Caixin
Jun 15, 2021 07:26 PM
BUSINESS & TECH

Shortages in Electric-Vehicle Battery Industry Play Havoc With Cell Prices, Executive Says

Production squeezes at battery manufacturers are underpinned by shortfalls of certain upstream materials. Photo: Svolt Energy
Production squeezes at battery manufacturers are underpinned by shortfalls of certain upstream materials. Photo: Svolt Energy

The ongoing supply squeeze in the electric-vehicle (EV) battery sector is making cell prices less predictable, the head of a major Chinese battery manufacturer has said, raising doubts about the EV industry’s short-term competitiveness with conventional fuel-powered vehicles.

Yang Hongxin, the president of SVolt Energy Technology Co. Ltd., said at an industry forum that only 60% to 80% of orders for high-quality batteries were currently being met amid supply shortfalls that took root last year due to a lack of certain raw materials.

The comments came as the global EV industry battles a twin scarcity of the batteries that power electric cars and the microchips that run their systems. Both issues owe much to production shortages due to the Covid-19 pandemic, though the latter is worsened by geopolitical tensions.

Despite the headwinds, some 217,000 new-energy vehicles (NEVs) were sold in China in May, a new record for the month, according to the China Association of Automobile Manufacturers (CAAM), an industry group. In China, NEVs include battery-electric vehicles, plug-in hybrids and those with hydrogen fuel cells.

The figure brings the total number of NEVs sold in China so far this year to 950,000, more than three times the amount sold in the equivalent period of 2020, when the Asian nation’s epidemic was at its height, according to CAAM.

SVolt is the former battery arm of Great Wall Motor Co. Ltd. (601633.SH), a Chinese automaker listed in Shanghai and Hong Kong. Its main shareholder is Wei Jianjun, who also holds a controlling stake in Great Wall.

Speaking at the China Auto Blue Book Forum on Saturday, Yang said anticipated reductions in battery prices could be affected by a rise in NEV sales since the second half of last year that has driven surging demand for upstream raw materials. He did not give details on how he expected prices to change.

Yang previously estimated that the price of EV cells would fall to 500 yuan ($78) per kilowatt-hour by 2025, a time when industry insiders expect battery-powered vehicles to be on a par with their gasoline-powered counterparts.

Production squeezes at battery manufacturers are underpinned by shortfalls of certain upstream materials, such as the chemicals used in electrolyte for lithium cells, according to research by China Merchants Securities Co. Ltd.

Chinese EV-makers have been feeling the effects of the shortages for months. In April, Nio Inc., the Asian nation’s nearest challenger to industry leader Tesla Inc., said on a quarterly earnings call that its production capacity had fallen to 7,500 vehicles per month due to the dearth of cells and semiconductors.

A senior executive Ningbo Ronbay New Energy Technology Co. Ltd. (688005.SH), a Shanghai-listed maker of cathode materials and precursors for lithium batteries, said that company would operate at full capacity to meet orders from downstream clients in the three months through June.

Contact reporter Matthew Walsh (matthewwalsh@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

Download our app to receive breaking news alerts and read the news on the go.

Get our weekly free Must-Read newsletter.

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code