(Yicai Global) July 18 -- Shares in Hongdou Industrial sank by as much as 10 percent today after the Shanghai bourse questioned the Chinese garment maker’s intention to invest CNY1.5 billion (USD222 million) to enter the electric car battery field.

Hongdou’s stock price [SHA:600400] closed down 1.76 percent at CNY5.59 (USD0.83). Earlier in the day it sank to CNY5.12. But the stock has gained 70 percent in value since early May when the firm first said its plans to branch into the new energy field.

Hongdou will build a solid-state lithium battery production plant with an output of 3 gigawatts a year in the northern Inner Mongolia Autonomous Region, the Wuxi, eastern Jiangsu province-based apparel manufacturer said on July 15.

The Shanghai Stock Exchange immediately noticed the crossover in investment and asked Hongdou to elaborate on where the funds will come from, the background of its partners, the profit prospects and the equipment and professional expertise that it possesses in the field. Hongdou has yet to respond.

The new plant, which is expected to be completed in 2024, should bring in annual revenue of CNY4.5 billion (USD668 million), generate CNY360 million (USD53 million) in tax revenue for the local government and create about 1,000 jobs, according to the deal signed with the local government.

A joint venture, set up by Hongdou ’s new energy subsidiary in early May, will be 90 percent owned by Hongdou and the rest by Suprima e-Power Chengdu, it said. Chengdu, southwestern Sichuan province-based Suprima will provide the intellectual property, technical support and services for the project. No further details were given.

Solid-state batteries use solid electrolytes and have many advantages over the traditional liquid electrolyte ones, such as better safety and higher energy densities. But they cost a lot more to produce as their manufacturing processes still need to be further refined.

Editor: Kim Taylor