China's EV battery supply chain pivots from Europe to Southeast Asia

by ZHANG Yi

China's electric-vehicle battery supply chain is increasingly moving abroad as manufacturers expand production outside the country and suppliers follow.

The shift comes as automakers and battery manufacturers diversify supply chains. Southeast Asia is emerging as a new hub for electric-vehicle production, while some Chinese investment projects in Europe have faced regulatory hurdles.

The latest example is Shanghai Putailai New Energy Technology Co., Ltd. (603659.SH), which said on March 11 it plans to invest US$297 million to build a 50,000-tonne-per-year plant in Malaysia producing lithium-ion battery anode materials, which store lithium ions and help determine battery performance. Construction is expected to take about 24 months.

The company said the facility would serve customers across Southeast Asia and other overseas markets while deepening ties with global battery manufacturers.

Rapid growth in electric-vehicle demand is making Southeast Asia an increasingly attractive destination for Chinese battery supply-chain investment. Malaysia's new-energy vehicle sales rose more than 50% in 2025, far exceeding the global growth rate of 29.1%, while markets including Thailand, India and Indonesia also recorded strong expansion.

Rising EV adoption is boosting demand for battery materials. Industry consultancy EVTank estimates China's anode material shipments reached 2.92 million tonnes in 2025, up 38.1% year on year, with artificial graphite accounting for 86.9% of the total.

Battery makers including CATL (300750.SZ), the world's largest EV battery maker, and EVE Energy (300014.SZ) have already built battery factories across Southeast Asia, including in Indonesia, Malaysia, Thailand and Vietnam. In February 2026, EVE Energy completed the second phase of its Malaysian plant.

Upstream suppliers are following their customers. BTR New Material Group (920185.BJ), one of the world's largest anode material producers, began production at a 160,000-tonne plant in Indonesia in August 2024.

Putailai had previously tried to expand in Europe. In May 2023, the company announced a 100,000-tonne integrated anode production and R&D base in Sweden, but the project was scrapped in December 2024 after it failed to reach agreement with regulators.

For Putailai, the shift overseas also reflects pressure in its core anode materials business. Although the company reported strong profit growth last year, its anode material shipments rose only 8.1% to 143,000 tonnes in 2025, far below the industry growth rate of 38.1%.

Other product lines expanded more rapidly. Sales of coated separators rose 56.26%, while shipments of PVDF and fluoropolymer materials nearly doubled.

Industry leaders remain significantly larger. According to EVTank, BTR shipped 595,000 tonnes of anode materials in 2025, followed by Shanshan Co. (600884.SH) with 518,000 tonnes and Zhongke Shinzoom with 373,000 tonnes.

By the end of 2025, Putailai had 250,000 tonnes of annual anode capacity, but utilisation was only around 60%, as the company limited shipments of lower-value products while focusing on higher-margin materials.

Putailai is also investing in next-generation battery technologies, including silicon-carbon and lithium-metal anodes aimed at improving battery energy density. High-energy-density artificial graphite anodes have already entered mass production for power, energy-storage and consumer battery customers, the company said.

The company is also developing silicon-carbon anodes, which offer higher theoretical energy density than conventional graphite, as well as lithium-metal anodes designed for future solid-state batteries.

However, profitability remains a challenge for overseas expansion. In 2025, Putailai’s overseas revenue totaled 936 million yuan, about 6% of total revenue, with a gross margin of 12.25%, far below the 32.91% recorded in mainland China.

Putailai plans to ramp up production in 2026, targeting anode shipments of more than 250,000 tonnes as new overseas capacity comes online.