German testing firm to expand battery facilities

German testing and certification company TÜV Rheinland plans to invest 100 million yuan ($15.2 million) in the coming two years to expand its facilities to test large batteries in China in response to the phenomenal growth in the electric vehicle battery industry.

The investment would be made in Shenzhen or Shanghai, where a large battery lab and a small battery lab of the company are located, said Sven-Olaf Steinke, general manager of the company's electrical service in China.

Electric vehicle battery production in the country, which accounted for about 24 percent of global production in 2016, is expected to increase by 56 percent year-on-year to 32 gigawatt-hours this year, he said.

Production in China is expected to account for 30 percent of the global total of 150 gWh next year and carry on robust growth through 2020, he said.

Domestically, the government's subsidy on the purchase of electric cars, environmental pressure to cut emissions and the decline in the battery price are boosting the industry.

The country's Internet Plus strategy would also energize the development of electric cars with more integrated internet-based functions.

The plan for new energy cars issued by the State Council in 2012 sets the goal of producing 500,000 electric cars by 2015 and selling 5 million by 2020, with production capacity reaching 2 million units in 2020.

In Europe, the diesel car emission testing scandal, the anticipated launch of Tesla's electric cars, and electric car production pledges by European brands such as Audi and Volvo are expected to drive the development and production of green vehicles by European car makers.

This should lead to more exports of China-made batteries, with half of the batteries made in China to be exported, up from the current 24 percent, Steinke said, adding that the United States, Europe, China and the rest of Asia would be the world's four major battery players.

The prevailing uncertain economic scenario overseas and significant domestic demand have compelled some electric vehicle battery makers to shift their production base from the US and Japan to China, such as Panasonic and Toda Kogyo. This may positively impact China's battery export.

Global electric vehicle battery production and market volume stood at 86.66 gWh and $28 billion respectively in 2015.

Investment bank Goldman Sachs projects that the global car battery market will reach $40 billion in 2025, which Steinke said may actually prove to be a rather conservative estimate.