CATL is committed to ten more factories in Yibin with a total capacity of 190 GWh, but global warming threatens the supply of cheap hydropower.
Photo from CFP
By WANG Yong
If the small city of Yibin in Southeast Sichuan province is known for anything, it’s known for baijiu. Exiting Wuliangye Airport – named after a local baijiu – are greeted by a huge sculpture of a fermenting jar.
But when Jiemian News visited in April, the highway into the city was lined with billboards for the World EV & ES Battery Conference. Yibin is trying to remake itself into the battery capital of China.
In 2021, a CATL factory with an annual capacity of 15GWh (enough for about 30,000 EVs), went into operation. CATL has since committed to nine more factories in the town with a total capacity of 190 GWh. Suppliers have followed.
More than thirty factories are under construction in five industrial parks, each dedicated to different battery parts and materials. Kaiyi, the only Sichuan-based EV brand, has a factory there.
A local taxi driver said salaries and house prices have gone up. “If you haven’t visited for a couple of years, you won’t recognize the place,” he said.
Yibin – with a population of around 5 million - has the third largest GDP in Sichuan after Chengdu and Mianyang. Before 2019 it was nowhere.
CATL’s YANG Weiping told Jiemian News that Yibin suits CATL. The region is abundant in hydropower. Hydropower can meet over 70 percent of Sichuan’s energy needs so electricity is extremely cheap.
Battery companies are also attracted to Sichuan’s mineral resources – the province has 57 percent of China’s lithium reserve – as well as convenient transportation along the Yangtze River. Raw materials can generally be sourced within a 150-kilometer radius and products reach Europe within a few weeks.
The Yibin government rarely hesitates to provide licenses and permits for new factories. Yibin subsidizes land and power cost and helps companies with hiring, employee benefits and logistics.
Having thrown in their lot with CATL, now the biggest employer in town, Yibin has found itself directly exposed to the whims of the EV market and at the mercy of whatever makes the most money for CATL.
“During the busy season last year, workers at CATL were working long hours and making good money. This year the market is not great. Many people have left their jobs,” a local resident told Jiemian News.
EV production and sales have slowed as incentives expired. Sales grew 26 percent in Q1, significantly lower than 90 percent in Q1 last year. Battery companies have consequently dialed back their inaccurate projections. By some estimates, production is down by 3 percent.
With CATL not doing much, Yibin-based suppliers are having a hard time. Projects under construction face even more uncertainty.
GUAN Min, director of Cuiping Industrial Park, says her job is to help CATL suppliers find new clients. Liu Lei of Tianyuan Group, says his company has been talking to smaller battery makers, far away, including SVOLT and Hithium.
Association with CATL seems to have brought as many risks as benefits. To reduce its exposure to vagaries of an unpredictable CATL, Yibin is now betting on photovoltaics.
Two years ago, Yibin set its hopes on becoming a national battery hotspot, and is now angling to become one of the country’s biggest photovoltaic clusters. City economists have juggled up a figure of 200 billion yuan in production by 2026 with five 10-billion-yuan photovoltaic projects either up and running or close to.
Neighboring Yunnan and Guizhou, which, like Sichuan, are both largely unspoiled by industrial scars but rich in natural resources including hydropower, are also trying to attract photovoltaic companies.
Hydropower, however, faces challenges posed by climate change, which makes precipitation unpredictable. Last summer was all about power rationing and the situation can only get worse.