Joint venture announced with plans to serve electric vehicles across country

China's largest battery manufacturer CATL recently announced cooperation with Baicheng New Energy to establish a joint venture to make inroads into the growing market for charging poles across the country.

With registered capital of 50 million yuan ($7.14 million), the joint venture, called Shanghai Kuaibu New Energy Technology, was established on March 6, and will focus on new energy technology, parking lot operations and the construction and operation of charging facilities.

CATL and Baicheng hold 49 percent and 51 percent of the company respectively.

CATL said that the joint venture aims to develop an intelligent integrated system that can provide energy storage, charging and electric vehicle test services.

The system will solve distribution issues and risks surrounding traditional charging poles, and quickly form a high-power superfast charging network, according to the joint venture.

A test run of the charging poles is scheduled for some cities in the near future, according to CATL quoted by the Economic Observer.

Earlier this month, China's top officials said the country will step up efforts to push forward a new infrastructure campaign across several fields, including charging poles.

CATL said it is looking forward to the implementation of the policies, which will help to promote its ongoing projects.

Baicheng New Energy, established in 2014, has launched urban charging networks in Shanghai and the provinces of Fujian, Henan, Jiangsu, Zhejiang and Guangdong.

This is not the only attempt for CATL in expanding its business to charging poles.

Last July, it inked a deal with Shenzhen Kstar Science and Technology to produce energy storage systems and develop optical storage charging products.

Tgood, Star Charge and China's State Grid are the country's top three charging station operators currently.

There were 1.25 million charging poles in China, both public and private, as of the end of February, according to the country's charging infrastructure promotion alliance. That was up 43.8 percent compared to a year ago.

Sun Huifeng, chairman of market research company CCID Consulting said the number of charging poles are still lagging far behind the number of new energy vehicles on the road.

China's new energy vehicle sales have exceeded 1 million units for two years in a row and are still trending upward as China's auto companies and global carmakers speed up electrification, Sun added.

Volkswagen plans to launch 70 electric models and sell 22 million electric cars in the next 10 years, and Mercedes-Benz estimates that the sales of electric cars will account for more than half of its total by 2030.

China will have 64.2 million electric cars by 2030, according to Sun. If one electric car has one charging pole, China needs to install 63 million poles in 10 years, he added.

CCID Consulting said one of the features of China's current charging pole market is that a large amount of operation is concentrated in the hands of just several companies.

According to the China Electric Vehicle Charging Infrastructure Promotion Alliance, eight public charging operators run more than 90 percent of the country's total charging poles as of the end of last year.

Leading companies should develop new markets to meet customer demand and make efforts to improve the utilization rate of charging poles, according to the CCID.

The CCID added that operators of charging poles should look to expand services offered beyond simply charging, such as providing drivers with data on battery usage and driving habits.

Consulting firm McKinsey based in the United States said in a report: "Companies that wish to provide electric vehicle fleet operators with charging services will need to look beyond existing business models. It may require an investor or a well-capitalized business to combine multiple entities into one with all the right capabilities, or complementary businesses to join forces in a partnership."