EXCLUSIVE Tesla supplier CATL plans a major battery plant in Shanghai -sources

People walk past the R&D center of Contemporary Amperex Technology Ltd (CATL) in Ningde, Fujian Province, China, Dec. 16, 2016. REUTERS / Jake Spring / File Photo

China’s CATL (300750.SZ) is planning a major new automotive battery plant in Shanghai and is continuing a rapid pace of expansion that will cement its leading position as the world’s No. 1 supplier, two experts on the matter said.

The facility’s location in Shanghai will bring it close to Tesla Inc. (TSLA.O) Chinese manufacturing base after starting supplying batteries for the US automaker’s Model 3 in China last year

CATL hopes to quickly build that relationship to become its largest supplier in the near future by providing half of the battery cells Tesla uses in electric vehicles and rooftop energy storage systems around the world, a senior source for the Chinese company said.

The new facility could produce 80 gigawatt hours of battery cells per year, said a second person, which would add up to 69.1 GWh of current production capacity and a further 77.5 GWh under construction.

CATL spoke to the Shanghai government about building the factory, people said, adding that the location will also allow the company to draw on a larger and more diversified talent pool than its headquarters in Ningde, southeast China.

It was not immediately clear when a final agreement could be reached or when CATL hopes to bring the new facility up and running.

CATL said it is in talks with Tesla about further collaboration and Tesla is asking the company for help with battery solutions, but declined to comment on plans for additional manufacturing capacity.

The Shanghai government and Tesla did not immediately respond to a request for comment.

The expansion plan is likely to increase competitive pressures on Tesla’s other battery supplier, Japan’s Panasonic Corp. (6752.T) and South Korea’s LG Energy Solution, a unit of LG Chem (051910.KS).

Many battery manufacturers are ramping up production to meet growing global demand as automakers accelerate their transition to electric vehicles to meet stricter emissions regulations to combat global warming. Tesla also urged its suppliers in April to produce as much as possible.

In March, LG Energy Solution announced that it would invest more than $ 4.5 billion in US battery production over the next four years. Continue reading

With 80 GWh per year, the new plant in Shanghai could supply around 800,000 electric cars with electricity, analysts said.

The plant will likely be located south of Tesla’s Shanghai factory in Lingang, Pudong New Area, the second source said, adding that it will hire 5,000 workers and manufacture cell-to-chassis (CTC) batteries.

The new technology integrates cells directly into the frame of an electric vehicle to increase the energy density of battery systems. CATL chairman Zeng Yuqun said electric vehicles could achieve ranges of over 800 km (500 miles) with CTC technology, adding that CATL plans to bring the technology to market before 2030.

By comparison, CATL’s cell-to-pack technology, currently used in Tesla’s Model 3 cars, gives the vehicles a range of around 468 km per charge.

CATL is also considering setting up a research center and global sales and operations center in Shanghai due to difficulties in retaining and hiring staff in Ningde, the source said.

The Shenzhen-listed CATL closed 2.3% on Thursday, valuing the battery maker at around $ 155 billion. The broader ChiNext Composite Index lost 1.3%.

Its stocks are up roughly 18% this year with sales increasing.

CATL, whose customers also include Volkswagen (VOWG_p.DE), General Motors (GM.N), BMW (BMWG.DE) and Daimler (DAIGn.DE) and Chinese car manufacturers almost quadrupled their battery sales to 21.4 GWh in the first four months of 2021, according to SNE Research.

LG Energy Solution saw sales jump 133% to 14.2 GWh over the same period, while Panasonic’s sales jumped 51% to 9.7 GWh, the report said.

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