CATL will build a factory in Germany

Foreword: Seven years ago, a new energy technology company was established in Ningde, China. And seven years later, this battery manufacturer announced that they would build a plant in Europe. That is CATL (Contemporary Amperex Technology Co. Ltd.). The ChiNext listing of CATL in June 11 was quite appealing. After only 9 days of listing, the market value of CATL has surpassed that of BYD. There are plenty of factors behind its excellent performance. However, there is no doubt that CALT aims at becoming the best battery manufacturer in the international market, not only in China. 

On July 9, German time, CATL signed an investment agreement with the state government of Thuringia at the Federal Chancellery in Berlin. According to the agreement, CATL will invest 240 million euros (about 187 million RMB) to establish a battery plant and intelligent manufacturing R&D center in Erfurt, Thuringia, Germany. Of course building a plant in Germany means a lot, but the point is what it can bring to CATL.

Germany is just the first stop.

Erfurt, the capital city of Thuringia, is located in central Germany. It’s a manufacturing city with a population of 200,000, close to Leipzig and Hannover. The siting of CATL new plant is fairly thoughtful. In its surrounding area, there are not only top suppliers like Bosch, but also some partners like Mercedes-Benz and BMW. To be clearly, this action of CATL is not only for its own good, it’s the result of the surging demand of these surrounding companies.

According to the plan, the construction of CATL Thuringian battery plant will be parted in two phases. It will mainly engage in the R&D and production of lithium-ion batteries. It is expected to begin production in 2021 and reach a production capacity of 14GWh in 2022. Meanwhile, it will create about 600 jobs for the city hopefully.

The attitude of CATL Chairman also reflects the determination and confidence of this battery manufacturer. CATL Chairman Yuqun Zeng said: “We chose Germany as our first step in Europe. We want to bring the world's most advanced power battery technology to Germany. By forming a local power battery supply capability in Europe, we can provide European customers with more timely and effective product solutions to better respond to customer needs and to be closer to them. " 

In my opinion, this "first step" is quite intriguing. CATL hopes to open up the European market. Although it is chosen to build plant in Germany, it seems that this is only the beginning. To expand the European market and to build more plants according to the needs of different European countries and partners already have been a general trend.

The big order of $4700 million 

When people pay attention to this new plant, they don’t know the potential effect has begun. On July 9, local time, Mark Duesmann, BMW Purchasing Director, said that BMW has signed a battery purchase contract with CATL. BMW will purchase $4.7 billion (about 31.07 billion RMB) of CATL batteries. About 176 million of the order will come from CATL’s new plant in Erfurt and the rest will come from CATL factory in China.

The reason why CATL could make its reputation in a such short time is that the cooperation opportunity that BMW has offered. In the very beginning, BMW Brilliance has provided CATL with gratuitous comprehensive support to help it become a world-class supplier. In addition, here is something that only a few people knew. Dr. Johann Wieland, the current chairman and CEO of BMW Brilliance has played an important role in it. His support means a lot to CATL.

Mr. Zeng explained: "BMW was also choosing its partners in China. CATL's team is from ATL, and is engaged in the lithium battery industry. It has been in the high-end battery industry for 16 years. When producing lithium batteries for consumer electronics, we have always been working with the world's top consumer electronics brands, and their requirements are also the highest. Due to the technology and the experience of cooperation with high-end customers, we were ahead of our domestic counterparts, so they chose us at the moment.”

As we all know, BMW's largest battery supplier was Samsung SDI. Adding CATL to the procurement object is a "strike" for Samsung SDI. In addition, based on the deep cooperation with BMW, it will also play a “demonstration” role for other vehicle companies. It is reported that the products in the German factory will also be supplied to Volkswagen, Daimler, Jaguar Land Rover, PSA and other car companies.

Building a factory in Germany is crucial for CATL when competing in the international market. European market is the key to the global market. In addition, CATL doesn’t ignore the importance of the Chinese market. The joint venture with Dongfeng Motor is the best evidence. While developing the market, CATL also takes some measures to motivate the employees. CATL plans to launch a 30.853 million restricted stock incentive plan. The incentive people are mid-level managers and core employees, with a total of 1,776 people. With comprehensive development, CATL is progressing steadily.