China Sets New Guidelines for Lithium-Ion Battery Production

China's Ministry of Industry and Information Technology has released a draft guideline aimed at reshaping the lithium-ion battery sector. The new regulations are designed to curb the expansion of mere production capacity and instead push companies towards technological innovation, enhanced quality, and reduced production costs. Under the new guideline, companies will be required to allocate at least 3% of their revenue to research and development (R&D) and technological improvements.

This initiative comes in response to the industry's structural issues, highlighted by a capacity utilization rate that fell to around 40% last year, with predictions suggesting it may decrease further to 35% by 2025. According to the China Automotive Power Battery Industry Innovation Alliance, despite these challenges, the production capacity is expected to surpass 3,000 GWh by 2025.

Market experts, including Mo Ke, founder and president of the consultancy firm RealLi, suggest that the guideline will eliminate low-end battery cells and promote a shift towards higher-quality production. This shift is seen as a crucial step in enhancing the competitiveness of China’s new-energy vehicles in the global market.