China's solar giant GCL to make electric car move in new 'eco-town'

By David Stanway

JURONG, China (Reuters) - China's leading solar equipment manufacturer GCL is planning a move into the electric vehicle sector, aiming to make use of its expertise in energy to gain a vital competitive advantage in an increasingly crowded industry, executives said.

The firm is currently building a 5 billion yuan ($721.19 million) solar production base in a new "eco-town" at Jurong near the city of Nanjing, which will also involve the construction of solar-powered residences, warehouses and public amenities.

But the firm is now in talks with auto manufacturers to build facilities and production lines in Jurong to support China's electric vehicle revolution, Tang Yanzhe, the head of the Jurong project, told Reuters.

"Our investment figures are very conservative and if the car firms come, it is a long industrial chain and many supporting factories will also come," he said.

Jurong is part of a "special town" programme launched by Jiangsu aimed at encouraging investment in strategic sectors. Other towns are focusing on areas like fruit farming, automobiles and e-commerce.

But the town's 2-gigawatt solar panel production line will be completed this year and go into operation at a time when China's solar manufacturers are struggling with overcapacity, weak demand and trade frictions.

After generation capacity rose by a record 53 GW in 2017, the government has also put the brakes on new installations this year.

GCL managers said low-grade, "outdated" producers were most at risk. The firm will also put only half its new capacity into operation this year so production does not expand too quickly.

Critics say cut-throat competition between China's cities and regions has caused price-sapping overcapacity in a wide range of sectors, including steel and solar - and electric cars could be next.

As many as 11 cities in the Yangtze delta region were competing to become car production bases, and across the country, 118 enterprises had registered 428 different models of electric cars by mid-July, up from 102 firms and 355 models in just four months, according to government data.

Automakers have already complained that China's regions are distorting the market by giving preferential treatment to local champions, and Beijing has promised to take action against "blind" sector growth.

Tang acknowledged that there were a lot of firms entering the sector but said those without "core competitiveness" would soon be eliminated.

GCL is exploring alternative models to boost its competitiveness, and aims to produce lower-cost batteries that can be rented out to drivers and eventually recycled for use in solar energy storage.

GCL's focus was on public transport and delivery vehicles, and there was still room for growth, Tang said.

"The Yangtze river delta is the biggest market for new energy vehicles - the customer base is the most developed, whether for delivery vehicles or passenger vehicles," he said.

($1 = 6.9330 yuan)

(Reporting by David Stanway; Editing by Christopher Cushing)