context: Overcapacity is an endemic problem in the power battery industry and new energy vehicle industry it supplies. The centre is pushing the sector to consolidate with declining subsidies, investment restrictions (in draft),mandatory battery recycling, and stricter requirements for power density and safety after a number of fires. But with long-term state backing guaranteed, investors and local government are still supporting expansion.

Ministry of Industry and IT issued revised ‘Regulations for lithium-ion battery industry’ and ‘Provisional measures on industry norms for lithium-ion battery industry’. The new regulations require battery makers that apply for official certification to have used at least 50 percent of their production capacity in the previous year. Battery makers outside of the top ten have 55 percent of total production capacity but only 13 percent of the market, industry insiders told Shanghai Securities News, noting most of that capacity is for low-quality products.

The regulations

  • require firms with in-house production, sales and service capabilities to invest at least three percent of turnover on R&D
  • simplify component requirements (for anodes, cathodes, membranes and electrolytes), giving firms more autonomy to select innovation strategies
    • the document’s clear and strict standards will help improve new energy vehicle power battery quality, says an analyst
  • call for restricting projects that only focus on expanding production