Major Chinese auto-related electric battery firms saw a profitability downturn in 2017, despite upstream material producers enjoying bigger margins, Chinese media reports say.

A report in the China Daily newspaper says the automotive battery segment in China is seeing tough times due to overcapacity and reduced subsidies for electrified vehicles.

The report says raw material companies producing lithium and cobalt registered significant growth last year, according to their recent annual reports. For instance, the net income of Jiangxi Ganfeng Lithium Co Ltd rose by 216 percent year-on-year to 1.47 billion yuan ($232.9 million).

Higher prices for raw materials led to reduced profits in downstream battery firms.

Guangdong Dynavolt Renewable Energy Technology Co Ltd forecast a net loss of 129 million yuan in 2017, down 237 percent year-on-year, according to a statement. BYD Co Ltd reported that its net profit shrank 19.5 percent from a year earlier to 4.07 billion yuan.

Guizhou Anda Energy Technology Co Ltd registered a profit decline of 24.5 percent year-on-year. The firm said in the report that the sudden decrease is partly due to "the rising cost of raw materials" and "the adjustment of a government subsidy program for new-energy vehicles", the China Daily reported.

The report noted that Beijing has been cutting financial incentives for new energy cars, after stimulating the market for years; they are being replaced by OEM volume quotas.

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