China to strengthen supervision of lithium battery supply chain

China will strengthen its supervision of the lithium battery supply chain to deal with shortages that are cutting into the profits of electric vehicle (EV) manufacturers, its Ministry of Industry and Information Technology said on Friday.

With explosive demand growth for electric cars and a complicated covid-19 situation, the supply chain of China’s lithium batteries is severely unbalanced, the ministry said in a statement on its website.

The ministry said it would curb hoarding, price gouging and unfair competition in the supply chain.

Most Chinese electric vehicle (EV) makers are registering losses despite rapid sales growth because rising battery costs are undercutting their profits.

Zhu Huarong, chairman of state-owned automaker Chongqing Changan Automobile Co, said at an industrial forum this month the government should crack down on the hoarding of battery materials to lower costs and help EV makers to improve production and profit, according to Shanghai Securities News.