After Chips, China to Pour Millions Into Solid-State Batteries

The Chinese government is planning to invest more than 6 billion yuan (about $830 million) into the research and development of solid-state batteries as part of efforts to maintain its lead in the electric vehicle market.

The development was first reported by Chinese state-backed newspaper China Daily, which claimed the funding was “the biggest amount of its kind.”

The government-led project will involve six firms that qualify for state funding, including battery-maker CATL and China’s biggest electric vehicle-seller BYD.

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Other recipients of the million-dollar funding will include Nio-backed WeLion New Energy Technology, and automakers FAW, SAIC and Geely, Reuters and China Daily reported.

The move is in line with China’s push to overtake Japan in the development of the next-generation battery tech.

In February, Beijing formed the China All-Solid-State Battery Collaborative Innovation Platform (CASIP) — a consortium of leading battery and EV makers to begin work on the development of solid-state batteries.

The consortium’s aim was to begin production of solid-state batteries by the end of the decade.

‘Next generation’ batteries

This is the second such announcement of Chinese state funding into emerging technologies this week. On Monday, a regulatory filing revealed Beijing had set up a $47.5 billion fund to boost the production of advanced chips.

Both EV batteries and semiconductors are key areas of interest for China as it battles a bitter trade and tech war with the United States and Europe. Both regions have imposed multiple sanctions on the flows of advanced chips to China, and the country’s lead in the electric vehicle market is now in focus as well.

China has already established itself as the most cost-competitive battery and EV producer in the world, on the back of early and heavy investment in domestic supply chains. Beijing likely views solid-state batteries as the next avenue of focus, in order to maintain that lead.

Solid-state batteries hold the promise of improved safety, a longer lifespan and faster charging compared with conventional lithium-ion batteries that use flammable liquid electrolytes. But mass adoption remains some way off due to constraints in raw material availability, intricate manufacturing processes and the resultant high costs.

Many auto industry officials and analysts expect solid-state batteries will determine the competitiveness of the next-generation EVs. Several global automakers are also looking into the technology, hoping to break China’s dominance in the current EV battery technologies.

Focus on ‘all-solid-state batteries’

According to China Daily, Beijing aims to use the massive fund to drive between seven to nine projects, which will explore the development of various types of solid-state batteries.

The projects will look at the production of “polymer-based and sulfide-based batteries, as well as other suitable technologies,” China Daily said, citing sources.

The report quoted industry analysts as saying that the fund will likely trigger a “catfish effect” and propel other players in China’s battery industry to catch up with their competition. “It is expected to further drive a trillion yuan-level market,” China Daily said.

With the fund, China aims to begin the mass production of “all-solid-state batteries in small quantities in 2027”, it added.

Competition with Toyota, Tesla

That deadline is key considering Japanese carmaker announced in June last year that it made a breakthrough in developing solid-state batteries, adding that it aimed to begin their mass-production by 2027.

That announcement came less then a month after the Japanese government announced $841 million worth of subsidies for Toyota, including for the development of solid-state batteries.

In April, Japan’s Nissan also claimed it was ready to mass-produce EVs powered by solid-state batteries by 2029.

Meanwhile, for China’s EV giant BYD, which is also a battery-maker, the race to champion solid-state tech is not just against Japanese carmakers, but also its US rival Tesla.

While the Elon Musk-led carmaker has not yet announced any plans to develop solid-state batteries, it remains BYD’s biggest rival in the electric vehicle market.

In the final quarter of last year, BYD overtook Tesla to become the world’s biggest EV-seller. That feat remained short-lived, however, as Tesla gained backed its crown in the first quarter of this year.

An ability to mass produce EVs powered by solid-state batteries could allow BYD to steal a march over Tesla.

‘Solid-state batteries unsafe’

Such a win may take a long while, however. Global battery-leader CATL’s boss has previously warned that producing and using solid state batteries is going to be an uphill task.

In an interview with the Financial Times earlier this year, CATL chief Robin Zeng said he “fully supported” solid-state batteries, but years of research had showed they were unsafe and unsustainable.

“CATL already spent 10 years,” to make solid-state batteries viable, Zeng, a PhD physicist, said.

The tech was years away from commercialisation, he added, saying his company was instead focusing on developing sodium-ion batteries and condensed-matter batteries.

Vishakha Saxena, with Reuters

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]