China CATL seeks sites in North America for battery plant

(Bloomberg) — The Chinese company Contemporary Amperex Technology Co. Ltd., the world's largest manufacturer of electric vehicle batteries, is looking at sites in North America to build a $5 billion plant to supply customers such as Tesla Inc.

The company intends to build a factory with a production capacity of up to 80 gigawatt-hours of batteries per year, according to people familiar with the matter. The facility would eventually employ up to 10,000 workers, said the people, who asked not to be identified because it was private information.

CATL executives traveled to Mexico earlier this month to hold meetings, the sources cited said. The company is also considering settling in the United States and Canada, but is concerned about the availability of labor and other commercial issues.

A CATL spokesperson in China declined to comment on expansion in North America, planned investment and site assessment.

Backed by China's strategic drive towards electric cars, CATL is taking advantage of the boom in demand for electric vehicles as countries work to reduce carbon emissions and consumers adopt cleaner cars. The company, which completed an IPO in 2018, has a share of around 30% in the global electric vehicle battery market.

For CATL, based in Ningde, in the Fujian region, it will be crucial to have a production facility in North America to avoid costly commercial tariffs while supplying Tesla and other automakers. The company has used its huge scale in China, which has the largest cell manufacturing and metal refining capacity in the world, to reduce costs for customers around the world, while spending heavily on research and development.

The expansion of its presence in North America could cause concern to the US authorities, which are in favor of supporting domestic suppliers. President Joe Biden is allocating billions to cultivate the U.S. battery supply chain and strip the automotive industry of its dependence on China, but those efforts will take years to pay off.

Automakers around the world, from Ford Motor Co. to Volkswagen AG, are electrifying their vehicle lines, creating unprecedented demand for batteries. Automakers' production plans have contributed to skyrocketing prices for metals such as nickel, cobalt and lithium, prompting Tesla to announce last October that it would start using lithium iron phosphate batteries for short-range vehicles in order to offset the pressure of prices.

Cheap and stable

Lithium iron phosphate, or LFP, batteries are cheaper and more stable than alternatives, but they often offer less autonomy because they lack energy density, although this is changing rapidly. CATL dominates the LFP battery market, and Tesla already uses LFP cells supplied by CATL at its Shanghai factory.

CATL's new plant in North America would produce a mixture of nickel-manganese-cobalt and LFP cells, and supply both Tesla and other automakers, said two people familiar with the matter.

Elon Musk said in January that battery supply would become a limiting factor once the chip crisis abates. To prepare for the crisis, Tesla is manufacturing its own 4680 battery cells in Fremont, California, and expanding its supply circle beyond its former partner Panasonic, while trying to increase sales and prepare to open plants in Austin, Texas and Berlin.

Panasonic is also looking for land to install a plant in the US, Bloomberg reported this month. The company manufactures 4680 cells for Tesla and supplies the automaker's gigafactory in Reno, Nevada.

CATL has 145 gigawatt-hours of battery manufacturing capacity and has announced or is in the process of building another 579 by 2026, according to data compiled by BloombergNEF.

manufacturer's customers also include Daimler Truck Holding AG, BMW, Stellantis NV and BAIC Motor Corp.

Original Note:

Tesla Supplier CATL Weighs Sites for $5 Billion Battery Plant

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