China will need 1,000-1,200 GWh of power battery capacity by 2025, but the industry is already planning for 4,800 GWh of capacity, according to Changan's chairman.
The chairman of one of China's largest automakers has warned about oversupply in the power battery industry, at a time when the risk is a growing concern.
China's power battery industry is currently suffering from a serious overcapacity and the sector is bound to return to a rational state, Zhu Huarong, chairman of Changan Automobile, said today in a speech at an automotive forum in the southwestern Chinese city of Chongqing.
China will need 1,000-1,200 GWh of power battery capacity by 2025, but the industry is currently planning for 4,800 GWh of capacity, Zhu said.
In a speech at the 2022 China Auto Forum on November 9 last year, Zhu said the tight supply of chips and batteries facing China's new energy vehicle (NEV) industry had eased, but their expensive prices stand out, seriously affecting the profits and production of NEV companies.
High battery prices were caused by factors including raw material price increases, capital speculation, sellers' hesitation to sell and middlemen hoarding, Zhu said at the time.
Zhu's latest comments come as the issue of power battery overcapacity is a growing concern.
In a research note yesterday, Morgan Stanley analyst Jack Lu's team said that despite a near-term recovery in orders for China's battery industry, there will still be excess battery capacity and price competition is inevitable.
More and more second-tier battery suppliers are adopting increasingly aggressive pricing strategies, and CATL may have to do the same, Lu's team said.
Power battery overcapacity is an industry consensus, but in the first quarter, expansion of power and storage batteries continued, the official Economic Information Daily said in a report yesterday.
In 2022, China's power battery shipments were about 480 GWh, while the installed power battery capacity was only about 260.94 GWh. Even counting the export volume and the installed power battery capacity in the segment including construction machinery, the current inventory pressure of the whole industry is still high, the report said, citing industry research institute GGII.
In the next few years, the structural overcapacity of power batteries will intensify, and the industry will enter a deep reshuffling stage, with a degree of competition that may be more severe than imagined, the report said.
China's power battery installed capacity in April was 25.1 GWh, up 89.4 percent year-on-year and down 9.5 percent from March, according to data released by the China Automotive Battery Innovation Alliance (CABIA) on May 11.
The power battery production in April was 47.0 GWh, up 38.7 percent year-on-year and down 8.3 percent sequentially, according to the CABIA.
May's data is expected to be available in a few days.
China EV battery installations in Apr: BYD regains top spot over CATL in LFP market
