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Tesla China Battery Supplier CATL Plans To Largely Increase Cell Production Capacity

by Eva Fox March 02, 2020

Tesla China Battery Supplier CATL Plans To Largely Increase Cell Production Capacity

In early February 2020, CATL announced a partnership with Tesla and officially entered its supply chain, and recently the company also announced that it plans to raise 20 billion yuan ($2.86 billion) to build lithium battery projects and promote capacity expansion plans.

On February 26, CATL published a closed release plan. According to the announcement, the total amount of funds raised by the non-public offering of CATL is no more than 20 billion yuan (including the number), which is to be fully used in Ningde times Huxi lithium-ion battery expansion project, Jiangsu times power and energy storage lithium-ion battery R&D and production project (phase III), Sichuan times power battery project phase I, and electrochemical energy storage cutting-edge technology reserve R&D project after deducting the issuing expenses and replenish working capital.

Regarding the purpose of this non-public offer, CATL stated that, firstly, it should meet the national industrial policy and stabilize the industry status of the company, and secondly, the company itself, which is a way to help the company realize its strategy and achieve the goals of future development. And it is also beneficial to replenish the company's business development funds and optimize the financial structure.

CATL believes that the capacity building activities of this fundraising project will help it expand its capacity and continue to meet growing market demand. This will help the company maintain its leading technological advantages, open new market areas and further increase the company's profitability.

In addition, CATL said that in order to further advance the company’s production capacity structure and strengthen its market position, it will also invest in the construction of the base project for the production of lithium-ion batteries Ningde Cheliwan with a total investment of not more than 10 billion yuan. ($1.43 billion).

A Contemporary Amperex employee works at an assembly line in Ningde, Fujian province.[Photo/Xinhua]

Market expansion and demand growth are the main reasons why the company is formulating plans to expand capacity.

According to SNE Research, for the entire 2019, the installed capacity of CATL batteries was 51% of China's total installed capacity, and the industry status is outstanding.

In early February, CATL published an announcement confirming its partnership with Tesla, and since then it has officially become the third Tesla battery supplier after Panasonic and LG Chem.

CATL wants to raise capital for a significant increase in production capacity, which means that they are very optimistic about the future of Tesla China.

The annual output at the Ningde plant in Fujian province, where the company’s headquarters are located, will be increased by 16 gigawatt hours, the battery manufacturer said.

Capacity in a factory in Jiangsu will increase by 24 gigawatt hours. And in Sichuan, a new plant with a capacity of 12 gigawatt-hours will open. New equipment at these facilities will be launched in two to three years.

CATL is currently building its first overseas factory in Germany. Mass production at the facility with a capacity of 14 gigawatt hours will begin in 2022.

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