photo)
₹ 73,999 - 1.04 Lakhs* *Ex-showroom price
Add to compare
Check latest offers

China’s purchases of new energy vehicles collapsed 78% in February, in line with the drop in the wider auto market, as customers stayed away from showrooms. Coronavirus-related disruptions added to earlier stresses in the sector, including a reduction in government subsidies.

Li said he’s optimistic given the health emergency in China appears to be easing and there’s prospects for government stimulus. But Guoxuan, like many of manufacturers across the country, is waiting for demand to return amid a slow resumption of activity.

New energy transport is a strategic priority for Beijing and may get support as President Xi Jinping tries to reboot the economy. BloombergNEF expects battery demand to grow somewhere between 6% and 15% this year, down from an earlier forecast for a 19% expansion, it said last month.

More Challenges

Guoxuan is a modest rival to Chinese battery giants Contemporary Amperex Technology Co. and BYD Co. Those two have a combined 68% market share, compared with 5% for Guoxuan, according to BloombergNEF.

Aside from the recent crisis, challenges for the industry include reduced subsidies for EVs and keeping up with advances in battery technology, Li said March 6. “The industry also requires higher capital expenditure, which further spurs consolidation and intensifies concentration among the top players."

Li’s firm can become a top 5 global battery supplier, he said, and aims to expand capacity nearly fivefold to 100 gigawatt hours to feed expansion both within China and overseas. CATL has 55 GWh of capacity.

The battery maker is in talks with four to five international carmakers for potential cooperation on batteries, Steven Cai, head of Gotion High Tech Engineering R&D, a department of Guoxuan, said in the same interview. Guoxuan held wide-ranging discussions with Volkswagen AG as the German car giant looks to expand its EV fleet, it said in January.

Also from the interview:

  • There’s “a lot of room" for cheaper batteries known as LFP to grow, Li said. Carmakers are shifting back to LFP against a backdrop of easing subsidies and fierce competition in the market. Guoxuan says it is the second-biggest supplier of LFP units, which contain no cobalt or nickel, in China.
  • Guoxuan is seeking to raise the energy density of LFP batteries at module level and boost their range.
  • Cobalt is a critical material given a possible global shortage in coming years. The firm has a joint venture with BYD and Metallurgical Corp. of China to secure nickel and cobalt, and is seeking stable supply of lithium to lower battery costs.
  • Guoxuan considers the energy storage business an area of opportunity.

First Published Date: 12 Mar 2020, 10:22 AM IST
Shopping Bag Shop Now
70% OFF
VENO Portable High Power 2 in 1 Car Vacuum Cleaner | USB Rechargeable Wireless Handheld Car Vacuum Cleaner Traveling, Camping Reusable and Sustainable (2 in 1 Vacuum Cleaner)
Rs. 899 Rs. 2,999
5% OFF
Godrej aer O – Hanging Car Air Freshener | Car Accessories | Cool Aqua (7.5g)
Rs. 94 Rs. 99
68% OFF
PUNZONE Car Body Scratch Remover - Scratch Repair Polishing Wax Kit Sponge Body Compound Cream Wax, Car Body Compound Scratch Remover
Rs. 289 Rs. 898
65% OFF
Ambrane 38W Fast Car Charger with Dual Output, Quick Charge 3.0 and Power Delivery, Type-C & USB Port, Wide Compatibility for Smart Phones (RAAP C38 A, Black)
Rs. 349 Rs. 999

Please provide your details to get Personalized Offers on

Choose city
+91 | Choose city
Choose city
Choose city
By clicking "View Offers" you Agree to our Terms and Privacy Policy

Dear Name

Please verify your mobile number.

+91 | Choose city
Couldn't verify the OTP.
It's either expired or it's incorrect.