Government support may boost China's battery film sector

BEIJING — The Chinese government is putting a huge amount of support behind the development of the lithium battery industry, and film manufacturers are optimistic about prospects for the sector.

More than 200 industry representatives gathered to discuss the development of the lithium-ion battery market in China and abroad at the 2015 Market and Technical Development Conference of Lithium-ion Battery & Separator Film and LIB Key Materials Industry Chain Development Forum 2015, held in Beijing in early April.

Speakers noted that lithium ion batteries are becoming popular around the world, including Japan, South Korea, the United States and Europe. Following this global trend, China's demand for lithium batteries is also growing, especially since 2011, according to speaker Wu Yao Gen chief engineer at FSPG Hi-Tech Co. Ltd., one of the top three producers of lithium-ion battery separator film in China.

The biggest increase in demand has remained in the consumer electronic goods category (for example smart phones and portable chargers), he said, although the demand for electric transportation tools such as electric bikes is growing at a markedly increased rate as well.

Following the increased demand, there also has been an increase in production. According to data he provided from AskCIData, the production of lithium batteries in China was more than 5.28 million units in 2014, an increase of 10.9 percent from 2013. According to CCM, the industry will have expanded 400 percent by 2017.

Chinese government subsidies for new energy vehicles remain a large part of the government support, although earlier this year the amount of subsidies decreased by 10 percent in order to extend the program.

Wu Yao Gen said that from 2009 to 2015, as production of lithium battery separator film steadily increased in China, the price of separator films steadily dropped. But he said there is a heavy dependence on imported films, with Japanese, South Korean and American manufacturers making up an overwhelming majority of the global separator film market.

Wu highlighted some of the reasons for the dependence on imported separator films. Many employees at foreign separator film companies have prior experience working in the battery industry and understand battery companies' needs. He added that domestic companies also invest less in equipment and have lower processing capacity, resulting in a production process that is hard to control.

Raw materials also make a difference. Domestic Chinese companies do not have a stable source of resin, he said, whereas some foreign companies like Celgard LLC have their own independent testing labs and so can produce their own resin. Celgard, a leading manufacturer of polyethylene and polypropylene separator films, is a unit of Charlotte, N.C.-based Polypore International Inc. — but Japan's Asahi Kasei Corp. recently signed an agreement to buy Polypore's Celgard unit for $3.2 billion. See story here.

More challenges for Chinese suppliers

Another issue is that there are barriers to understanding the local manufacturers. Battery manufacturers don't often switch suppliers, changing them only two to three years, so he said it would take a longer time for domestic manufacturers to gain respect.

Domestically produced separator films have several areas that need improvement, he said. These include improving production yield, improving heat resistance, developing thinner films, improving absorption rate of the films and developing new types of separator films.

Several speakers talked about the growth of the electric car industry and how it is impacting growth of the lithium battery industry.

China's worsening pollution has prompted the government to strengthen their regulations regarding cars and car manufacturing said Xu Yan Hua from the China Association of Automobile Manufacturers Association. He said that the main challenges that the car industry faced would be meeting China's ever increasingly stringent demands.

“From purely individual perspective we should be optimistic but the 2020 targets are a bit challenging to achieve,” he said. Those 2020 targets include increasing the number of new energy (including electric) cars sold and produced to 5 million, reducing the average fuel consumption of all vehicles to 5 liters per 100km and reaching an average fuel consumption of 4.5 liters per 100 km for all energy efficient, hybrid, and electric vehicles.

But while the government support is there, consumers identified several problems facing new energy car market in China, said Xu. In a 2013 consumer survey on China's new energy cars, respondents said that while the technology is relatively mature and reliable, there are issues with battery safety and charging the battery is considered expensive and not convenient. The driving range for new energy cars is seen as too short and the charging time too long. Still, over half of those surveyed said they would be willing to buy a new energy car.

Lu Shi, head of the Guolian Car Battery Research Institute, analyzed the numbers of patents applied for in China related to lithium batteries and battery film as well as research published on the topic in China. Last year there was a jump in patent applications for lithium batteries and separator film. Out of a total 1,581 patents applied for in the lithium battery and battery film category last year, 669 were found effective. BYD, Ningde Xinnengyuan Technology Co. Ltd., Amperex Technology Ltd., Tsinghua University, and BAK were among the top five applicants for patents in this category.

For PE separator film, 186 out of 419 patents were found to be effective. Of the 415 patents applied for PP  separator films, Atop New Materials dominates the patent applications with 21 effective applications, while other top patent holders have no more than five. Lu also found that there has been 42 percent more papers published on lithium batteries in China last year than in the past 10 years.

The figures spell out a good future for the lithium battery market in China. Attendees at the conference were busy networking and making contacts that will ensure more partnerships and growth. But the manufacturers of lithium batteries and lithium battery separator film have their work cut out for them as they try to capture the growing interest in their products.

Foshan Jinhui Hi-Tech's Wu Yao Gen said that following the sales growth of electric cars in China, “the market for lithium ion batteries is entering a golden age.”