CATL plans third battery factory in Europe

The world’s largest electric vehicle battery maker, China’s current Amperex Technology Co. Ltd., is considering a third manufacturing plant in Europe, the company’s president in the region, Matthias Zentgraf, said.

“We are fascinated by this, but right now there is no clear solution or exercise,” Zentgraf told Bloomberg News in an interview, saying internal discussions were already underway.

Last month, the company announced plans to build a second European plant in Hungary, investing 7.3 billion euros ($7.2 billion) in partnership with Mercedes-Benz.

The capacity has a planned output of 100 gigawatt hours and will also supply Volkswagen Group, BMW and Stellantis.

CATL expects it to be ready within 5 years.

“We are not going to build a third plant if there is no prospect for the volume of demand,” Zentgraf said in a video name from the IAA Transportation conference in Hannover, Germany.

CATL maintained a lead over its rivals, with the world’s second largest cell producer, LG Power Resolution.

The company rebounded from the biggest drop in quarterly earnings on record at the start of 2022, with first-half internet profits up 82% year-on-year and revenue up 156%.

CATL has established a number of manufacturing bases in China and subsidiary companies in the United States, Japan and Europe. It is spending 27 billion yuan ($3.8 billion) on two battery initiatives in China’s Shandong and Fujian provinces.

Zentgraf declined to say whether or not CATL would supply batteries to Tesla’s new manufacturing plant in Berlin.

The battery maker has also set up websites in Mexico and the United States to supply Tesla, Ford and others, although this process has been partially delayed due to political tensions between China and the United States, said reported Bloomberg in August.

CATL is expected to start producing batteries at its first European factory in the central German city of Erfurt later this year. One of the problems is the continent’s vitality disaster and rising fuel prices following Russia’s invasion of Ukraine. More than half of Germany’s fuel imports came from Russia before the conflict.

“We are affected by the shortage of pure fuel, which is essential for the cell manufacturing process because we need a lot of energy,” Zentgraf said. Gasoline accounts for about half of the German plant’s energy needs.

“We are engaged in substitutions for this extensively,” said Zentgraf, who joined CATL in 2015. “We already have a very, very promising idea to switch from pure fuel to buying renewables.”

Contingency plans will allow the plant to remain operational in the winter if fuel supplies are insufficient or costs are too high, he said.

Zentgraf called on the EU to provide more versatile public support to help locate and grow the EV battery supply chain and complement the billions of dollars in funding from battery manufacturers.

“Focus this grant on increasing the chain of availability for all battery companies,” he said.