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China’s CATL eyes US$2b fundraising for battery production

CATL Battery Factory. Source: CATL

Chinese battery maker Amperex Technology is set to float with a US$20 billion valuation this year, as it seeks to become the biggest player in the world

Contemporary Amperex Technology Ltd. – CATL – is one of China’s fastest-growing lithium-ion battery makers, with rising cell output buoyed by the country’s mammoth push to expand EV adoption.

Founded in 2011, the company now has branches in the US, France, Canada and Japan, and claims links to some of the industry’s top research organisations.

Fuelled by booming demand in China and further afield, CATL is now planning a 13.1 billion yuan (U$1.97 billion) initial public offering (IPO) in Shenzhen this year, putting up 10% of the company under a US$20 billion valuation.

Bloomberg reports that part of the proceeds of this will go towards a US$1.3 billion factory in south-eastern China, which would come online as soon as 2020. The factory would supply Chinese firms like BAIC and Zhengzhou Yutong, but also vehicles made under joint ventures between local automakers and the likes of VW, BMW and Hyundai.

Others such as Toyota and Nissan are considering using CATL packs, the news agency added.

If the IPO goes ahead as planned, the battery plant would make CATL the world’s largest maker of electric-vehicle battery cells, with output of over 40 GWh per year – way ahead of rivals Panasonic Corp of Japan, LG Chem of South Korea, BYD of China and Tesla, according to Bloomberg New Energy Finance (BNEF).

CATL’s US$20 billion valuation is a considerable sum, and would propel CATL’s worth above that of the listed Chinese units of automakers like Kia and Mazda. But given the wave of incoming production regulations and policy enforcements surrounding vehicle electrification, a battery maker like CATL is sure to benefit.

Although analysts have noted that the company is a year or two behind the competition in terms of technical competence, the momentum it has built and the size of its orderbook should propel it into similar territory within two or three years. Its pedigree is also promising: CATL founder Zeng Yuqun spent most of his professional life working on li-ion batteries for consumer electronics, including the iPhone.

Moreover, China’s hard stance on domestic goods production infers that not only will EVs have to be made in China, but their batteries should come from China too. This puts CATL in a strong position to secure new agreements as vehicle production grows.

Commercial victory is far from certain, but given the government support, talent and hot money flooding into the battery market, it would be tough to bet against CATL’s success.

 

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