CATL is aggressively forging its international business with OEMs

CATL is aggressively forging its international business with OEMs

As the automotive industry rapidly pivots from combustion to electric vehicles, many OEMs are racing to set up lithium-ion battery supply deals. At the same time, OEMs are increasingly concerned about vesting such a large proportion of the value of their EVs outside of the company. As their role in modern technology becomes more critical, batteries have become a new battleground, with those in possession of the best technology or the most lucrative supply deals likely to become dominant in the future.

To capture as much value as possible within their own walls, several OEMs now looking to more vertical integration for battery supply. This will be driven by their concern over large third-party developers such as CATL – one of the fastest-growing providers of batteries to the industry.

Here's our primer on CATL, what it is, where it came from and where it's going.

IN PROFILE: CATL

 CATL
Company name Contemporary Amperex Technology Co., Limited. (CATL)
HeadquartersNingde, Fujian Province, China
Founded2011
Key people‘Robin’ Zeng Yuqun (founder, chairman), Zhou Jia (president)
ProductsLithium-ion battery cells for passenger vehicles, commercial vehicles, and energy storage systems; battery recycling solutions
RevenueQ3 2020 – CNY 12.69bn (up 0.8% compared with Q3 2019)
Net profitQ3 2020 – CNY 1.19bn (up 3.9% compared with Q3 2019)
Competitive positionNumber 2 for global market share of EV battery manufacturing. Largest lithium-ion battery supplier in China. (H1 2020 – source: Global X ETFs) 1. LG Energy Solution (26.5%) 2. CATL (25.8%) 3. Panasonic (20.6%) 4. Samsung SDI (6.8%) 5. BYD (6.2%)
R&D centersFour research and development centers: • Ningde, Fujian, China • Liyang, Jiangsu, China • Shanghai, China • Munich, Germany
Production basesSix production bases: • Ningde, Fujian, China • Xining, Qinghai, China • Liyang, Jiangsu, China • Yibin, Sichuan, China • Zhaoqing, Guangdong, China • Erfurt, Germany
Production capacityCATL’s current production capacity stands at 109GWh for 2020. That’s enough for roughly 1.8 million mid-sized electric vehicles assuming they use a 60kWh battery pack. The company has stated that it intends to ramp up its battery production capacity to around 336 GWh in 2023. This comes in response to rapidly growing EV sales both in China and abroad, with companies such as Tesla urging battery manufacturers to ramp up capacity as much as possible. This capacity growth will be achieved through a number of methods including building a new facility in Zhaoqing, Guangdong with a projected annual capacity of 25GWh. The new factory is expected to cost roughly CNY 12bn. In addition, the company will spend another CNY 12bn to upgrade its existing factory in Yibin. This plant is expected to grow its annual production capacity from 15GWh to around 30GWh further down the line. The company has also suggested opening a second Yibin facility with a similar 30GWh annual capacity target. Chinese local media is estimating that upgrades to CATL’s existing facilitates will account for around 130GWh of its planned increased capacity. Reportedly, those gains break down as a 60GWh increase in its Ningde base, a 40GWh increase in Jiangsu, and a 30GWh jump courtesy of the Yibin facility.
Joint venture activityCATL-FAW joint venture: Established March 2019; JV for development, production and sale of lithium-ion batteries for electric vehicles; Starting capital of CNY 2bn; 51% owned by CATL, 49% by FAW; Facility in Ningde, Fujian, China; Began production of cells in September 2020; Supplies cells for vehicles based on FAW’s Hongqi FME EV platform along with Chinese-made models using Volkswagen’s MEB EV platform
CATL-Geely joint venture: Established December 2018; Called CATL Geely Power Battery; JV for production and sale of lithium-ion battery cells, modules and packages; Starting capital of CNY 1bn; 51% owned by CATL, 49% by Geely; Facility in Yibin, Sichuan, China
CATL-SAIC joint venture: Established June 2017; Set up two companies: one to develop, produce and sell lithium-ion batteries, and one focused on battery systems; First phase completed in 2018 with a capacity of 18GWh at a cost of CNY 10bn; JV announced in February 2021 that it would spend a further CNY 10.5bn on the facility to double its output to 36GWh
CATL-GAC joint venture: Established July 2018; Set up two companies: one to develop, produce and sell lithium-ion batteries, and one focused on battery systems; Registered capital across the two businesses is CNY 1.1bn; The battery production facility was expected to go into production at the end of 2020 but slow investment exacerbated by the COVID-19 outbreak has delayed the predicted start of production to October 2021; According to reports, only around 2% of promised capital has been invested in the JV as of June 2020
CATL-BAIC joint venture: Relationship began between the two in 2012, before advancing to a full supply agreement in 2016; Co-developed a ‘cell to pack’ battery pack in 2019 that cuts out battery modules and directly incorporates EV battery cells directly into the pack to reduce weight and increase capacity and range; Cell to pack battery pack is claimed to increase capacity by up to 20% while reducing the number of parts needed by 40%
CATL-Dongfeng joint venture: Set up in April 2018 with the first of three production lines going live in July 2018; JV is 50/50 owned by the two parties; JV is based in Wuhan, China; Both parties renewed their commitment to the venture in June 2020 with an agreement to deepen ties and develop more competitive EV battery technology; Through 2019 a further two production lines were set up for a total of three
CATL-Honda joint venture: In July 2020, Honda and CATL agreed to form an alliance for the joint development of batteries for electric vehicles; Honda purchased a 1% stake in CATL; The two companies have also agreed to set up a battery recycling business; The first Honda with a CATL-built battery pack is expected to launch into the Chinese market in 2022; This is separate from Honda’s agreement in North America with GM to use LG Energy Solution-designed Ultium battery cells and EV component
CATL-Valmet Automotive joint venture: In January 2017, contract vehicle manufacturer Valmet Automotive confirmed that CATL had taken a 22% stake in the company; The JV aims to support leading European manufacturers and suppliers by engineering EV drivetrain solutions and battery packs; The partnership strengthens CATL’s position in the growing European electric vehicle market; In November 2019, production of EV battery packs began at Valmet’s plant in Salo, Finland – this was a former Nokia factory that manufactured battery components for mobile devices; This tie-up puts Valmet in a strong position to become a Europe-based supplier of complete EV systems including ‘skateboard’ EV platforms, battery packs, electric motors and control hardware. These can be sold on to coachbuilders to add their own unique body designs on top
Other supply agreementsTesla: CATL is the main cell supplier to Tesla for its Shanghai facility; It supplies 2170-type cells to Tesla for the locally built Model 3 sedan; CATL cells in Standard Range Model 3s use LFP chemistry (lithium, iron, phosphate) that completely cuts out cobalt – an expensive metal that’s difficult to ethically source
Volvo/Polestar: In May 2019, Volvo agreed a large supply deal with CATL and LG Chem for cells to be used in its new Polestar EV range; Deal ensures Volvo and Polestar will have cell supply for at least 10 years
Daimler: CATL has agreed to supply Daimler with its cell to pack battery packs and the two agreed in 2020 to expand their partnership to include battery R&D; Daimler will be supplied with CATL cells produced at its German facility; Agreement covers battery packs for passenger vehicles along with Mercedes vans; A separate agreement in September 2019 was signed between CATL and Daimler Trucks and Buses; This will see CATL-built battery modules built into battery packs at Daimler Truck facilities including Mannheim, Germany and Detroit, USA
BMW: The German automaker signed an initial supply deal with CATL for EUR 4bn worth of cells for future electric models; In November 2019, BMW confirmed that it would increase this order to EUR 7.3bn for the period between 2020 and 2031; Of that sum, EUR 2.8bn will be used in Brilliance-BMW models built in China, with the remainder used in BMW-branded models built outside China
Toyota: In July 2019, Toyota and CATL confirmed that they would set up a supply arrangement for lithium-ion cells for EVs; Toyota has also partnered with China’s BYD for further cell supply; The CATL partnership makes up for Toyota’s relative lack of expertise and production capacity in the lithium-ion field, having invested much in its nickel-metal-hydride batteries used extensively in its hybrid vehicles

Source: GlobalData