CATL Eyes Germany For New €1 Billion Factory

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Chinese battery heavyweight CATL is reportedly looking to invest up to €1 billion into a new battery factory in Germany, according to a Bloomberg report on the matter. The move would put one of the largest plug-in vehicle battery manufacturers right in the backyard of Germany’s lucrative luxury automotive manufacturers, including Daimler, Volkswagen, Porsche, and BMW.

Volkswagen and BMW already have business relations and Daimler might not be too far behind, as it has reportedly been in talks with CATL about a battery supply relationship in Europe, according to Sabine Angermann, a procurement executive at Daimler. Building a new facility in Germany or Poland could be a way for the Chinese battery giant to show Daimler how serious it is in an effort to seal the deal.

Renault and Nissan also recently made — or are in the process of making — a deal with CATL. While the German automakers may be the first that come to mind when you think of European cars, the Renault Zoe has been the top selling electric car in Europe several years now. CATL may be looking to supply far more than German automakers with a new factory on the northerly continent.

The Germany move is being financed in part at least by CATL’s recent initial public offering, which sent 10% of the company’s shares out into public markets for the first time, raising just over $853 million for a valuation of $12.3 billion, according to the Financial Times. The stock soared up to the maximum increase of 44% allowed by the Shenzhen stock exchange for a new stock, revealing just how bullish investors are in the plug-in vehicle market, and more broadly in energy storage, as well as how bullish they are on CATL itself.

CATL shared that it would use the funds raised to build a new factory capable of 24 GWh/year of production, which would be a significant increase on the 12 GWh of batteries it cranked out last year.

Rank Company Name (Chinese) Company Name (English) Company Name w/ Link (Short or Alternative) Electric Bus Battery Capacity Produced in 2017 (MWh)
1 宁德时代新能源科技股份有限公司 Contemporary Amperex Technology Limited CATL 5349.29
2 惠州比亚迪电池有点公司 Huizhou BYD Battery Co., Ltd BYD Huizhou 1664.27
3 深圳市沃特玛电池有限公司 Shenzhen Wotema Battery Co., Ltd. OptimimNano 1383.66
4 合肥国轩高科动力能源有限公司 Hefei Guoxuan High-Tech Power Energy Co., Ltd Guoxuan High-Tech 983.79
5 深圳市比亚迪锂电池有限公司 Shenzhen BYD Lithium Battery Co., Ltd BYD Shenzhen 872.64
6 珠海银隆新能源股份有限公司 Yinlong Yinlong 736.02
7 北京国能电池科技有限公司 Beijing National Battery Technology National Battery 568.74
8 微宏动力系统(湖州)有限公司 Micro Power System (Huzhou) Co., Ltd. Microvast 397.27
9 力神动力电池系统有限公司 Lishen Battery Co., Ltd. Lishen 297.8
10 中航锂电(洛阳)有限公司 China Aviation Lithium Battery Co., Ltd. CALB 271.13
2017 Chinese Installed capacity
2017 installed battery capacity in Chinese electric buses. Data source: Research Department of Power Battery Application Branch

The expansion is the start of a much larger push into electric vehicle battery production that tracks nicely with that of Tesla. However, they are building their businesses starting from great distances apart. CATL is already a big player in the world’s largest plug-in vehicle market — China — where it is the #1 battery supplier of China’s tremendous electric bus market as well as the battery supplier for various electric cars. Meanwhile, Tesla still has another 4 or 5 years of construction before its first Gigafactory in Nevada reaches full capacity. In parallel, though, Tesla is flipping the script, with the confirmation of its first Gigafactory in China, which will land in Shanghai and be announced shortly according to an update in Tesla’s annual shareholder meeting last week. So, it is fitting that CATL is now moving west.

CATL has plans to achieve a production capacity of 50 GWh by 2020, which requires another 14 GWh of production capacity beyond the 24 GWh factory it is working to pin down in Germany or Poland. Where will that remaining 14 GWh be produced?

Poland has become a top option for battery manufacturers looking to spin up production capacity for Europe. It is now home of LG Chem’s $387 million investment in additional production capacity, which is being put into action in Wroclaw, Poland (home of CleanTechnica Director Zach Shahan). The city also has an electric carsharing program that includes 200 Nissan LEAFs, a couple of electric scooter-sharing networks, and extensive EV parking and driving incentives.

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Kyle Field

I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. As an activist investor, Kyle owns long term holdings in Tesla, Lightning eMotors, Arcimoto, and SolarEdge.

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