CATL plans units in Mexico; may supply Tesla, Ford

Contemporary Amperex Technology Co Ltd is mulling accelerated overseas expansion, as the Chinese battery giant is planning at least two locations in Mexico for a manufacturing facility to potentially supply Tesla and Ford Motor.

The Ningde, Fujian province-based company is contemplating an investment of as much as $5 billion in the new plant. Two Mexican cities, Ciudad Juarez of Chihuahua and Saltillo of Coahuila, are options, Bloomberg reported.

Ciudad Juarez is attractive in part because it would provide a route around the border crossings of Texas, which is the home of Tesla's new factory but in recent months has taken measures that complicate shipping and entry into the United States.

Industry experts said that CATL aims to speed up its global layout to better meet the needs of overseas customers and reduce logistics costs, especially when new energy vehicle development is expected to see a boom globally over the next years.

In June, CATL confirmed to China Daily that it has also supplied electric vehicle batteries to South Korea's Kia Corp, which marked the first entry of a non-South Korean battery into the market.

CATL also received approval to produce battery cells in its factory in the German federal state of Thuringia in April. The new plant, as its first factory outside of China, has a total investment of 1.8 billion euros ($1.9 billion), which is much higher than the average 300 million yuan ($47 million) to 400 million yuan investment in the company's domestic factories.

"Recent moves showed CATL's ambitious plan and accelerated steps for its capacity expansion in overseas markets, so as to get closer with major car manufacturers to reduce costs in logistics amid COVID-19 pandemic uncertainties," said Wang Jing, a research supervisor for high-end manufacturing at Shanghai Chaos Investment Group Co Ltd.

"With an anticipated boom in NEV sales globally in the coming years, mainstream battery manufacturers will no doubt rev up steps in going global," she said.

Robin Zeng Yuqun, chairman of CATL, remarked to over 50 investors including Hillhouse Group, Sequoia Capital, Tencent Holdings and Temasek Holdings, that CATL is also considering opening a plant in the US and the company is exploring the feasibility of localizing in the market. However, Zeng admitted that the plan faces many challenges, such as worker training.