China ramping up EV battery production to crush Tesla’s Gigafactory

EV battery

Tesla’s EV battery in the Nevada desert should be completed by 2018.  Bloomberg photo.

Expected Chinese EV battery production could supply 1.5 million Tesla Model 3s

A report by Bloomberg Intelligence says while Elon Musk works to finish building the world’s largest battery factory in Nevada, Chinese battery companies are planning additional factories that may far out-produce what Tesla Inc.’s Gigafactory will crank out.

Once completion of additional battery factories in China is complete, the facilities are expected to produce over 120 gigawatt-hours a year by 2021.  That is enough to supply batteries for 1.5 million Tesla Model S vehicles or 13.7 million Toyota Prius Plug-in Hybrids per year, according to Bloomberg New Energy Finance.

Alberta TogetherThe Tesla Gigafactory is expected to output 35 gigawatt-hours of battery cells annually when the facility is completed in 2018.

Demand for lithium-ion batteries has steadily increased thanks to smartphones, laptops and other personal electronics.  With the proliferation of electric vehicles and power companies installing giant storage systems to facilitate wind and solar power, the demand for the batteries is expected to skyrocket.

Tesla says it built 84,000 vehicles in 2016 and has plans to produce 500,000 in 2018.

The Tesla Gigafactory is indeed the largest in the world, but the Chinese government has launched a program to increase the country’s dominant market share.

Currently, 55 per cent of global lithium-ion batteries are produced in China and 10 per cent in the US.  By 2021, China is expected to see its share of the market grow to 65 per cent.

Bloomberg New Energy Finance analyst Colin McKerracher said “This is about industrial policy. The Chinese government sees lithium-ion batteries as a hugely important industry in the 2020s and beyond.”

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By 2021, global battery-making capacity is expected to more than double to 273 gigawatt-hours, up from about the current 103 gigawatt-hours.

“The Gigafactory announced three years ago sparked a global battery arms race,” Simon Moores, a managing director at Benchmark Mineral Intelligence told Bloomberg. “China is making a big push.”

Tesla is fighting back with plans to announce up to four new factories by the end of 2017, and is exploring at least one site in Shanghai.

According to Bloomberg, there are few, if any, individual battery factories in China that can match Tesla’s production scale.

Earlier this year, the Chinese government announced plans to consolidate its battery manufacturers, including Amperex Technology Ltd., Tianjin Lishen Battery Joint-Stock Co and dozens of others.

The initiative is part of the government’s plan to add five million electric vehicles by 2020 to help reduce GHGs and clear the smoggy cities.  As well, the Chinese government is hoping to create a domestic market for battery manufacturers.

“The Chinese government wants to encourage the creation of a domestic market to create a large enough base and gain a foothold,” said Logan Goldie-Scot, a Bloomberg New Energy Finance analyst. “From there, they can expand and sell globally.”

Ted Morton

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