China to invest $845 million on ramping up its advanced EV battery ambitions

China is set to invest approximately 6 billion yuan ($845 million) in the development of next-generation battery technology for electric vehicles (EVs), despite concerns about overcapacity and complaints from the US and Europe regarding its industrial policy.

Six companies, including the world’s largest battery manufacturer CATL, as well as major automakers BYD and Geely, are eligible for government support to develop all-solid-state batteries (ASSBs), according to a report from the official China Daily newspaper on Wednesday. The report, citing unnamed industry sources, described the project as “unprecedented” and noted that it will be led by various government ministries and commissions, though specific details were not provided.

ASSBs represent an advancement over traditional lithium-ion batteries (LIBs) by using a solid, conductive electrolyte instead of a liquid or gel. This makes them safer and more powerful, as they are less prone to catching fire or exploding and offer higher energy density. However, ASSBs are currently not widely available due to their high cost and the challenges associated with mass production.

The announcement of Beijing’s investment comes amid tense trade relations with the West. Earlier this month, the Biden administration imposed significant new tariffs on Chinese EVs, advanced batteries, and other goods, aiming to protect US jobs and businesses from the issues arising from overproduction in China. The European Commission is also expected to make a decision on Chinese EV tariffs early next month, which could impact the export of hundreds of thousands of Chinese cars to Europe annually.

Despite these challenges, China continues to push forward with efforts to boost EV production as part of its strategy to counteract a property-induced economic slowdown and promote a low-carbon economy.

Global automakers and tech companies are also pursuing the development of ASSBs. In January, Toyota announced plans to launch vehicles with solid-state batteries in a few years. Samsung SDI has stated it will begin mass production of these batteries in 2027, and Volkswagen is collaborating with US startup QuantumScape to develop them.

Chinese companies are equally competitive in this space. In November, state-owned automaker GAC Group, based in Guangzhou, announced a breakthrough in solid-state battery technology and plans to release vehicles equipped with these batteries by 2026.