China’s largest electric bike battery maker, Tianneng Power International, is to expand its facility at Changxing to produce 15 million kilovolt ampere hours of lead-acid batteries a year from 2017.

The Hong Kong-based English newspaper South China Morning Post reported that the $230 million factory was expected to generate annual sales of $870 million. Trial operations will begin in January, according to Tianneng chairman Zhang Tianren.

As well as being the largest E bike battery maker in China, Tianneng is also a licensed lead battery recycler. Senior vice president Chen Minru said its recycling business would become one of the company’s core focuses alongside battery production.

The batteries will be made for the slower electric vehicles (often called ‘low-speed vehicles’) commonly used in the countryside by farmers, where they can travel at speeds of no more than 80 kilometres an hour.

The announcement comes after the Chinese government said it intended to grant legal status to these low-speed vehicles, as BESB reported on November 16.

The Ministry of Industry and Information Technology recently said that in Shandong Province alone, more than 330,000 low-speed EVs were sold in the first eight months of this year.

Low-speed vehicles were unregulated in China until the ministry stepped in, saying “their production is unauthorized, poor quality, mostly unlicensed and its disordered development will pose serious challenges to road traffic safety”.

The China Passenger Car Association said the move would force EV makers into speeding up the development of their product to compete, which would mean having to meet new regulations.

Yet despite positive forecasts for what some term the ‘green’ car industry in China, with reports saying sales were up 135% year on year during the first six months of 2016, one report out last week gave a less optimistic picture.

Citi Research predicted that over generosity in government subsidies for new energy vehicles would end in 2017. “Beijing is changing its mind on the car of the future and is expected to slash subsidies next year,” said the analyst firm.

“Under Citi’s bear case, subsidies for electric buses could be cut by 66% next year, while subsidies for battery electric or plug-in hybrid passenger cars would be cut by 40%.”

Forecasts for the lead battery industry as a whole are optimistic, with research analysts at Technavio predicting a compound annual growth rate of 5.6% to 2019.