Photo: CATL
CATL’s first factory outside China is in Arnstadt, Thuringia, Germany. It is even named with a different acronym: CATT, for Contemporary Amperex Technology Thuringia GmbH. The Chinese manufacturer announced it started manufacturing lithium-ion cells on December 21, which is a long wait since the factory began its operations.
In Q3 2021, CATT kicked off the production of battery modules, but it did that with cells imported from China. With local production of these components, CATL will finally serve its European customers with batteries made just around the corner, so to speak. The Chinese battery maker did not disclose where the raw materials for production come from, but we’d bet they are still imported from China, the world’s leader in processing them.
The Thuringia state granted CATL authorization to make batteries in April, which also demonstrates how long the company took to get going with its first foreign factory. CATL reinforced that its new cells passed all quality control tests the company follows in its home market, which ensures the German cells are as good as the Chinese ones. Sign of the times, right?
CATL is the world’s largest battery manufacturer. Being Chinese and concentrating production close to its headquarters can be a sensitive element in times of international distrust in global commerce. Russia’s invasion of Ukraine and China’s feeble response to it led several countries to rush not to depend on Russian gas and Chinese batteries. The U.S. Inflation Reduction Act is a direct effect of that urge.
CATL’s president for Europe made sure to stress that the company is “a reliable partner of the industry.” Matthias Zentgraf also said that the Chinese battery maker is “committed to Europe's e-mobility transition even under very challenging conditions like the pandemic.” According to the executive, the company is “working hard to ramp up production to full capacity.”
Surprisingly, that full capacity is not that large. The Thuringia authorization is for the production of 8 GWh per year, which is relatively modest when we hear about other battery factories in Europe. The minimum output we have heard about is 20 GWh annually, and most projects are for 40 GWh. When CATL finishes investments in its German plant, it expects to make 14 GWh in cells every year and to employ 2,000 people at CATT. The factory will have a total investment of €1.8 billion ($1.914 billion at the current exchange rate).
CATL did not disclose who will buy its German cells, but we could bet on German carmakers, such as BMW, Mercedes-Benz, or the Volkswagen Group. With the low production volume its factory currently has, it will probably have a supplementary role. At this point, we wonder if the batteries made in Europe have any cost advantage or if they are just a political statement. Only CATL and its customers would be able to answer that.
The Thuringia state granted CATL authorization to make batteries in April, which also demonstrates how long the company took to get going with its first foreign factory. CATL reinforced that its new cells passed all quality control tests the company follows in its home market, which ensures the German cells are as good as the Chinese ones. Sign of the times, right?
CATL is the world’s largest battery manufacturer. Being Chinese and concentrating production close to its headquarters can be a sensitive element in times of international distrust in global commerce. Russia’s invasion of Ukraine and China’s feeble response to it led several countries to rush not to depend on Russian gas and Chinese batteries. The U.S. Inflation Reduction Act is a direct effect of that urge.
CATL’s president for Europe made sure to stress that the company is “a reliable partner of the industry.” Matthias Zentgraf also said that the Chinese battery maker is “committed to Europe's e-mobility transition even under very challenging conditions like the pandemic.” According to the executive, the company is “working hard to ramp up production to full capacity.”
Surprisingly, that full capacity is not that large. The Thuringia authorization is for the production of 8 GWh per year, which is relatively modest when we hear about other battery factories in Europe. The minimum output we have heard about is 20 GWh annually, and most projects are for 40 GWh. When CATL finishes investments in its German plant, it expects to make 14 GWh in cells every year and to employ 2,000 people at CATT. The factory will have a total investment of €1.8 billion ($1.914 billion at the current exchange rate).
CATL did not disclose who will buy its German cells, but we could bet on German carmakers, such as BMW, Mercedes-Benz, or the Volkswagen Group. With the low production volume its factory currently has, it will probably have a supplementary role. At this point, we wonder if the batteries made in Europe have any cost advantage or if they are just a political statement. Only CATL and its customers would be able to answer that.
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