Chinese energy storage giant Ganfeng Lithium has announced it will start operations at a 100 MWh capacity pilot production line for solid-state lithium batteries this year.

The Xinyu-based raw materials-to-recycling business made the announcement as part of a first-half update that reported a net profit of only RMB297 million (US$42 million) for the first six months of the year, down from RMB730 million for the same period last year.

Ganfeng is investing R&D efforts into commercializing solid-state lithium batteries, which are potentially safer than conventional lithium products and boast a higher energy density but which are also much more costly to manufacture.

Revealing profits had been affected by a reduction in public subsidies for electric vehicles due to a policy change introduced by Beijing in March, Ganfeng reported falling lithium salt prices had also hit its bottom line.

Volkswagen tie-up

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The company said it had signed a memorandum of understanding with Volkswagen to supply the carmaker and its subsidiaries with EV batteries for the next decade. The German company in return will co-operate on recycling efforts and solid-state R&D, according to the Ganfeng results, published on the Hong Kong exchange today.

With the EU in particular voicing concerns about the sustainability of the existing lithium battery market, Ganfeng announced an intent to “become one of the leading players in the global lithium battery recycling sector”.

The Chinese company said subsidiary Ganfeng Recycling Technology Co Ltd completed permitting procedures on a battery recycling facility with the capacity to process 34,000 tons per year of end-of-life lithium batteries during the first half of 2019. Work started on a second phase, 12,000 ton expansion operation in January, according to the manufacturer, with the eventual aim of establishing a facility able to recycle 100,000 tons of dead batteries annually.

The financial update revealed Ganfeng’s lithium processing and non-battery product operation was the only part of the business to register a gross profit from January to June, as it brought in RMB415 million. The lithium battery unit lost RMB23.4 million during that period and the capital-intensive raw materials business lost RMB4.04 million.