(Bloomberg) -- BYD Co. is building what would become the world’s largest vehicle-battery factory next year in an effort by the Chinese electric-car maker to increase capacity and help revive earnings growth.
The plant will have an annual capacity of 24 gigawatt-hours when it is fully in use in 2019, enough to equip 1.2 million BYD Tang electric cars, according to the manufacturer backed by Warren Buffett. BYD invested 10 billion yuan ($1.5 billion) in the factory, which will help meet the company’s plan to boost its battery-making capability almost fourfold by 2020.
“We have reason to believe there will be further explosive development in the new-energy vehicle industry,” BYD Chairman Wang Chuanfu said at the facility in the Chinese outpost of Qinghai Wednesday. “There is huge potential in the lithium industry.”
China’s biggest manufacturer of new-energy vehicles has differentiated itself from other carmakers with its self-sufficiency in battery supplies and strength in battery-production, starting with its roots as a maker of mobile-phone batteries. BYD is also expanding production to sell batteries to other automakers to broaden its income sources after posting profit declines in five of the past 10 years, and plans to spin off the business.
The new plant, which Wang called the world’s largest power-battery factory, will cover 1 million square meters -- the size of about 140 soccer fields. It will be a fully automated facility, with about 100 robots handling logistics and manufacturing.
BYD will face competition for the crown. Tesla Inc. is expanding its gigafactory in Nevada to reach output of 35 GWh, according to its website. The company headed by Elon Musk also plans to build a gigafactory in China.
Rising ownership of electric-powered vehicles in China, where the government has thrown its weight behind the industry’s growth, has spurred the expansion of battery makers such as BYD and Contemporary Amperex Technology Co., whose rapid production ramp-up turned it into the nation’s biggest maker of battery cells for electric cars.
Like BYD, the company known as CATL is also building a 24-GWh factory. That’s scheduled for completion around 2020 and will help CATL expand its production capacity to 88 GWh by that time. BYD expects its total battery-making capacity to reach 28 GWh this year, and rise further to 48 GWh and 60 GWh in 2019 and 2020, said He Long, a vice president who heads the battery business.
Sherry Li, BYD’s marketing head, said the company is in talks with some European and U.S. carmakers to explore cooperation, which includes the possibility of setting up factories overseas.
The Chinese government is trying to consolidate the auto industry and establish a few world leaders among automakers and component suppliers. Regulators are also urging automakers to install batteries with higher energy density and longer range.
BYD expects to start mass-producing its more advanced NMC 811 batteries next year, He said.
The company looks set to be a strong contender to balance out CATL’s meteoric rise among battery-cell makers, according to Bloomberg NEF. Automakers often have relationships with more than one battery supplier to maintain their bargaining power and BYD’s quality and production capacity make it an obvious contender, BNEF said.
©2018 Bloomberg L.P.
With assistance from Editorial Board