A leading Chinese electric vehicle (EV) battery manufacturer, Shenzhen OptimumNano, has been forced to slash production to just 20% of its capacity amid a financial crisis.
OptimumNano, reportedly China’s third largest EV battery maker as of 2016, said it had taken the drastic move because it has a glut of batteries in stock that it cannot sell.
China’s state Xinhua News Agency suggested that OptimumNano’s crisis stemmed from strategic mistakes— including a “radical expansion” of lithium battery production capacity in the hope it would benefit from subsidies paid by the government to encourage EV sales.
However, Xinhua said the government adjusted its subsidy policy for new energy vehicles at the end of 2016— making payouts only for EVs that had been on the road and clocked up 30,000 kilometres or more. The move was to discourage EV manufacturers from claiming subsidies for cars that they had yet to sell. But this meant EV makers cut down on battery orders— which in turn hit OptimumNano’s business plans.
Meanwhile, the company has built up debts with dozens of raw material suppliers and is in arrears for loans to banks and other financial institutions.
The company’s parent, Shaanxi J&R Optimum Energy, said in an announcement to the Shenzhen Stock Exchange the battery maker’s debts as of April 2018 amounted to nearly CNY2 billion ($315 million).
According to Xinhua, the J&R group’s overall battery production capacity has been reduced to one-fifth of its capacity before the Chinese New Year.
However, OptimumNano is now aiming to sell some of its batteries for use in other applications including energy storage, Xinhua said.
BBB learned OptimumNano has recently signed two separate battery storage contracts with Japan’s battery R&D company CONNEXX SYSTEMS and Brazil’s ELECTRO CELL— which would expand OptimumNano’s storage batteries business.
