CATL considers plant in North America

The Chinese battery cell manufacturer CATL considers building a cell factory with a production capacity of 80 GWh in North America. A media report reveals that the Chinese company has not yet decided on a location and that Mexico, the USA and Canada are likely candidates.

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Several people familiar with the process have told Bloomberg that the investment could amount to up to five billion dollars (4.5 billion euros). When completed, it could employ up to 10,000 people. A date for the possible start of construction has not been revealed, nor do the sources say when the final stage of development should be reached.

According to Bloomberg, sources said that a delegation of CATL executives had already travelled to Mexico for meetings in early March. The outcome of these talks has not been revealed, but the company is explicitly considering locations in the US, Mexico and Canada. The sources have said there are “concerns about labour availability and other trade issues”. This could suggest that Mexico might be the favourite.

CATL would not comment to Bloomberg on the information about a possible expansion in North America. What is clear, however, is that with a production base in North America or the NAFTA region, CATL could avoid costly import duties that would be incurred when importing cells built in China.

Bloomberg speculates, however, that an expanded North American presence for the world’s largest EV cell maker could “unnerve” US officials. While US President Joe Biden’s administration wants to build an eMobility industry along the entire value chain, it is also particularly keen to support domestic suppliers. It remains to be seen whether and to what extent CATL could count on government subsidies if it set up shop in the USA.

As the insiders further stated, the large cell factory is not to supply only one carmaker. Of the potential customers, only Tesla is mentioned by name, which already purchases cells from the Chinese manufacturer for production in the Giga Shanghai – more precisely, the LFP cells for the base models of the Model 3 and Model Y built in China. According to two sources, the new CATL plant will also manufacture LFP cells, but not exclusively, aiming for a mix of NMC and LFP cells.

CATL already has an installed production capacity of 145 GWh. According to BloombergNEF, the company has announced plans to build another 579 GWh by 2026, part of which is already under construction.

Update 18 July 2022

According to a recent Bloomberg report, CATL now has a favourite location for its planned North American factory – and that is Mexico. The Chinese battery cell manufacturer has identified two potential locations in Mexico. As Bloomberg reports with reference to insiders, these are Ciudad Juarez in the state of Chihuahua and Saltillo in the state of Coahuila. Both potential sites are close to the Texas border.

The decision could also be made based on negotiations with potential buyers. Ciudad Juarez has a direct border crossing to Texas, where, as is well known, a gigafactory of the large CATL customer Tesla is located. Saltillo, on the other hand, is a little further from the US border, but in the immediate vicinity of Ramos Arizpe, where GM will build electric cars in the future. The report also mentions Ford as a potential customer. Ford’s Mexico plant in Cuautitlán, however, is located much further south near Mexico City.

CATL is also considering splitting its investment between two locations – one in the USA and one in Mexico. A final decision has not yet been made.

bloomberg.com, autonews.com, yahoo.com (update)