Benefit from the policy, the alternative energy fuel vehicles market in China embrace its positive development, which boosts demand for high-end power lithium batteries. It is predicted that the sales of lithium batteries will reach 59.6 billion yuan in 2016 and will increase to 200 billion yuan in 2020. This is such a huge market that will face great pressure and challenges in the future as the followings reporters predict.

 

The production and sales of alternative energy vehicles in China have been blooming throughout this year. It is predicted that the sales of alternative energy vehicles in China will reach 220,000 units in 2015, increasing by 162% from a year earlier, which leads to a demand of 12.5 GWhs of power lithium batteries, valuing $25 billion. However, the real capacity of China’s power lithium batteries only reaches five GWhs. And according to experts, the cumulative capacity of main suppliers of iron phosphate is 20,000 tons per year, three times less than the predicted demand. Under the stimulus of strong market demand, the investment on constructing power battery industry has been rising. Therefore, for those power battery enterprises with high capacity, 2016 will witness their flooding orders.

 

With the development of passenger vehicles, Lithium-NMC Batteries will take up larger market share in the future. Now, alternative energy vehicles mainly service in public sector in China, resulting in that LiFePO4 battery has dominated the market by accounting for about 60% to 70%. However, as passenger vehicle plays a main role in achieving the goal of selling five million units of alternative energy vehicles in 2020, Lithium-NMC batteries will embrace its promising development later.

 

But the explosive development of alternative energy vehicles also gives rise to the soaring number of scrapped batteries. Under this circumstance, the recycling and reuse of power batteries has become the top priority. Experts predict that the number of scrapped power battery in China will total 20,000 to 40,000 tons this year. And by 2020, that of both electric vehicles and hybrid vehicles will get to 170,000 tons which, if not recycled, can cause secondary pollution to the earth and worsen environment.

 

Regulators in China decide to curtail subsidize for developing alternative energy vehicles in the following years. Power batteries manufacturers in China haven’t gained enough technology to produce world-class power battery. They still have to invest a lot on the development of battery technology. Since the cost of producing power batteries accounts for half of that of an electric vehicle, the rising cost of developing batteries arising from decreasing government subsides will inflict a huge impact on the sales of alternative energy vehicles and further restrict their future.

 

The soaring sales of alternative energy vehicles drive the flooding investment on producing power batteries. However, owing to low technology threshold of producing batteries, the production capacity scarcity can turn into excess in a short time. Considering the rapid release of production capacity, the supply of power batteries in China’s market may surpass its demand in 2016.