(Yicai) Jan. 19 -- Longhua New Material plans to invest CNY1.6 billion (USD222.3 million) to construct a polymer materials factory in the Lingang New Area of the Shanghai Free Trade Zone to meet growing demand from new energy vehicle manufacturers in the locality.

The facility will consist of a factory with a production capacity of 200,000 tons of polymer materials a year as well as a research and development center, Longhua said, citing the deal signed with the Lingang New Area yesterday. The project will employ around 300 people, one third of which will work in R&D, and the annual output value will be around CNY4.6 billion (USD639.2 million).

One of the products, modified nylon, is widely used in the chassis, power system and cockpits as well as interior and exterior decorations of electric cars thanks to its lightweight properties, the Zibo-based company said.

The Lingang New Area is home to Tesla’s Shanghai Gigafactory whose output soared 33 percent last year from the previous year to 947,000 units, accounting for more than half of the US electric car startup’s global capacity, according to the China Passenger Car Association.

Last year, the output value of the new materials industry in the Lingang New Area was close to CNY9 billion (USD1.3 billion) and it is expected to exceed CNY15 billion by 2025 as more integrated circuit, smart car, new energy, aerospace and biomedical materials firms make their base there, according to the plan released by the management committee last month.

Thanks to strong sales of its main product, polyether polyols, Longhua is expecting net profit to surge between 77 percent and 105 percent in 2023 from the year before to reach between CNY225 million (USD31.3 million) and CNY260 million, according to the company’s latest earnings forecast. Revenue will likely jump between 58 percent and 63 percent to between CNY5 billion (USD700 million) and CNY5.2 billion.

Editor: Kim Taylor