Chinese battery maker Tesla explores factory sites in Mexico

China’s Contemporary Amperex Technology Co. Ltd., the world’s largest maker of electric vehicle batteries, plans to set up at least two sites in Mexico for a manufacturing plant that could supply Tesla Inc. and Ford Motor Co.

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(Bloomberg) — China’s Contemporary Amperex Technology Co. Ltd., the world’s biggest maker of batteries for electric vehicles, is considering at least two locations in Mexico for a manufacturing plant to potentially supply Tesla Inc. and Ford Motor Co.

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The battery maker is considering Ciudad Juarez, in the state of Chihuahua, and Saltillo, in Coahuila, according to people familiar with the deliberations. Both are near the Texas border. The company plans to invest up to $5 billion in the project, said the people, who asked not to be identified while discussing private information.

Ciudad Juarez is attractive in part because it is close to the San Jeronimo-Santa Teresa port of entry into the US state of New Mexico. This would provide a route around border crossings in Texas, home to Tesla’s new factory, but which has taken steps in recent months that have complicated shipping and entry into the United States. Gov. Greg Abbott increased commercial vehicle inspections in April, declaring his willingness to crack down on drug trafficking and immigration. But analysis by an economic research organization found it was costing the state economy more than $4 billion in lost production due to shipping delays and blocked bridges.

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Read more: Tesla supplier CATL weighs sites for $5 billion battery factory

CATL, as the Ningde, China-based company calls it, also plans to split its investments across two locations, one in the United States and the other in Mexico, the sources said. No final decision has been made and the total size of the investment is fluid. Bloomberg reported in March that the investment could build an 80 gigawatt-hour plant.

CATL and Dearborn, Michigan, Ford, declined to comment. Tesla, based in Austin, Texas, did not respond to a request for comment.

Backed by China’s strategic push towards electric cars, CATL is seeing a boom in demand for electric vehicles as countries strive to reduce carbon emissions and consumers adopt cleaner cars. The company, which completed an IPO in 2018, controls more than 30% of the global electric vehicle battery market.

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CATL has been considering a battery factory in the United States for years, but rising geopolitical tensions between the United States and China have complicated the effort. It is also under competitive pressure to speed up a decision as rivals like LG Energy Solution Ltd., Samsung SDI Co. and Panasonic Holdings Corp. enter into agreements with car manufacturers to build battery factories in the United States.

The trade agreement between the United States, Mexico and Canada, negotiated under then-President Donald Trump, further complicated CATL’s plans by introducing higher wage requirements for cars to be traded duty-free. of rights, as well as stricter content rules. A CATL site would help Mexico, which has long been a major part of the automotive industry’s supply chain, solidify its role in the region’s electric vehicle production.

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Read more: Panasonic seeks US sites for new battery factory by 2024

CATL could choose to manufacture battery cells in Mexico and then ship them to Kentucky to be assembled into batteries. In 2020, the Chinese battery giant bought a former RR Donnelley & Sons Co. print shop in Glasgow, Kentucky, and formed a subsidiary in the state, documents show. In April 2021, he hired Charles Huang, a manufacturing executive, to be general manager of the project, according to his LinkedIn page.

Huang’s LinkedIn page says his mandate is “to establish corporate structure and strategy for CATL’s manufacturing project in North America.”

A spokesperson for the Kentucky Economic Development Agency declined to comment on CATL’s plans in the state.

An expanded presence in North America could confuse US officials keen to support domestic suppliers. President Joe Biden is allocating billions to cultivate America’s battery supply chain and wean the auto industry from its reliance on China, but those efforts will take years to materialize thanks to American startups and partnerships with Korean and Japanese companies.

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