EV Battery Industry Adopts 60-Day Payment Terms, Major Players On Board

On June 29, 2024, the China Automotive Power Battery Industry Innovation Alliance and the Zhongguancun Energy Storage Industry Technology Alliance jointly issued the "Initiative on Standardizing Payment Terms for Suppliers of Power and Energy Storage Battery Enterprises," aiming to promote implementation of the Regulations on Guaranteeing Payment of Accounts Payable to Small and Medium-sized Enterprises. The initiative prohibits relevant enterprises from leveraging their dominant market position to harm supplier interests and sets clear rules on payment terms: for suppliers classified as small and medium-sized enterprises (SMEs), the payment period must not exceed 60 calendar days from the delivery date or the date of acceptance; for non-SME suppliers, both parties may agree to conduct monthly consolidated reconciliations, with the payment term commencing from the reconciliation date. Regarding acceptance procedures, materials and components should, in principle, be accepted within seven working days, and a certificate of compliance must be issued immediately upon completion of acceptance. Cash payments are encouraged; if bank-accepted bills are used, this must be explicitly stipulated in the contract. The initiative also calls for reducing reliance on commercial acceptance bills and electronic payment instruments, and advocates full cash payment for SME suppliers. On the day of the initiative’s release, major companies including Contemporary Amperex Technology Co. Limited (CATL), Sunwoda Electronic Co., Ltd., and EVE Energy Co., Ltd. expressed their support. CATL stated it would safeguard the health and stability of the industrial chain and protect supplier rights; Sunwoda Power announced it would implement the initiative across multiple operational areas; and EVE Energy pledged to optimize its supply chain payment management. The Ministry of Industry and Information Technology’s (MIIT) Department of Equipment Industry I voiced its support, noting that 11 leading battery enterprises have already responded by introducing supporting measures. This initiative extends the automotive industry’s “60-day payment term” reform to the power battery supply chain. By 2025, 17 automakers have committed to keeping supplier payment terms within 60 days. According to a report by the China Association of Automobile Manufacturers (CAAM), most major automakers have already reduced their average payment terms to under 60 days. However, challenges persist in practice, including disguised extensions of payment terms and unreasonable demands imposed on suppliers. The issue is particularly acute in the battery sector—for instance, CATL’s total accounts payable and bills exceed RMB 300 billion. MIIT officials emphasized that this unified standardization effort will help establish a closed-loop governance system for payments and represents a critical step toward improving the business environment across the new energy vehicle supply chain. Despite strong initial support from leading enterprises, comprehensive implementation of the initiative still faces practical hurdles.