Caixin
Oct 18, 2021 08:43 PM
TECH

Top Electric Car Battery-Maker CATL Signs Up New U.S. Customer

CATL showcases its new-energy vehicle batteries on June 18 at a trade fair in Fuzhou, East China’s Fujian province. Photo: VCG
CATL showcases its new-energy vehicle batteries on June 18 at a trade fair in Fuzhou, East China’s Fujian province. Photo: VCG

The world's top electric car battery-maker, China's Contemporary Amperex Technology Co. Ltd. (CATL), has agreed to supply a new U.S. manufacturer of commercial electric vehicles, adding to its growing list of customer deals with global automakers ranging from Tesla Inc. to Volkswagen AG and General Motors Co.

CATL has agreed to a four-year deal to provide Electric Last Mile Solutions Inc. (ELMS) with lithium-iron phosphate (LFP) batteries to power its electric delivery van, which the U.S. automaker, based in a suburb of Detroit, began building last month at its factory in Indiana, ELMS said in a statement issued late last week.

In addition, the two companies are also exploring “various potential cooperation opportunities” including setting up a U.S. battery plant that would enable CATL batteries to power ELMS vehicles sold in North America, a ELMS representative told Caixin.

The companies did not disclose the financial terms of the deal.

ELMS was founded in 2019 by former U.S. auto and Silicon Valley executives and was taken public on Nasdaq earlier this year through a “blank check” merger.

In late 2020, Fujian-based CATL, which already has U.S. sales offices, bought a plant from U.S. commercial printing firm LSC Communications Inc. in Glasgow, Kentucky, a move that some industry observers regarded as a step toward the Chinese vehicle-battery maker eventually localizing U.S. manufacturing there.

When asked by Caixin on Friday, a CATL representative gave a vaguely worded statement about the speculation, saying that the company will issue a formal statement if it decides to make batteries in the United States. The representative added that CATL would factor in market demand, investment environment, industry chain level and labor costs when making investment overseas.

The tie-up between CATL and ELMS follows moves this year by the administration of U.S. President Joe Biden to set an ambitious new target requiring that half of all new vehicles sold in the U.S. by 2030 be zero-emissions, including electric, plug-in hybrid and fuel-cell vehicles.

As the switch to more environmentally friendly cars gathers pace in China — already the world’s biggest market for electric vehicles — CATL has been doubling down on efforts to boost its investment and production to meet growing demand in the country.

Last week, CATL unveiled plans (link in Chinese) to invest up to 32 billion yuan ($5 billion) to build a battery material recycling and manufacturing facility in Yichang, Central China’s Hubei province. As part of the investment plan, a CATL subsidiary will form a joint venture with Hubei Yihua Chemical Industry Co. Ltd. to recycle used vehicle batteries and extract cobalt and lithium.

In September, the Tesla supplier said that it would invest up to 13.5 billion yuan to build a lithium-ion battery factory in Yichun in Southeast China’s Jiangxi province.

CATL holds the world's biggest share of the electric vehicle market at around 30% in the first eight months of 2021, according to South Korean consultancy SNE Research, followed by Korea's LG Energy Solution at 25% and Japan's Panasonic Corp. with 13%.

LFP batteries produced by CATL use a so-called cell-to-pack technology that offers improved energy density, simpler manufacturing and enhanced cost efficiency, CATL said. LFP technology is widely considered less expensive and safer than cobalt or nickel-based cathodes used in other batteries.

Contact reporter Ding Yi (yiding@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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