The World's Largest EV Battery Maker CATL is in the Final Stages of Vetting Sites in the U.S. to Build a New Factory
China's Contemporary Amperex Technology Co Ltd (CATL), which is the world's largest producer of electric vehicle batteries, is in the final stages of vetting sites in the United States to build a battery factory that would supply automakers, two people with knowledge of the plans told Reuters on Thursday.
The plant would be CATL's first battery production facility in the U.S.
CATL is in talks to supply both Ford Motor Co and BMW with batteries, so the potential factory sites include South Carolina, where BMW's U.S. assembly is located, and in Kentucky, where Ford operates two assembly plants, according to the two people that spoke with Reuters. The people asked not to be identified because the talks are ongoing and private.
Automaker BMW is already a customer of CATL. The company also supplies batteries to Tesla for the China-made Model 3, Honda Motor Co, Volkswagen, Volvo and Mercedes-Benz.
CATL also aims to expand its partnership with Tesla and eventually become its biggest battery supplier globally. The company is aiming to supply half of the battery cells Tesla uses for its electric vehicles and energy storage systems, a senior source at the Chinese company said last year.
If CATL selects South Carolina for its first U.S. factory, the company aims to have it operational by 2026.
Chairman Zeng Yuqun said on Thursday that CATL is looking to lock in its standing as the major battery supplier to automakers overseas "in the next round of supplier sourcing," which he said would begin from 2026, Reuters reported.
In a statement to Reuters, BMW said it was "intensively examining the possibility of establishing a battery factory" in North America and buying battery materials in the region. "We are in talks with several partners about this," the company wrote.
All of BMW's X Series SUV models, including the X3, X4, X5 and X6, are built in the U.S. at the automaker's factory in Spartanburg, South Carolina. The vehicles will soon be offered with electrified powertrains.
BMW's aims to reach sales of 2 million fully-electric vehicles by 2025 and have EVs account for at least half of global deliveries by 2030. BMW Chief Executive Oliver Zipse said the most important factor for EV production is having local suppliers.
BMW's factory in Spartanburg, South Carolina set a new production record last year, assembling a total of 433,810 BMW X Series vehicles. The record number represents a 20% increase from 2020, which was largely disrupted by the global pandemic. The production total also surpassed the previous record of 411,620 X Series vehicles produced at the plant in 2019.
A supply deal between CATL and Ford would help ensure the company has the batteries it needs as its electrifies its model lineup.
Ford's global battery electric vehicle (BEV) plan calls for at least 240 gigawatt hours (GWh) of battery cell capacity by 2030. The automaker said that approximately 140 GWh will be required in North America, with the balance dedicated to other key regions, including Europe and China.
In May 2021, Ford and South Korea-based SK Innovation signed a memorandum of understanding (MoU) to create a joint venture EV battery company called "BlueOvalSK" to produce approximately 60 GWh annually in battery cells and array modules in the U.S. Battery production is scheduled to begin by mid-decade, with potential to expand as Ford introduces new electric models. However, the planned production is still 80 GWh short of Ford's North America goal of 140 GWh.
"This MoU is just the start. It's a key part of our plan to vertically integrate key capabilities that will differentiate Ford far into the future," said Jim Farley, Ford president and CEO last year when the deal was struck. "We will not cede our future to anyone else."
General Motors has also formed a joint venture named Ultium Cells LLC for EV battery production in the U.S. with LG Energy Solution. In April 2021, GM announced a $2.3 billion investment to build a second EV battery cell manufacturing plant in the U.S. in Tennessee.
CATL will also open its first battery plant outside of China later this year in Arnstadt, Germany. The plant will supply batteries to BMW, as well as other automakers. CATL will invest 1.8 billion euros ($1.89 billion) in that factory, which will have an initial annual capacity of 8 GWh of batteries, the company has said.
It was not immediately clear what incentives CATL will receive from the states its considering for its U.S. factory, or if the company will enter into a joint-venture with an automaker.
Last month, CATL reported that its net income for 2021 more than doubled to 15.93 billion yuan ($2.47 billion), easily beating analyst estimates of 13.51 billion yuan ($2.1 billion). However the battery maker scrapped its dividend and reported weaker profitability due to surging raw-materials costs.
CATL's soaring net income is a result of growing demand for its electric vehicle batteries from global automakers. In 2021, CATL's lithium-ion battery sales were 133.4 GWh, up 184.8% year-on-year, with power battery system sales of 116.7 GWh, up 162.5% year-on-year.
120 GWh is enough to power around 1.2 million electric vehicles.
In December, CATL started phase 1 production at its new EV battery factory in China. Once completed, the plant will be the world's largest EV battery factory, with an annual production of 120 GWh. It will be more than three times the size of Tesla's gigafactory in Nevada.
The first phase of operations will have an annual capacity of 60 GWh and the additional 60 GWh for phase 2. The annual output of 120 GWh is enough to power around 1.2 million EVs.
CATL is investing 17 billion yuan (US$2.6 billion) in the plant and said it will create about 10,000 jobs once fully operational.
In March, China-based battery manufacturer Sichuan Contemporary Amperex Technology Limited (CATL-SC), which is a wholly-owned subsidiary of CATL, received the internationally recognized specification for carbon neutrality ("PAS 2060" certification) for its new electric vehicle battery plant in China. The recent PAS 2060 certification makes the plant the world's first zero-carbon factory in the new energy industry.
The certification marks a significant milestone for CATL towards its carbon neutrality goals. As the world's first zero-carbon battery plant, CATL's Sichuan plant sets an example of how EV battery production can be carbon neutral.
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