Two months after being acquired by Gree Electric Appliances Inc., Yinlong New Energy Co., Ltd. opened its lithium titanate material and battery manufacturing base on October 21 in Hebei.
Since Yinlong has acquired Guangtong Auto and Zhongbo Auto several years ago, Gree has successfully expanded its foothold into the NEV industry.
Gree is neither the first outsider to go for NEV building, nor the first to invest on batteries.
Open reports show that BMW, Ford and JLR will jointly establish EV battery plants. Tesla’s $5 billion gigafactory is also ready to go into operation.
The same thing has happened on the Chinese side. Just for the last year, Lifan Stock raised ¥5.2 billion ($800 million) by private placement to invest on programs to produce 6,000 GWh lithium cells and 300,000 sets of electric engines and control systems. BAIC BJEV has invested ¥3 billion in Changzhou for a 5 GWh power battery program.
Why are many NEV manufacturers investing in battery production?
Recently, MIIT has released its third list on power battery enterprises which meet industry standards. For any NEV model to get subsidies, it must use batteries made by the 25 local enterprises on the list. It rules out the widely used Japanese and Korean batteries. All models at sale must finish replacing their batteries by the end of July 1, 2017. Newly developed models must choose those brands on the list since this July.
Up until now, four lists released by MIIT have included 57 battery providers, but some battery giants like Samsung and LG are missing.
Since local EV products rely heavily on subsidies to survive and compete, the battery regulation has shocked the industry.
JAC has temporarily halted IEV6S production recently since Samsung SDI battery it uses is not on MIIT’s list.
BAIC BJEV will not use Korean lithium batteries on its EX200.
SAIC will also replace U.S.-made A123 batteries and LG batteries.
For domestic players which already use foreign-made batteries, they have to postpone the launching of new products or risk products being ousted from the market.
Dropping subsidies have also prompted NEV enterprises to focus more on cost control, to say, battery cost, since it takes about half of all cost of an EV.
The booming NEV industry heated the battery industry in recent years. But of all 170 power battery providers nationwide, only some 20 enterprises can enter the mainstream market. Some NEV enterprises still have to wait for their batteries.
So, mergers and acquisitions and establishing JVs have become more popular.
Wanxiang Group acquired A123 and BAIC joined hands with SK to produce lithium batteries.
It’s already a bit late for Chinese NEV players to lay out in battery manufacturing since the heat of NEV industry is gradually disappearing.
But better late than never.