At the end of last year, CATL, the world’s largest battery manufacturer, had an annual production capacity of 170 GWh. It plans to increase it to 670 GWh by 2025, according to Reuters. Much of this capacity expansion will come from a new $7.6 billion battery factory that will be located on 221 hectares (546 acres) in the industrial park in the southern city of Debrecen in Hungary. The project will supply both cells and modules to European automakers, including Mercedes, BMW, Volkswagen and Stellantis, according to a joint press release from the company and Hungarian officials.
As part of its commitment to reduce the carbon footprint of battery manufacturing, CATL will use electricity from renewable sources and work with local partners to develop suppliers of solar energy and battery materials at the both locally and throughout Europe.
“There is no doubt that our plant in Debrecen will allow us to further strengthen our competitive advantage, better serve our European customers and accelerate the transition to e-mobility in Europe,” said Dr Robin Zeng, founder and president of CATL. . “The greenfield project in Hungary will be a giant leap in CATL’s global expansion, as well as a milestone in our efforts to make an outstanding contribution to the momentum of green energy for humanity.
Hungary is becoming a major hub for electric vehicles and batteries in Europe. Debrecen is home to a factory built by BMW, while Audi has a factory in Gyor in western Hungary and Mercedes-Benz has a factory in Kecskemet in the central part of the country.
Péter Szijjártó, Hungarian Minister for Foreign Affairs and Trade, added: “The global economy and the European economy have recently faced enormous challenges. In Hungary, we have a clear objective to be a local exception to the continental recession. The best tool to achieve this goal is to attract cutting-edge investments in the most revolutionary branch of the automotive industry, namely electromobility. We are proud that CATL has decided to execute the biggest investment ever in the history of Hungary. We have recently become one of the world’s leading battery production sites and with this huge investment we are further strengthening our position.
Markus Schäfer, Mercedes Technical Director, said: “This new state-of-the-art European CATL plant in Hungary is another important step for the scaling up of our production of electric vehicles with our key partners. With CATL, we have a technology leader as our partner to supply us – as the first and largest customer of the new plant’s initial capacity – with first-class CO2-neutral battery cells for our next generation electric vehicles in Europe. , thus following our local-to-local approach to sourcing. We are proud to see our Ambition 2039 supported by CATL’s commitment to CO2 neutral production in Hungary.
One question the press release doesn’t answer is whether the battery cells produced at the new plant will use NMC or LFP chemicals. A good guess is that the correct answer is “both”. BMW may prefer NMC cells as they support higher levels of performance while Volkswagen may choose LFP batteries for models that directly compete with Tesla, which is about to start offering a new version of the German-built Model Y. which will use BYD’s LFP Blade batteries.
What about CATL and North America?
This news begs the question, what are CATL’s plans for new factories in North America? The United States has just passed a new law known as the Reducing Inflation Act, which makes it very clear that batteries and battery components sourced from China will not be eligible for tax credits for electric vehicles included in this legislation. Europe seems much less concerned by these questions.
We recently reported that CATL was considering sites in Mexico and the United States for a new North American plant, but the fuss over Nancy Pelosi’s visit to Taiwan may have delayed any decision. Reuters reports that a source with knowledge of the situation says CATL has not changed its plan to start local battery production for North America starting in 2026. The expansion is expected to supply EV batteries for Ford, BMW and potentially from other automakers, including Tesla.
CATL plans to supply LFP battery cells to Ford for its second-generation F-150 Lightning electric pickup truck, but there are no reports (yet) of BMW using LFP cells. It seems likely that CATL’s new factories will be able to produce all the battery cells its customers need to meet changing market demands and supply chain variables.
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