China intends to invest approximately 6 billion yuan ($845 million) in the development of next-generation battery technology for electric vehicles (EVs), despite the fact that its industrial policy has triggered overcapacity worries and has become a primary target of US and European objections.

Six companies, including CATL, the world’s largest battery manufacturer, and major automakers such as BYD and Geely, are eligible for government funding to create all-solid-state batteries (ASSBs), the official China Daily newspaper claimed Wednesday, citing unnamed industrial sources.

The necessary government departments and commissions will lead the “unprecedented” effort, according to the statement, but no further information is provided.

People use their phones in front of the BYD Seagull that is displayed at the Auto Shanghai show in Shanghai, China, on April 19, 2023. REUTERS/Aly Song

ASSBs are a new technology that improves on traditional lithium-ion batteries (LIBs) by employing a solid, conductive electrolyte rather than a liquid or gel-based substance. They are less likely to catch fire or explode than traditional batteries and have a higher energy density, making them thought to be safer and more powerful.

However, strong batteries are currently unavailable due to their high cost and difficulty in mass production.

The announcement of Beijing’s planned investment comes at a critical time for China’s commercial relations with the West.

Earlier this month, the Biden administration put significant new duties on Chinese electric vehicles, sophisticated batteries, and other goods. American authorities said they want to shield US workers and businesses from the challenges caused by overproduction of specific products in the world’s second-largest economy.

The European Commission is expected to issue its own ruling on Chinese EV tariffs early next month, which might cause problems for Chinese EV manufacturers, who export hundreds of thousands of vehicles to Europe each year.

However, Beijing continues to increase efforts to speed EV production in order to counteract a property-induced economic downturn and create a low-carbon economy.

Global automakers and technology businesses are also developing ASSBs.

Toyota (TM) announced in January that it would deploy automobiles with solid-state batteries in the next few years, according to Reuters. Samsung SDI announced in March that it would start mass-producing solid-state batteries in 2027. Volkswagen has also collaborated with Quantum Scape, a US startup, to produce batteries.

Chinese rivals are likewise raising the stakes. GAC Group, a state-owned manufacturer located in Guangzhou, announced in November that it had made a breakthrough in solid-state batteries and would begin producing vehicles with them in 2026.