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Sluggish EV sales drag down power battery industry

Many of China’s power Li-ion battery manufacturers are seeing little investment and few orders, according to Investor Journal that cited a Shenzhen-based battery technology company president.

The president, surnamed Dai, said his company is paying attention to the big cake offered by Li-ion batteries, but will not rush to invest blindly.

In Dai’s opinion, Li-ion battery makers in China fall into two categories. The first type are companies with a good read on the market that really want to make a profit. But they have underestimated technology and overestimated market acceptance.

The other type are speculators, whose only aim is to take advantage of the new opportunity to ask the government and banks for land and loans.

“Few traditional Li-ion battery manufacturers have made strides in tapping the power batteries business, because they are fully aware of the technology setbacks and the enormous R&D funds that they have to invest,” said Dai.

An anonymous engineer from a battery company in Jiangsu Province said though his company claims to be a Li-ion power battery manufacturer, it has yet to start producing the batteries. “Li-ion battery project requires considerable upfront investment and R&D input. But the market demand is weak so far. If there is no government subsidy, it is hard to survive in the business,” he said.

The China BAK Battery, Inc., a NASDAQ listed Li-ion battery maker, reported a 30 percent revenue decline in the second quarter of 2012. “BAK is a typical battery maker that has been dragged down by the sluggish power battery demand. The company’s battery business was going well until 2008 when it decided to set up a battery project in Tianjin. The project has brought heavy financial pressure on its shoulder,” said an industry insider who required anonymity.

Analysts have agreed that the major cause of the current situation is the unopened low-reach market. If there is little demand, it is impossible for battery makers to mass produce Li-ion battery products and thus their costs cannot be lowered. The high cost is unbearable to most of the middle and small battery enterprises.

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