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Electric cars in China

World's No. 4 battery maker halts output for 6 months

China's OptimumNano suffers as subsidy-reliant customers slash orders

The headquarters of Shenzhen OptimumNano Energy. The entire staff has been asked to take six months off as the company halts production.  (Photo by Yu Nakamura)

SHENZHEN -- Electric vehicle battery maker Shenzhen OptimumNano Energy will suspend production for six months starting Sunday amid a sharp drop in orders.

The Shenzhen-based company has told its entire staff to take half the year off, sources told Nikkei.

"Most workers in back-office departments have already stopped coming to work," an employee in her 20s said. "The production floor has no work."

Another employee in his 50s said production has mostly been on hold since the start of the year. " A business can collapse in an instant," he said.

Last year, OptimumNano shipped 5.5 gigawatt-hours of automotive batteries, ranking as the world's fourth-largest supplier behind leader Contemporary Amperex Technology (CATL), Panasonic and Chinese carmaker BYD. It ranked third in 2016 with batteries for electric buses selling well. With Beijing getting behind the shift to electric vehicles, electric bus makers used to receive subsidies of $150,000 per bus.

But OptimumNano's finances grew tight this year as orders plunged. The government cut back aid to electric vehicle makers amid rampant subsidy fraud. So vehicle manufacturers dependent on subsidies have slashed orders for batteries even as the electric-vehicle market expands.

China has many manufacturers that have relied on subsidies and more than 100 companies in the business of making batteries for cars. OptimumNano's struggle suggests that many of its peers may be weeded out down the road.

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