Lithium-ion batteries: BYD to quadruple battery production by 2020


Chinese electric vehicle (EV) and battery manufacturer BYD is building what could become the world’s largest automotive battery factory in 2019, in an effort to increase capacity and improve earnings.

The new plant, located in in Xining (part of the western province of Qinghai), is scheduled to be at full capacity of 24GWh by 2019. This capacity is enough to power 1.2M BYD Tang electric cars, according to the Chinese company. BYD has invested RMB10Bn (US$1.5Bn) in the factory, which will help the company to meet its target of boosting battery production capability almost fourfold by 2020.

BYD has also agreed with the local government of Xining to construct another RMB9Bn (US$1.35Bn) battery factory with a targeted annual capacity of around 2GWh. The company’s two existing plants in Guangdong Province have a combined capacity of 16GWh and total capacity is expected to increase to 60GWh by 2020 with the addition of the two new facilities.

In 2017, BYD also announced plans to supply auto batteries to other car companies, and began exploring a possible spin-off of the battery business to have more operating and financial independence.

Roskill view: Amid quasi-synchronized falling share prices since 2017 from eleven of the largest Chinese automakers, BYD has pledged to increase battery capacity while spinning off its car manufacturing business in a push to replicate buoyant share prices of rival battery maker CATL.

While BYD has, so far, focused on providing batteries for its own cars, the Chinese company has also committed to begin supplying batteries to other automakers. This follows similar moves made by CATL but also, those of Panasonic, which announced in December 2017 that it would reduce exposure to Tesla’s business by creating a new battery partnership with Toyota.

Several divestment projects related to lithium-ion battery production indicate the difficulties automakers face when executing both automotive manufacturing and lithium-ion battery cell manufacturing. There are inherent differences in the procurement process of battery raw materials compared to the traditional automaking route, with a long and multi-stage supply chain for the lithium-ion battery industry adding complexity and significant investment for automakers. Latest market trends suggest this could be the case with BYD and its potential spin-off, as well as with Nissan and its AESC divestment efforts. On the other hand, Tesla is pushing to operate its Gigafactory at full capacity, while Daimler is also producing its own battery packs through its wholly-owned German subsidiary Deutsche ACCUmotive.

Overall, high-profile lithium-ion battery makers are expected to triple production capacity in the next 2-3 years, spinning off complex integrated businesses, focusing on the production of automotive batteries, and closing long-term agreements with miners who supply key battery raw materials. They will also look to increase the nickel content in cathodes, as the most realistic solution to increasing energy density, and aim to power EVs through longer distances.

To discuss the lithium-ion battery industry with Roskill, contact Jose Lazuen: or Nessa Zhang: