Chinese Battery Companies Plan Big Investments in Vietnam

Chinese Battery Companies Plan Big Investments in Vietnam
Dau Tieng Solar Power Project in Veitnam, the largest solar plant in Southeast Asia. (TammyLe)

The Lede: Two Chinese energy storage and battery companies are considering large investments in Vietnam

What We Know:

  • Industry and government sources revealed prospective investments of around $1.2 billion in Vietnam by the Chinese companies Xiamen Hithium Energy Storage Technology and Growatt New Energy. Both companies are in talks to find potential locations for their enterprises in Vietnam
  • Hithium has approached officials and industry manager in Vietnam to discuss investing up to $900 million to build a plant on industrial land of about 30 hectares. That amount would make the company one of the largest foreign investors in Vietnam. Hithium has said that it has no new deals near closing.
  • Growatt has plans to spend $300 million to acquire about 15 hectares of industrial land for a factory in Vietnam. It currently leases a pre-fabricated plant in the country.

The Background: Xiamen Hithium Energy Storage Technology is a startup specializing in stationary energy storage products such as cells and large containers to help manage intermittent energy supplies from solar and wind farms. It has been pushing expansion in the U.S. and Europe. Growatt produces battery systems and energy storage inverters for residential and commercial use. Vietnam experiences power shortages and is a growing market for renewable energy. In recent years, the country has attracted foreign manufacturers such as Apple and Samsung suppliers and who view it as an alternative to China in the wider ‘de-risking’ trend. Chinese companies have also been increasing investments in Vietnam.

Likely Outcomes:

  • As the global EV trend continues to grow, Vietnam’s position as an alternative to China will become increasingly important for both Chinese and Western EV and related battery manufacturing companies. Chinese companies have already broken ground on battery factories in Vietnam and they will likely grow their operation. Western companies will not be far behind as the competition picks up. Along with Vietnam, companies looking to get into the battery business in Southeast Asia may also look to Indonesia and the Philippines. All three countries mine nickel which is essential in battery production.
  • This could lead to Southeast Asia becoming a region of intensified competition among the ‘de-risking’ countries and China. The region’s neutral stance on the diverging world economy could mean greater inflows of capital from all sides looking to do business in the environment.
  • In terms of geopolitics, Southeast Asia is set to be increasingly important in the Indo-Pacific rivalry. In addition to the strategic importance of key geographic locations like the Malacca Strait and the South China Sea, the rising productive capacity of countries like Vietnam and the shifting demands of the divergent global economy could eventually lead to outside pressures to pick sides. However, in the near term, manufacturers can be content that Southeast Asia walks a tight neutrality, especially when it comes to doing business.    

Good Reads:

Exclusive: Chinese energy storage, battery firms consider big investments in Vietnam (Reuters)

Chinese battery companies weigh $1.2 billion Vietnam foray (ETN)

What is Vietnam’s Mining Capacity for EV Batteries? (Vietnam Briefing)