The Chinese authorities have issued draft guidance on new rules for the domestic battery industry, which appear to be targeting to address the current overcapacity in the sector.
China's Ministry of Industry and Information Technology unveiled on Wednesday a new set of draft rules that lay out minimum energy density standards and stricter battery specifications, as well as advise that companies should refrain from the construction of new plants that "simply expand production capacity," Bloomberg reports.
The proposal and the suggestions in the draft document are not binding and are subject to feedback from the industry.
In 2023, China's production of lithium-ion batteries alone was enough to meet global demand for batteries, BloombergNEF estimated last month.
Globally, demand for lithium-ion batteries for the electric vehicle (EV) industry and stationary storage was estimated at around 950 gigawatt hours (GWh) in 2023. China's output was enough to meet that demand, while the world's battery manufacturing capacity was nearly 2,600 GWh last year, more than twice the demand.
As production capacity in China has boomed in recent years, the country has become a major exporter of batteries for the EV industry, and the U.S. and the EU are now trying to curb Chinese dominance in the supply chain by onshoring as much of the supply chain as possible, thanks to government incentives.
China is the world's largest EV battery exporter, with around 12% of its EV batteries being exported, the International Energy Agency (IEA) said in its Global EV Outlook 2024 report.
"Battery production in China is more integrated than in the United States or Europe, given China's leading role in upstream stages of the supply chain," the IEA said.
Currently, China accounts for almost 90% of global installed cathode active material manufacturing capacity and over 97% of anode active material manufacturing capacity, the agency noted.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More
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