In Depth: CATL’s Bet on Europe Shows Challenges of Recreating Supply Chains Abroad

Contemporary Amperex Technology Co. Ltd. (CATL), the world’s largest EV battery maker for eight consecutive years, highlighted its European ambitions with a high-profile secondary listing in Hong Kong, raising HK$35.7 billion ($4.56 billion). The company allocated 90% of this capital to constructing a massive battery facility in Debrecen, Hungary, which is projected to reach 100 gigawatt-hours (GWh) of capacity, making it among the largest in Europe. This move marks a shift from a “made in China, sold globally” approach to local production, essential for maintaining contracts with Western automakers increasingly demanding local sourcing [para. 1][para. 2][para. 3].

CATL’s European expansion is rooted in strong ties to continental automakers. It was spun off from Amperex Technology Ltd. in 2011 and secured a milestone contract with BMW Brilliance in 2015, propelling its transition to automotive batteries. The company’s German plant in Thuringia already supplies major automakers such as BMW and Mercedes-Benz, and the decision to launch the Hungary project in 2022 was driven by Mercedes’ requirements for regional manufacturing. CATL is also investing in a 4.04 billion euro joint venture with Stellantis for a lithium iron phosphate (LFP) battery plant in Spain, with production targeted for 2026. With three European factories, the company will exceed 13.2 billion euros in continental investment [para. 4][para. 5][para. 6][para. 7].

CATL’s push stems from both client demands and market projections. The company expects Europe to become the world’s second-largest battery production hub by 2030, trailing only China, amid rising EV sales—even as broader EU auto sales slightly declined. Regulatory shifts, such as the EU’s new Battery Regulation, further require stringent standards, compelling foreign suppliers to manufacture in Europe. The collapse of Northvolt, once a leading European startup, shifted industry focus toward Chinese competitors like CATL, EVE Energy, and Sunwoda, which are now establishing local plants [para. 8][para. 9].

However, overseas expansion is fraught with challenges. European facilities face far lengthier and costlier construction timelines than those in China—often more than triple the 12–18 months typical for Chinese plants. Essential elements such as skilled staff, machinery, and supply chains are less accessible, slowing operations. For example, it took CATL until late 2022 to deliver its first battery cell from its German plant, which broke ground in 2019. Germany’s talent shortfall has forced CATL to import Chinese experts and invest heavily in local training, spending over 1.6 million euros training 3,000 workers between 2021–2024. Stringent safety regulations, environmental red tape, and the need to comply with EU rules on sourcing and localized supply chains add further delays and expenses [para. 13][para. 14][para. 15][para. 16][para. 17][para. 18][para. 19][para. 20][para. 21][para. 22][para. 23][para. 24][para. 25].

Competition is intensifying. South Korea’s LG Energy Solution and Japan’s Panasonic, with decades of overseas experience, are leveraging patent management—including legal actions in Germany—to slow Chinese entrants. CATL, with 17,000 global patents and a growing international legal presence, still faces vulnerabilities in intellectual property. Nevertheless, its scale, partnerships, and resources position it as a likely trendsetter for global Chinese battery makers, despite the formidable operational, legal, and talent challenges it faces abroad [para. 26][para. 27][para. 28][para. 29][para. 30][para. 31][para. 32][para. 33].