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Quality Concerns Under Output Expansion

According to a set of data released by Gaogong Lithium Power Grid, the number of domestic power lithium battery companies has rapidly surged from around 50 to nearly 150 since 2014. Huge subsidies have led to a surge of hot money, with new companies coming from real estate, steel mills, and even the firefighting industry.

The capital and technology of new companies are mixed, and under the halo of a 300% growth rate in the battery industry, safety issues, risks of low-end overcapacity, and product plagiarism and imitation are rampant, causing headaches for downstream users and governments. According to statistics from Gaogong Industry Research Institute, there have been over 20 safety accidents of new energy vehicles in China this year, and industry standards are urgent.

Since the frequent introduction of policies this year, it can be seen that the government is determined to rectify the battery industry. Professionals from all walks of life also believe that the "2017 Norms and Conditions" aims to prevent vicious competition in the industry by raising the threshold, with a good starting point.

But raising production so high in a short period of time may not necessarily achieve this goal, "Liu Yanlong, Secretary General of China's Chemical and Physical Power Industry Association, told Time Weekly. He has three concerns: firstly, currently only a few companies meet the standards, which may lead to oversupply or even monopoly; Secondly, in order to meet the standards, the company will inevitably focus on expanding production, which may lead to a surge in battery production in the future, resulting in explosive overcapacity, and the expansion of production may not necessarily guarantee quality; Thirdly, the current threshold is too high, which will exclude many small and medium-sized companies with innovative capabilities, which is not beneficial for China's battery technology breakthroughs.

Liu Yanlong explained that there is currently only a demand of 20 billion to 22 billion watts in the Chinese market. If more than 100 battery companies expand their production to 8 billion watts according to national standards, it may cause serious overcapacity in production. Moreover, there is a logical problem in controlling product quality by requiring production, as technology and resources may not necessarily keep up with the expansion of production. Expansion may not necessarily have good quality, and it may also be due to waste production. At the same time, many innovative battery companies nowadays have a very small scale, and without policy support, it is difficult to establish a firm foothold in the field.

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