The future of the automotive market is set to become more competitive, and both vehicle manufacturers and power battery companies will need to adapt. From now on, some of our power battery firms must rethink and plan their strategies. This was a key point made by Liu Yanlong, the Secretary-General of the China Chemical and Physical Power Industry Association, during the “New Energy Industry Summit.†His remarks offered a unique perspective on the challenges facing the power battery sector today.
Liu’s call for “consideration and planning†suggests that weaker battery companies must take action—whether through mergers with larger firms, resource integration with upstream or downstream partners, or expanding into new market segments. The industry is at a critical juncture, and those who fail to adjust may find themselves left behind.
This warning comes amid a surge in production and overcapacity within the power battery sector. Despite rapid growth in electric vehicle (EV) sales, the installed capacity of batteries has not kept pace. In 2017, China’s new energy vehicle power battery installations reached 37.06 GWh, up 20% from 2016. However, this fell short of the 50–60 GWh projected earlier in the year. Meanwhile, EV production and sales hit nearly 800,000 units in 2017, a 50% increase from the previous year. This mismatch highlights the growing imbalance between supply and demand.
Experts like Prince Dong, director of the 201863 Testing Center, have expressed concerns about the severe overcapacity. With a total production capacity exceeding 200 GWh, the question remains: who will buy all these batteries? Liu Yanlong also pointed out that even though overall capacity is high, it may not meet evolving national policy standards. Rapid technological advancements could render current equipment obsolete, further intensifying the pressure on companies.
Amid this turbulence, some companies are taking a different approach. Jiangsu Tafel New Energy Technology, for example, has grown steadily without overexpanding. Its chairman, Long Yijin, emphasized a cautious, order-driven strategy that avoids the risks of blind expansion. Tafel focuses on technology development and product quality, ensuring sustainable growth rather than chasing short-term gains.
Market concentration is another key trend. In 2017, six major players accounted for over 63% of the total installed capacity. The number of battery companies has dropped significantly, from over 150 in 2016 to under 100 in 2017. This consolidation indicates that only the strongest will survive in the long run.
While China has made progress in battery technology, there are still gaps. Prince Dong stressed that power battery development must be comprehensive—not just focused on energy density. Safety, cost, and lifespan remain critical issues as subsidies phase out. Although Chinese batteries have improved significantly since 2012, achieving the 2020 targets will require continued innovation and effort.
Lin Yi of Beiqi Lightweight Technology Research Institute highlighted the importance of addressing consumer concerns, particularly range anxiety. While mileage is a top priority, it's not the only factor. Both automakers and battery companies must work together to improve efficiency and reliability.
In summary, the power battery industry is transitioning from rapid growth to a more sustainable, high-quality phase. Companies unable to meet market demands risk being eliminated. Industry associations play a vital role in guiding development, providing accurate data, and supporting informed decision-making. As the sector evolves, adaptability and strategic planning will determine success.
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