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Plastics suppliers gear up for China's electric vehicle market

By Rebecca Kanthor |

Guangzhou, China -- China's transformation in the last two years into the world's largest market for electric vehicles has the plastics supply chain gearing up.
While electric vehicles are a small market today, sales are growing quickly, and China's outsized presence -- it accounted for 40 percent of the 750,000 electric cars sold worldwide last year -- has plastics companies focused.
That was apparent in interviews at the Chinaplas trade show in mid-May in Guangzhou.
"EV is growing very fast, driven by regulatory support and rebates for buying EV or hybrids," said Luke Du, managing director Asia and executive vice president of Solvay Specialty Polymers.
Gero Willmeroth, president of sales and service at Engel Machinery (Shanghai), said the rapid development of the market means the Austrian injection machine maker needs to be closely involved.
"A lot of companies are coming out starting production of what they have never done before, so you need to be there right on the spot when the need arises," he said at a Chinaplas news conference.
He cited the EV market as one reason Engel introduced a more end-market oriented sales structure to Asia this year, as it had earlier done in Europe and North America.
French auto component manufacturer Plastic Omnium SA also cited the EV market as a factor in its plans to double its China sales to 1.3 billion euros ($1.45 billion) by 2021.
The company said in April it signed an order with Chinese carmaker NextEV to supply all of its electric vehicle body parts, and announced that production of the first high pressure tank for rechargeable hybrid vehicles is scheduled to start at the end of the year.
Last year, NextEV, which now calls itself Nio, signed an agreement with the city of Nanjing, in Jiangsu province, to build a $465 million factory with production capacity of 280,000 cars.
Other companies are looking to build in Jiangsu as well.
South Korean manufacturer LG plans to expand its electric vehicle battery factory in Nanjing later this year, where it makes batteries for 50,000 electric cars and 180,000 plugin-hybrids a year.
Chinese firm Beijing CHJ Automotive Technology plans a second production facility in the nearby city of Changzhou, a $436.7 million plant to make 100,000 electric and plug in SUVs a year.
The Chinese government is hoping that by 2020, 2 million electric cars will be sold annually in the country.
A June report from the International Energy Agency said that China's electric car market in 2016 was more than twice the size of the second-largest market, the United States. China surpassed the U.S. as the biggest in 2015.
IEA said if you add in other types of vehicles, like electric buses and two-wheelers, China is "by far the global leader in the electrification of other transport modes."
Brussels-based Solvay said government support has played a crucial role in China, although that is now changing in a way that helps Solvay, Du said.
"Now the government looks at what kind of subsidies that they will put together and new regulations come out that would peg or tie a subsidy to the performance of the battery, so it will encourage high performance, high energy-density batteries," Du said. "This also brings advantage to our battery.
"Depending on the policy, [EV] is either a must-have a or a luxury," he said. "In China, it is a must. The regulations and policies put in place are to encourage growth."
Solvay said it's looking at the whole infrastructure of materials needed to support the EV market. Zhou Qiang, specialty polymers general manager, said the company will finish a plant in Changshu later this year for making binder and coating material for lithium ion batteries.
"It will be significant and it will help our global supply," Zhou said.
China's overall vehicle market topped 28 million last year. A China Daily report said that if you add in other types of new energy vehicles, such as plug-in hybrids, China sold over 500,000 such vehicles in 2016, and projects to exceed 700,000 this year.
The IEA report estimates that worldwide the total number of electric vehicles in use will rise from 2 million today, to between 40 million and 70 million by 2025.
"It is still a small market," said Du, but noted the outlook is prompting a lot of interest. "The upside is huge."

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