CATL to set up battery cell manufacturing in Germany

The Chinese battery manufacturer has decided to start producing battery components in Germany. According to electrive.net, CATL is looking to Erfurt to set up a manufacturing facility for battery cells.

The hints that cell production in the German state of Thuringia have been intensifying: Bloomberg and Insider have also picked up on the information that CATL will be moving to Thuringia. The electrive.net editorial staff have spoken with informed circles, who indicated that the state capital Erfurt was chosen. An official declaration from the battery manufacturer or the state of Thuringia is still outstanding, however.

CATL’s role in the automobile industry has been steadily growing in recent times. Volkswagen and Daimler have signed supply agreements for the I.D. family and the EQ brand. Furthermore, BMW, PSA, and Renault-Nissan are also receiving battery cells from CATL.

After an attempted joint venture between Daimler and Evonik to build battery cells in Saxony, no major battery cell production plans in the country had been mentioned, and manufacturers focused on securing batteries from Asian manufacturers. While the competencies are elementary to building EVs, the options for local production had been left open.

The location for a potential battery factory has been discussed for some time, and led to founding the planning consortium Terra E Holding. CEO Holger Gritzka promised that by the end of 2019, the first batteries would be in ready. That now CATL has decided to join the battery manufacturing game in Germany is further good news.

Location benefits

Reasons for selecting Erfurt as a manufacturing base are multiple: For one, the nearby Volkswagen factory in Zwickau is easily reached, next to BMW and Porsche in Leipzig. Furthermore, the local population has a fairly high potential for well-educated specialists with key skills for the manufacturing, including the knowledge cluster in Thuringia, for example looking to the battery research project in Jena. The state will also be subsidizing the facility, further making the location attractive. Finally, the ICE train network with direct lines to Munich and Berlin is strategic for both customers and employees.

Battery demand has been growing rather rapidly in recent times. Experts expect that global production capacities will grow to an 175 GWh by 2020. That is about five times the total from 2016. Sources indicate that CATL will be producing around 44 GWh for the global market, exactly how much of which will be produced in the German facility is yet unclear.

Financing

In order to finance the major growth spurt, CATL will be going public at the stock exchange reportedly. Institutional investors can already sign up, and CATL is planning to sell about 10% of the company value in stocks at around 3.40 euro each (25.14 Yuan), as well as investing a volume of 722 million euro, making for a total of 7.2 billion euros.

The value of the German facility can hardly be exaggerated: Battery cell production on a local basis will not only help alleviate logistical issues, but the research teams from the BMW Group, the Daimler AG and the Volkswagen AG will work with the battery manufacturer to quickly integrate prototype technology insights into serial production.

That CATL is not a local company has found some disapproval from local figures in politics and economy. It is not unimaginable that local manufacturers will follow suite, at least when it becomes evident just how needed a battery cell manufacturing facility in Europe is.

electrive.net (In German)

Copy: Christoph M. Schwarzer