China’s booming electric vehicle (EV) sector has hit yet another speed bump, a shortfall of batteries, which is leading to delays in the delivery of cars. “The EV market is growing at a torrid pace that keeps beating estimates by assemblers and component suppliers,” said David Zhang, an automobiles industry researcher at the North China University of Technology. “It will take time for key battery manufacturers to expand production capacity to meet demand.” Last December, Xpeng Motors , one of China’s top EV start-ups, in China faced consumer complaints after deliveries of some of its models were delayed. Last week, it once again apologised to customers for delays in deliveries of its P5 sedans due to insufficient battery supply. Tesla, the runaway leader in China’s premium EV segment, said buyers would have to wait for as long as four months before its Model 3 and Model Y vehicles were delivered. A senior Tesla sales manager in Shanghai said a supply constraint involving chips and batteries had kept the US carmaker from selling and delivery more units in the world’s largest EV market. Battery makers have been wary of building facilities aggressively because a lacklustre EV market could result in redundant production capacity. “The bottleneck caused by the battery shortage is similar to the chips woes facing the electric carmakers last year,” said Tian Maowei, a manager with Yiyou Auto Service in Shanghai. “Customers keen on owning an EV have to be patient after placing an order for their cars.” In 2020, a miscalculation among global chip makers over the pace of recovery in demand for costly items such as cars during the Covid-19 pandemic led to a severe shortage of automotive chips, particularly in China where a surging demand for smart EVs became a growth engine for the national economy. China reported sales of 2.99 million new-energy vehicles (NEVs) – comprising pure electric, plug-in hybrid and fuel-cell cars – in 2021, a jump of 169 per cent year on year. As a soaring number of drivers consider replacing their conventional cars with EVs, the delivery volume of such vehicles is expected to top 5.5 million units this year, up 84 per cent from 2021, according to Cui Dongshu, general secretary of the China Passenger Car Association. The battery output this year may only be enough for 4.4 million new NEVs, said North China University of Technology’s Zhang. “Battery manufacturers are ramping up production to capture opportunities in the market,” he added. “The battery shortage issue is likely to be eased in the second half of this year.” William Li, the co-founder and CEO of Shanghai-based EV firm NIO , said late last year that the carmaker’s delivery volume in 2022 would largely hinge on how many batteries it could secure. NIO, along with Guangzhou-headquartered Xpeng and Li Auto, are the three mainland Chinese smart EV start-ups snapping at Tesla’s heels in the domestic market. On Friday, Beijing-based Li Auto reported that its revenue in the fourth quarter of 2021 stood at 10.6 billion yuan (US$1.7 billion), beating market expectations of 10.3 billion yuan, according to China’s EV technology portal CNEVpost. It delivered 35,221 vehicles in the three months ended December 2021, up 143.5 per cent year on year and 40 per cent from the previous quarter. Li auto forecast that its delivery in the first quarter of this year would reach 30,000 to 32,000 vehicles, the same as its previous guidance for the fourth quarter. “EV assemblers like Li Auto remain conservative in predicting their output and delivery given the current tight supply of key components,” said Peter Chen, an engineer with vehicle parts company ZF TRW in Shanghai. “They also need to be patient and wait for an expanded capacity in the supply chain.” There is one catch, analysts said. Rising metal prices could slow the expansion of battery makers as prices of lithium carbonate, cobalt and nickel – key metals used in EV batteries – jumped about 20 per cent in 2021, eating into their profit margin. “Big battery makers are capable of managing costs and maintaining profit margins, while smaller ones will be reluctant to build more facilities fast,” Chen said.