(Yicai Global) Dec. 29 -- Shares in Shenzhen Dawei Innovation Technology soared by the exchange-imposed limit today after the Chinese auto parts maker said it will invest CNY22 billion (USD3.2 billion) to build a lithium-ion battery cluster, stretching from mining to the production of electric cars, to meet rapidly growing demand for new energy vehicles.

Dawei’s share price [SHE:002213] surged 10 percent to reach CNY16.37 (USD2.30). The stock has lost 9 percent in value in the last year.

The hub, which will be located in Guiyang county, Chenzhou, central Hunan province, will cover the whole lithium battery industrial chain, from lithium mining, producing raw materials, manufacturing batteries to making NEVs, Dawei said yesterday, citing a deal it penned with the local government that day.

CNY9 billion (USD1.3 billion) will go towards lithium mining and building a battery-grade lithium carbonate plant with an annual output of 40,000 tons, the Shenzhen-based company said. CNY12 billion will go towards the battery factory which will produce 20 gigawatt hours of batteries a year, and the rest will be used to construct a facility for NEVs.

Soaring sales of electric cars is pushing up demand for batteries which in turn is increasing the need for the raw materials used to make them, Dawei said. This investment will enable Dawei to make full use of the rich lithium resources in the county and expand its footprint in the new energy sector, it added.

Dawei, which also makes semiconductor equipment, branched into the NEV sector last year. Net profit jumped 62.4 percent in the first three quarters from a year earlier to CNY12.9 million (USD1.9 million), while revenue climbed 12.2 percent to CNY640 million (USD91.8 million), according to its latest earnings results.

Editor: Kim Taylor