(Yicai) Dec. 28 -- The capacity utilization rate for power battery production in China may have fallen to 41 percent this year as domestic producers add more capacity, according to the vice chairman of third-party think tank China EV100.

Investments in batteries, the most important part of the new energy vehicle supply chain, has surged over the last three years, and the capacity built up over several years will begin to be released next year, Zhang Yongwei, who is also secretary general of China EV100, said yesterday.

China’s power battery capacity was 1,260 gigawatt hours as of the end of last year, with a capacity utilization rate of 52 percent, according to the think tank’s data. That has increased to 1,860 GWh as of June 30.

“Next year will be the release period for battery capacity, and the battery industry will undoubtedly face a stark imbalance between supply and demand,” Zhang pointed out.

Domestic battery capacity will likely reach 3,000 GWh by 2025, while shipments are expected to reach just 1,200 GWh, implying significant oversupply, said Ouyang Minggao, executive vice president of China EV100 and a member of the Chinese Academy of Sciences.

In recent years, the industry has been characterised by a lack of high-end production capacity and excess low-end capacity, Yang Hongxin, chief executive of battery maker Svolt Energy Technology, told Yicai previously. And battery improvements lead to the previous generation becoming surplus capacity, he pointed out, while the upgraded batteries face the issue of insufficient supply.

Founded in 2014, China EV100 is a nonprofit organization aimed at boosting the development of the electric vehicle industry, and its staff are high-level government officials, scholars, and industry professionals, according to its website.

Editors: Xu Wei, Martin Kadiev