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Please see today’s daily update from EPIC Investment Partners Received this morning:

China’s Guangzhou Automotive Group (GAC) announced in mid-April that it had “broken through” several obstacles regarding the durability and safety of all solid-state batteries (ASSB), best described as the next generation of EV (electric vehicle) batteries. GAC has opted for a solid electrolyte system. This sets it apart from Toyota, a long-term partner of GAC, who are the world’s leading holder of ASSBs patents by some margin. 

It is widely recognised that China leads the way in EV adoption. In 2023 EVs market share reached 24%, almost double the market share in 2021. However, over the same period PHEV’s (hybrids) market share has almost quadrupled from 3% to 11%. The biggest advantage of PHEVs over EVs? Range and ease of ‘recharging’. 

This is about to change. GAC expects to roll out its ASSB in 2026 offering a range of over 1,000km (620 miles). Toyota and CATL are aiming to roll out their ASSBs in 2027 while Nissan and BMW are aiming for 2028 and 2030 respectively. All are expected to have a similar range. 

Crucially Toyota’s ASSB will have a charging time of just ten minutes – not substantially different from the time taken to refuel a vehicle with fossil fuel! This is likely to be a real game changer. 

We read about oversupply in solar panels, batteries and indeed EVs as China ramps up its goal of reducing dependence on (largely imported) oil and gas by increasing renewable energy production. China’s ability to develop at scale and reduce costs across a variety of industries is well documented. As the US and Europe complain about subsidies and other Government support, EV customers worldwide are enjoying better products at lower prices. 

We have the impression, rightly or wrongly, that the EVs currently available with a range of perhaps 250-300 miles suit an urban population much better than a rural dweller. This is a global opinion, not just China. 

An EV that will match an ICE (Internal Combustion Engine) on range and refuelling time suddenly looks like a very smart option for everyone, urban or rural. The real question is whether countries will invest sufficiently fast in their electricity infrastructure to cater for the increased demand for high-speed charging. There is no doubt that China will react to this challenge positively. The one ESG caveat is that the majority of China’s electricity (circa 56%) is still produced by coal fired power plants. 

Please continue to check our blog content for the latest advice and planning issues from leading investment firms.

Andrew Lloyd DipPFS

17th May 2024