Global Courant 2023-04-11 22:05:18
Major electric vehicle (EV) battery makers in China have cut back their workforce because they are not getting enough orders to fully utilize their burgeoning production capacity.
The downward cycle in the EV battery sector started in part because the Chinese government stopped subsidizing EV buyers from the beginning of this year, analysts say. Rising raw material costs are also blamed for the sector’s slowdown.
Due to declining global demand for EVs, some Chinese battery makers are diversifying into the new energy storage sector, some industry experts say.
Most EV battery factories in Changzhou, Jiangsu province, have been downsizing in recent months TFCaijing.coma Guangzhou-based news website.
“Many electric battery manufacturers are struggling this year and are trying to reduce their workforce,” Wang Feng (pseudonym), a manager at a Changzhou-based recruitment agency, said in the report.
Wang says most EV battery makers hired more staff in early 2022, but they now have no vacancies.
The combined output of all EV battery manufacturers in Changzhou increased 140% last year to 170 billion yuan (US$24.7 billion). The hub for major EV battery manufacturers, including Contemporary Amperex Technology Co (CATC) and China Aviation Lithium Battery (CALB), produces about 20% of all EV batteries in China.
A worker nicknamed Li says that CALB is not allowing staff to work overtime because it is now receiving fewer orders. After earning about 7,000 to 8,000 yuan a month, he says, he can now earn only 4,000 to 5,000 yuan with fewer working hours.
TFCaijing.com says the number of employees at CALB’s factory in Changzhou has already fallen to 5,000 from its peak of 10,000. CALB has not yet responded to media inquiries.
According to the China Industry Technology Innovation Strategic Alliance for Electric Vehicles, Chinese companies produced 545.9 GWh of EV batteries in 2022, of which 294.6 GWh were used in cars and 68.1 GWh shipped abroad. It means that by 2022 an oversupply of about 180 GWh of EV batteries has been made.
Contemporary Amperex Technology Co (CATL) is the world’s largest manufacturer of lithium-ion batteries for e-vehicles. Photo: catl.com
Chinese companies produced 219.7 GWh of EV batteries in 2021, of which 154.5 GWh were actually used in cars.
At the end of last year, CATL had a 50.1% part in the Chinese electric battery markets, followed by BYD (24.2%), CALB (5.6%), Gotion High Tech (4.7%) and Eve Energy (2.4%). The rest was shared by smaller companies such as SVOLT Energy Technology Co.
Wang Zidong, deputy secretary general of the China Industry Technology Innovation Strategic Alliance for Electric Vehicles, predicted last November that demand for new energy cars in China would decline by 2023, resulting in an oversupply of EV batteries. He has been proven right by the latest car sales figures.
Slower growth in electric car sales
The China Passenger Car Association (CPCA) said Monday that a total of 1.31 million new energy vehicles were sold in the first quarter of this year, an increase of 22.4% compared to a year earlier. However, this growth was much slower than the 147% year-on-year increase in the same period of 2022.
China’s e-vehicle penetration rate rose to 34.2% last month from 28.1% a year earlier, meaning that about a third of new passenger car sales were electric or hybrid cars.
At the end of last month, major Chinese automakers, including BYD and Changan Automobile, held a combined 67% share of the domestic EV markets, while Tesla held 14%. Joint ventures of foreign and local companies, such as Audi-FAW, had a market share of 6%. Other smaller players include NIO, Li Auto and XPeng.
The year-over-year growth in global EV sales turned down from 107% in 2021 to 55% last year, according to Canalys, a technology market analyst firm.
“The spike in electricity prices in Europe is making the running costs of battery electric vehicles (BEV) less attractive, while some countries, such as the United Kingdom, Switzerland and Australia, are starting to introduce EV taxation,” said Pedro Pacheco, an analyst at Gartner. say in a research report.
“China ended EV subsidies in early 2023, and global charging infrastructure still has many coverage gaps and average quality of service is poor,” says Pacheco, listing other obstacles.
He predicts BEV sales will grow at a significantly slower pace this year or stall in some markets.
After Tesla launched its first EV in 2008, called the Roadster, China decided to boost its EV sector. In 2010, the Chinese government started providing subsidies to buyers of electric vehicles. The policy expired earlier this year.
Mo Ke, Founder and Principal Analyst at RealLi Research, say most EV battery makers are now trying to cut costs as the industry’s oversupply is likely to continue for the rest of this year. Mo says some of these companies will diversify into the new energy storage sector.
According to a research report published by AVIC Securities, global demand for batteries used in solar, wind and hydropower plants will grow from 50 GW in 2022 to 233 GW in 2025.
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Follow Jeff Pao on Twitter at @jeffpao3
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