Guoxuan High-Tech, China’s no. 3 battery maker: auto recovery needed by May

Source: Automotive News China

China’s electric-vehicle makers need to return production to normal levels in the next few months to prevent a bigger hit to supply chains already pressured by an unprecedented plunge in auto sales, according to the country’s third-biggest producer of batteries for the industry.

Guoxuan High-Tech Co.’s operations have been negatively affected by the coronavirus crisis, Chairman Li Zhen said in an interview, as the outbreak paralyzed swathes of Asia’s top economy and triggered a record fall in light-vehicle sales. The company makes rechargeable batteries for Chinese carmakers including SAIC Motor Corp. and Chery Automobile Co.

“It’s still manageable at the moment, and will be OK if customers such as car companies can quickly resume production this month,” he said. “But if that is not improved between March and May, it will bring relatively greater challenges to our sales goals.”

China’s purchases of new energy vehicles collapsed 78 percent in February, in line with the drop in the wider auto market, as customers stayed away from showrooms. Coronavirus-related disruptions added to earlier stresses in the sector, including a reduction in government subsidies.

Li said he’s optimistic given the health emergency in China appears to be easing and there’s prospects for government stimulus. But Guoxuan, like many of manufacturers across the country, is waiting for demand to return amid a slow resumption of activity.

New energy transport is a strategic priority for Beijing and may get support as President Xi Jinping tries to reboot the economy. BloombergNEF expects battery demand to grow somewhere between 6 percent and 15 percent this year, down from an earlier forecast for a 19 percent expansion, it said last month.

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