Asia Tech Wire (May 17) -- Chinese companies are becoming more rational in their investment in the lithium battery industry as they put the brakes on capacity expansion.
This year, many Chinese listed companies in the lithium battery industry chain have announced the termination of private placement, termination of project construction, and some have even begun to step on the brakes last year.
Some listed companies said, in view of significant changes in the new energy battery market situation, they decided to suspend the project construction, and wait for the best implementation opportunities.
Over the past few years, a large amount of capital rushed into the lithium battery industry, resulting in rapid expansion of production capacity.
However, with the slowdown in market demand, many investment projects have to choose to exit the market because they do not have a competitive advantage in technology, cost and other aspects.
In order to guide the healthy and orderly development of the lithium industry, China's Ministry of Industry and Information Technology (MIIT) released documents on May 8, guiding enterprises to reduce manufacturing projects that simply expand capacity, strengthen technological innovation, improve product quality and reduce production costs.
Industry sources believe that despite the challenges and fluctuations faced by the lithium industry in the short term, the positive trend in the long term remains unchanged.
"The future development trend of the lithium industry is still positive and favorable," said Li Pan, lithium analyst at Shanghai Ganglian's new energy division.
The analyst said, "With the continuous expansion of the new energy vehicle market and technological progress, the demand for power batteries will continue to grow."
"Meanwhile, policy guidance and standardization will drive the industry toward achieving high-quality development, avoiding disorderly competition, and the competitiveness and profitability of enterprises will be further enhanced," the person added.
The U.S. government recently announced tariffs on Chinese goods, including lithium batteries, as Chinese companies pause their lithium battery expansion.
The White House declared on Tuesday that it would impose tariffs on a range of Chinese goods, including semiconductors, electric vehicles, batteries, critical minerals, solar cells and others, which would affect $18 billion worth of goods.
According to the statement, the tariff rate on Chinese lithium batteries for electric vehicles will increase from 7.5% to 25% this year, while the tariff rate on lithium batteries for non-electric vehicles will increase from the current 7.5% to 25% in 2026.
In this regard, a number of industry insiders said that the policy has little practical impact on China's lithium battery industry chain at present.
A researcher said, "In the field of lithium batteries, the U.S. is currently dependent on China's lithium supply chain, can not do the volume themselves, and [it in the short term] doesn't have the ability to decouple itself from China's supply chain."
