Chinese Battery Makers Surge Amid Solid-State Technology Hopes

Chinese battery manufacturers are experiencing a surge in stock prices, fueled by optimism surrounding the commercialization of solid-state battery technology. This innovation, which replaces some liquid components with solids, is seen as pivotal for the future of electric vehicle (EV) batteries. As interest grows, investors are increasingly optimistic about the timeline for bringing these advanced batteries to market.

One notable beneficiary of this trend is Contemporary Amperex Technology Co. Ltd., the world’s largest EV battery producer. Its shares, which are listed in Hong Kong, are on track for their highest closing price since their initial public offering in May. Analysts from JPMorgan & Chase Co. attribute this rise to a broader “thematic trade” on solid-state optimism, driven by positive forecasts from equipment manufacturers and a rise in energy-storage investments within China.

In addition to Contemporary Amperex, other companies are also making significant strides. Wuxi Lead Intelligent Equipment Co. has seen its stock climb approximately 25% following its announcement of a “complete” production process for solid-state technology. Meanwhile, Gotion High-Tech Co. plans to begin “semi-solid” mass production next year, according to analysts from Citigroup Inc., who cited recent earnings presentations. Furthermore, EVE Energy Co. opened a solid-state research facility in Chengdu earlier this month, offering further clarity on the potential timeline for this long-anticipated technology.

Max Reid, head of battery technology and costs at consultancy CRU Group, expressed increased confidence in the commercialization of solid-state batteries. He noted, “What’s changed is Chinese companies committing to production lines,” predicting that mass production could commence in the late 2020s. Solid-state batteries are expected to deliver higher energy density and enhanced safety compared to traditional lithium-ion batteries, although their development has been hampered by cost and technical challenges.

According to data tracked by BloombergNEF, less than 10% of global solid-state capacity is currently operational, with most production coming from Chinese manufacturers focused on semi-solid battery technologies. These batteries are commonly used in sectors that require high energy density, such as medical devices and small aircraft, where cost sensitivity is lower.

In contrast to China’s advancements, South Korea’s SK On Co. aims for mass production of solid-state batteries by 2029, while QuantumScape Corp. in the United States reported a 20% increase in its shares after showcasing a solid-state cell at a major auto show in Munich last week.

Despite these promising developments, many projects are struggling to adhere to timelines set earlier this decade. Transitioning from pilot plants to full-scale production demands new facilities for raw material processing, electrode fabrication, and cell assembly. Notably, solid-state battery plants in China require around 8% more capital expenditure than traditional lithium-ion facilities, and the supply chains for this emerging technology remain underdeveloped, as highlighted by BloombergNEF’s recent analysis.

As excitement builds around solid-state battery technology, it is essential to remain cautious. Recent fluctuations in battery stocks underscore the sensitivity of investors to technological advancements and market developments. The road to widespread adoption of solid-state batteries may still have hurdles to overcome, but the momentum within the industry suggests a promising future for electric vehicles and energy storage solutions.