EV in China Update: Solid‑State EV Battery Production Target Announced — Key Takeaways

On March 18, 2025, China’s Ministry of Industry and Information Technology (MIIT) set a national target of 120 GWh (gigawatt‑hours) for solid‑state EV battery production by 2028 — a 400% increase from the current pilot capacity of 24 GWh. The target, embedded in the updated New Energy Vehicle Industry Development Plan (2025–2028), marks the world’s most aggressive solid‑state battery rollout schedule. For foreign executives managing China EV supply‑chain strategy, this number defines the pace at which battery technology — and competitive advantage — will shift.

Why This Matters

Solid‑state batteries promise 500 Wh/kg energy density versus ~250 Wh/kg for today’s lithium‑ion cells, along with faster charging and intrinsic safety gains. China already controls roughly 70% of global lithium‑ion battery production. By setting a hard production target for next‑generation solid‑state cells, Beijing is signalling that incumbents and newcomers alike must pivot R&D pipelines, capital expenditure, and joint‑venture negotiations now. For foreign firms, the question is no longer whether to engage with China’s solid‑state supply chain, but how to structure WFOE (外商独资企业, waishang duzi qiye) or cooperative ventures before technology leadership solidifies.

Key Details of the 2028 Target

1. Production volume trajectory

The MIIT plan outlines a phased scale‑up from pilot lines to mass manufacturing. Below is the official roadmap compared to current baseline figures.

The cost reduction from ¥1.2/kWh to ¥0.5/kWh is particularly striking: it would make solid‑state batteries cheaper than current lithium–iron–phosphate (LFP) packs, which hover around ¥0.6–0.7/kWh. This cost parity is expected to accelerate mass adoption in EVs priced below ¥200,000 (~$27,500).

2. Investment and policy levers

To back the target, the central government has allocated ¥50 billion (approx. US$6.9 billion) through a combination of R&D grants, production subsidies, and tax rebates for domestic and foreign‑invested enterprises that meet localization thresholds. Provinces including Guangdong, Jiangsu, and Sichuan have released supplementary incentives, including reduced land costs and fast‑track environmental permits for solid‑state battery factories.

3. Key players and foreign participation

Chinese battery giants CATL and BYD have already announced pilot lines targeting 10 GWh each by 2026. At the same time, at least three foreign‑backed joint ventures — including a partnership between a German automotive OEM and a Chinese electrolyte specialist — are in advanced negotiation. The MIIT explicitly encourages foreign technology collaboration, though IP licensing and local content rules remain sensitive. A growing number of foreign firms are establishing a WFOE (外商独资企业, waishang duzi qiye) in battery R&D hubs such as Suzhou and Hefei to retain control over core solid‑state formulations.

Immediate Action Checklist for Foreign Executives

• Assess your current China battery exposure — Do you have a WFOE or JV? If not, begin entity setup in a pilot‑friendly province before 2026.
• Map solid‑state IP and supply chain gaps — Identify which electrolyte, separator, or electrode technologies you need and which Chinese partners hold patents.
• Evaluate subsidy eligibility — The ¥50 billion fund is distributed on a first‑come, first‑qualified basis; foreign entities with ≥30% local content can apply.
• Align product roadmap with 2028 cost targets — If your EV platform requires solid‑state cells by 2028, start qualification testing with Chinese pilot producers in 2025–2026.
• Monitor trade and technology transfer rules — China’s revised Catalogue of Technologies Prohibited or Restricted from Export (2024) includes certain solid‑state manufacturing methods. Engage legal counsel early.

Pitfalls and Risk Factors

Technology readiness and scale‑up hurdles

The 120 GWh target is ambitious: today’s global solid‑state production is below 5 GWh, and most cells are still in A‑sample validation. Dendrite formation, interfacial resistance, and low‑temperature performance remain unsolved for several chemistry families. Foreign executives should not assume that the 2028 target guarantees a mature supply chain — quality and yield may vary significantly between producers.

Localisation and IP sensitivity

While China welcomes foreign investment, the Data Security Law and Anti‑Foreign Sanctions Law create uncertainty around cross‑border data flows (e.g., cell test data, production recipes). Several foreign firms have opted for a WFOE (外商独资企业, waishang duzi qiye) structure combined with a separate technology licensing entity to ring‑fence core IP. This two‑entity approach, though more costly, offers better protection in case of future regulatory tightening.

Subsidy dependency and market distortion

The ¥50 billion fund could create short‑term overcapacity, as seen in China’s LFP battery sector between 2020 and 2023. Foreign players must differentiate on cell performance, not just price. Moreover, subsidies are often tied to using domestic raw materials (e.g., lithium from Chinese refineries), which may conflict with ESG or sourcing diversification strategies.

Competitive dynamics with incumbents

CATL and BYD together control ~55% of China’s battery market. Their solid‑state pilot lines are heavily subsidised, giving them a cost advantage that foreign newcomers may struggle to match. Joint ventures with mid‑tier Chinese battery makers (e.g., CALB, Gotion) could offer faster technology access but weaker IP protection. Executives need to weigh market access speed versus long‑term technology autonomy.

Why the Numbers Matter: Context for Decision‑Makers

The 400% production increase from 24 GWh to 120 GWh is not just a volume shift — it implies a complete retooling of China’s battery manufacturing ecosystem. By comparison, the US Inflation Reduction Act (IRA) has allocated roughly US$7 billion for advanced battery manufacturing, but lacks a solid‑state‑specific production mandate. The EU’s Battery Regulation targets 200 GWh of total cell production by 2030 but does not set a solid‑state sub‑target. China’s explicit 120 GWh solid‑state figure makes it the first major economy with a legally binding output goal for this technology.

The cost target of ¥0.5/kWh (≈US$0.07/kWh) would undercut today’s cheapest LFP cells (¥0.6/kWh) by 17%. For a typical 75 kWh EV pack, that translates to roughly ¥37,500 (~$5,200) savings per vehicle — a game‑changer for the mass‑market EV segment below ¥200,000. Foreign OEMs that can secure solid‑state cells at this price point will gain a 10–15% cost advantage over peers still using lithium‑ion.

Finally, the ¥50 billion (US$6.9 billion) government fund is equivalent to roughly 8% of China’s total NEV subsidy spending from 2016–2022. This concentration of capital in a single battery technology signals that Beijing views solid‑state as a strategic national asset, akin to semiconductor independence.