Investors swarming lithium battery market in China...

Investors swarming lithium battery market in China
wantchinatimes.com

• 2015-08-13

A worker checks lithium batteries as they charge at a company in Yichun, Jiangxi province, May 8, 2014. (File photo/Xinhua)

On Aug. 10, Sichuan Chengfei Integration Technology and Der International Home Furnishing simultaneously unveiled their lithium-battery investment projects, boosting the number of such projects by listed companies in China to 17 so far this year, calling for total investment of 50 billion yuan (US$7.8 billion).

Guangzhou's 21st Century Business Herald attributed the investment craze to the robust sales of new-energy cars, whose output topped 98,900 units in the first seven months this year, triple the amount one year earlier. In 2014, output and sales of such cars soared 3.5 times and 3.2 times, respectively.

The skyrocketing sales of new-energy cars has overstrained the supply of lithium batteries, prompting China Aviation Lithium Battery, a subsidiary of Chengfei, to invest 1.45 billion yuan (US$227 million) to build a new lithium-battery production line with annual capacity of 1.5 billion watts. The company further plans to team up with the Jintan district government of the city of Changzhou in Jiangsu province in carrying out a 12.5 billion yuan (US$2 billion) lithium-ion battery project, according to the paper.

Attracted by the handsome potential, Der International Home Furnishing has decided to raise 2 billion yuan (US$313 million) in funds for investing in grapheme super lithium batteries and their materials.

Prior to this, BYD announced a plan on June 3 to raise 15 billion yuan (US$2.3 billion) via private share placement, 6 billion yuan (US$940 million) of which will be sunk in a lithium-ion battery project, the largest such project so far this year.

Data released by the Ministry of Industry and Information Technology show that sales in the lithium-ion battery industry in China jumped 17.4% in the first half, when its total profits soared 72.8%.

Huatai Securities forecasts in a recent report that lithium-battery capacity in the nation will expand at an annual clip of 100% in the coming three years.

Industry insiders, though, warn of overcapacity resulting from frenzied investments, a risk intensified by the custom design for lithium-battery production equipment, set according to the specific needs of downstream clients, according to the 21st Century Business Herald.