(Yicai) May 9 -- Electric car battery manufacturers should strengthen technological innovation in order to improve product quality and align with environmental standards and they should not solely focus on capacity expansion, the industry ministry said in a draft proposal released yesterday that is open to feedback from the public.

Lithium battery makers should improve product quality and reduce production costs, the Ministry of Industry and Information Technology said. And they should allocate no less than 3 percent of their revenue each year towards research and the improvement of processes.

Companies can apply to expand production, only when their capacity usage rate is over 50 percent, the draft said. Firms are encouraged to obtain qualifications as independent research institutes, engineering laboratories, technology hubs or high-tech enterprises at the provincial level or above.

Businesses are encouraged to set up green factories and build pilot platforms either independently or through joint ventures, it said.Their main products should possess technological invention patents.

The technical standards for lithium batteries were also raised. The energy density of consumer-grade lithium battery cells should be equal to or more than 260 watt hours per kilogram with a cycle life of at least 800 cycles. The energy density of large-scale battery cells should be equal to or more than 165 Wh/kg. The performance requirements for positive electrode materials, negative electrode materials, and separator materials have also been enhanced.

China's lithium battery production surged 25 percent last year from the year before to top 940 GWh. However, there is still a shortage of high-end, high-quality lithium batteries on the market, while there is an overabundance of low-end batteries, leading to intense competition, industry insiders said.

Editor: Kim Taylor