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Vision Group Plans to Invest RMB 1.05 Billion in Building a Li-Ion Battery Production Line

published: 2023-03-14 9:30

On March 7, Vision Group announced in a public notice that the company plans to sign a project investment agreement for a 5GWh Li-ion battery production line with the government of Jingshan. The total fixed asset investment of the project will come to around 1.05 billion yuan, the majority of which will be allocated to the setup of the production line. Jingshan is a county-level city in China’s Hubei Province.

The notice stated that the production line will be located at Yongxing Street, east of Panyan Road, south of Qingji Avenue, north of Jinying New Materials, and west of Daquan. The planned area for the proposed production line spans around 150 mu, of which the area for facility buildings accounts for around 100,000 square meters.

Vision Group plans to commence construction in this April and complete the construction of a factory that will take up 100,000 square meters by the end of this October. The factory actually integrates an existing facility building that occupies an area of 45,000 square meters with a new facility building that occupies an area of 55,000 square meters. However, the existing facility building will be further modified, and its area size is still pending on the actual measurement. After the completion of the factory, the company plans to finish equipment installation and calibration before the end of November and carry out pilot product. If the delivery of this project is delayed, then production will be deferred accordingly.

According to the agreement between the two parties, the government of Jingshan will provide subsidies for the setup of the site infrastructure, the development of the fixed assets, the upgrading of the existing facility building, the procurement of smart manufacturing equipment, and the interest payments related to the working capital. Vision group said the signing of this investment agreement is in line with the company's development strategy that aims to fully tap and enhance the company’s advantages in resources and operational capabilities. The new battery production line will enable the company to consolidate its resources and extend its influence over the Li-ion battery industry. All in all, the project is beneficial for the company’s long-term growth and sustainable development.

Earlier on February 13, Vision Group announced that it had signed an investment framework agreement with the government of Jingshan. Under the agreement, the company intends invest a total of about RMB 10.5 billion to set up projects for the manufacturing of Li-ion and Na-ion batteries. The amounts of annual production capacity for Li-ion and Na-ion batteries are set around 15GWh and 10GWh respectively.

A day after the announcement on the investment framework agreement (February 14), the Shenzhen Stock Exchange issued an inquiry letter to Vision Group, requesting the company to explain its core competitiveness in the market for battery technologies and the feasibility of its projects. Vision Group would have to provide an explanation that takes account of the supply-demand dynamics, the competition landscape of the battery industry, and the average profit level of its battery business.

According to publicly available information, Vision Group’s cash equivalents came to RMB 1.523 billion by the end of the third quarter of 2022. The Shenzhen Stock Exchange also requested the company to provide details on the specifications of its battery manufacturing projects, their development schedules, and their funding sources. Vision Group would also had to disclose the progress of the permitting of these projects, its view on the cycle of the battery market, its battery technologies, and the potential risks associated with its investments.

Regarding its Na-ion battery business, Vision Group actually revealed that it had yet to acquire the relevant technologies. However, the company controls a 30% stake in Pangu Naxiang, a R&D center that focuses on Na-ion batteries and is located in Shenzhen. Furthermore, Naxiang has laboratories for the development and testing of battery cells, battery modules, and electrolytes. It also has a production line for battery cells.

Presently, Pangu Naxiang already completed the qualification of its Na-ion battery system and its manufacturing process. Also, earlier this year, internal evaluation was completed for the materials and technological path of its first-generation products. Pangu Naxiang is ready to move from the pilot production phase to the mass production phase. Besides these achievements, Vision Group also touted that Pangu Naxiang’s Na-ion batteries can offer a much higher performance compared with the counterparts from its competitors.

Vision Group also pointed out that the founding members of Pangu Naxiang come from top research institutions, industrial enterprises, and other elite organizations such as Huawei, BASF, EY, and other major Chinese battery manufacturers.

Vision Group said the total investment of RMB 10.5 billion in Jingshan encompasses the followings: (1) Its wholly-owned subsidiary Hubei Vision Lithium Battery has completed a RMB 1 billion investments in Jingshan and plans to a further investment of RMB 2 billion the future. (2) Vision Group, Pangu Naxiang, and Jingshan Jingcheng Investment will form a joint venture named Jingshan Sodium Battery. The establishment of this entity will entail an investment of around RMB 7.5 billion.

Regarding the development of the battery manufacturing projects, the first phase of the Li-ion battery project will commence this year and is expected to be fully completed within three years. The first phase has 5GWh of production capacity, of which 2.5GWh will be ready this year. The additional 2.5GWh will increase Jingshan’s local production capacity for Li-ion batteries to a total of 7GWh. In a conservative estimate, Hubei Vision Lithium Battery will contribute around RMB 2 billion in L-ion battery sales for 2023.

This article is a translation of a Chinese article posted by TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain. Some Chinese names are transcribed into English using Hanyu Pinyin.

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