July 29, 2021

VE: competitiveness compromised by lack of batteries, chips

Continued squeeze in supply of electric vehicle (EV) batteries and microchips makes pricing difficult to predict, chief executive of major Chinese battery maker said, raising doubts about short-term price competitiveness electric vehicles compared to those equipped with heat engines.

60% to 80% of high quality battery orders satisfied

At an industry forum, Yang Hongxin, president of SVolt Energy Technology said that only 60% to 80% of orders for high-quality batteries are currently filled, given the supply shortages that have emerged. last year due to a lack of certain raw materials.

SVolt is the former battery arm of Great Wall, a Chinese automobile manufacturer listed in Shanghai and Hong Kong. Its main shareholder is Wei Jianjun, who also owns a majority stake in Great Wall.

Global EV Industry Facing Two Shortages

These words emerge as the global electric vehicle industry faces a double shortage: shortages of batteries powering electric cars and electronic chips to run their systems.

These two problems owe a lot to the production shortages generated by the Covid-19 health crisis, but the phenomenon is however aggravated by geopolitical tensions, in particular between China and the United States. A large part of electronic chips is indeed produced on the Asian continent.

217,000 new energy vehicles sold in China in May

Despite the headwinds, some 217,000 new energy vehicles (NEVs) were sold in China in May, a new record, according to the China Association of Automobile Manufacturers (CAAM).

In China, NEVs include battery electric vehicles, plug-in hybrids and those with hydrogen fuel cells.

The figure brings the total number of NEVs sold in China so far this year to 950,000 units, more than three times the volume sold in the equivalent period of 2020, when the Asian nation’s epidemic was at its peak. peak, according to CAAM.

Decrease in production at battery manufacturers

Production cutbacks at battery manufacturers are due to shortages of certain upstream materials, such as chemicals used in lithium battery electrolytes, according to a study by China Merchants Securities. Chinese groups producing electric vehicles have been feeling the effects of the shortages for months. Last April, Tesla’s Chinese challenger Nio said in a quarterly earnings call that its production capacity had fallen to 7,500 vehicles per month due to the shortage of cells and semiconductors.

A senior executive at New Energy Technology, a maker of cathode materials and parts for manufacturing lithium batteries listed in Shanghai, said the company will operate at full capacity to meet orders from downstream customers for 3 months.

Reductions in battery prices called into question

Speaking at the China Auto Blue Book Forum last Saturday, Yang Hongxin said predicted battery price declines could now be undermined by increased sales of NEV since the second half of last year. A phenomenon that has led to an increase in the demand for upstream raw materials.

The leader did not provide further details on his projections for price developments. Yang Hongxin had previously estimated that the price of cells for EVs would drop to 500 yuan ($ 78 or € 65) per kilowatt hour by 2025, when – according to industry analysts – battery-powered vehicles will be competitive by compared to their thermal counterparts at the tariff level.

Our opinion, by leblogauto.com

While the price of electric vehicle sales is slowing their growth, this is unlikely to get better in the long term. The words of SVolt Energy Technology are also there to warn Western manufacturers of a probable rise in battery prices. Hence the urgency to curb dependence on China.

All the more so since the very restrictive European CO2 ceilings which now apply to automobile sales oblige manufacturers to sell electric vehicles to avoid the very heavy fines provided for in the event of an infringement …

Sources : SVOLT

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