Chinese electric vehicle (EV) battery suppliers can't keep up with record foreign and domestic demand, and the shortfall may reach a record 30% to 40% this year, despite efforts to increase output, industry insiders said. Sales are being driven by soaring global demand for Chinese EV batteries as the country becomes greener. Meanwhile, companies are facing disruption of supplies of raw materials form abroad. The shortage has also prompted some car companies to place orders months ahead of time. Amid the massive shortfall, EV battery factories across the country are running at full capacity.
A source with an EV battery producer in Jiangsu province told the Global Times that the company has an annual capacity of around 400 million batteries, and the production lines are running at full capacity. “A new production line with a capacity of 300 million batteries will open in the fourth quarter,” the source said. A lithium battery maker in Xinyu, Jiangxi province, which supplies batteries for the Tesla Model 3 and BYD Han, was running at full capacity 28 days a month. EVE Energy, a Guangdong-based lithium battery supplier, said that its production lines are also operating at full capacity, but demand for its batteries is still expected to outstrip supply for nearly a year. Behind the shortage is record demand for EV batteries in both the domestic and overseas markets.
Over the past four months, China has installed about 31.6 gigawatt-hours (gWh) of power batteries, up 241% year-on-year. Industrial data provider SMM predicted that the demand for lithium-ion batteries in the new energy market will reach 102 gWh this year, up 60% year-on-year. EV makers are seeking long-term supply contracts. Contemporary Amperex Technology Co (CATL), a leading EV battery maker, recently announced that it had signed an agreement with Tesla to supply lithium-ion power batteries from January 2022 to December 2025. Tesla was CATL's third-largest customer by installed capacity in 2020, and by the first quarter of 2021, the U.S. company became its largest customer. SNE Research predicted that global demand for power batteries for EVs will reach 406 gWh by 2023, compared with an estimated 335 gWh of supply, a shortfall of about 18%. By 2025, the gap will increase to about 40%, SNE said. China contributed 511 gWh of the 804 gWh of global lithium battery production capacity in 2020, the Global Times reports.
