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The Production Capacity is Increasing while the Utilization Rate is Declining

published: 2023-08-08 17:10

By the end of 2022, China’s lithium production capacity had reached approximately 1,200GWh, with an output of 750GWh, representing a remarkable increase of over 130% year-on-year. According to the capacity planning of major manufacturers, the production capacity is expected to continue growing. However, the growth rate on the demand side has slowed down. Specifically, in the first half of 2023, China’s new energy vehicle sales reached 3.086 million, showing a year-on-year increase of 37.3%, while lithium battery shipments amounted to 270GWh, reflecting a growth of 33%. This growth rate has declined compared to the previous year and is significantly lower than the growth rate of lithium battery production capacity.

Regarding energy storage batteries, despite shipments reaching 87GWh in the first half of this year, showing a notable increase of 67% year-on-year, their proportion of output and performance, and capital market preferences remain lower compared to power batteries. Presently, the lithium industry’s development still heavily relies on power batteries.

From a macro perspective, the growth rate of supply outpaces that of demand, leading to a tendency of oversupply in production capacity. This oversupply situation poses challenges for enterprises and results in a reduction in capacity utilization rates. Looking at specific data, a leading lithium enterprise’s capacity utilization rate in the first half of this year is approximately 60%, significantly lower than the 83% recorded the previous year, indicating a notable decline. The oversupply situation at the macro level has a direct impact on the micro capacity utilization rate.

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