Chinese company Contemporary Amperex Technology Co. Ltd. (CATL), the world’s largest electric vehicle battery maker, is considering at least two locations in Mexico for a manufacturing plant that could supply Tesla and Ford.
The battery maker is eyeing locations in Ciudad Juárez, in Chihuahua state, and Saltillo, in Coahuila, according to people familiar with the deliberations. Both cities are close to the Texas border. The company is eyeing an investment of up to $5 billion in the project, the people said, asking not to be identified because the information is private.
Ciudad Juárez is attractive in part because it is close to the San Jerónimo-Santa Teresa bridge, the port of entry to the US state of New Mexico. That would provide a route around border crossings in Texas, where Tesla’s new factory is based but which has taken steps in recent months that complicate shipping and entry into the United States.
Texas Governor Greg Abbott in April increased inspections of commercial vehicles, declaring his desire to crack down on illegal drug trafficking and immigration. But analysis by an economic research body determined that this cost the state economy more than $4 billion in lost production due to shipping delays and bridge blockages.
CATL, as the Ningde, China-based company is known, is also considering splitting its investment across two locations: one in the United States and one in Mexico, the people said. A final decision has not yet been made and the total volume of the investment is uncertain. Bloomberg reported in March that the investment could build an 80-gigawatt-hour factory.
The battery maker and Dearborn, Michigan-based Ford declined to comment. Austin, Texas-based Tesla did not respond to a request for comment. CATL shares rose 3.5% on Monday in Shenzhen.
Supported by China’s strategic push toward electric cars, CATL is capitalizing on the boom in demand for electric vehicles as countries work to reduce carbon emissions and consumers adopt cleaner cars. The company, which completed an initial public offering in 2018, controls more than 30% of the global market for batteries for electric vehicles.
CATL has been contemplating building a battery plant in the United States for years, but growing geopolitical tensions between the United States and China have complicated the process. It is also under pressure from the competition to speed up the decision, as rivals such as LG Energy Solution, Samsung and Panasonic Holdings Corp. have struck deals with automakers to build battery plants in the United States.
USMCA, negotiated under then-President Donald Trump, further complicated CATL’s plans by introducing higher wage requirements so cars can be traded duty-free, along with stricter content rules. A CATL plant would help Mexico, which has long been an important part of the auto industry supply chain, consolidate its role in the region’s electric vehicle production.
CATL could choose to manufacture battery cells in Mexico and then ship them to Kentucky for assembly into battery packs. In 2020, the Chinese battery giant bought a former RR Donnelley & Sons Co. printing plant in Glasgow, Kentucky, and formed a subsidiary in the state, according to documents. In April 2021, he hired Charles Huang, a manufacturing industry executive, as executive director of the project, according to his LinkedIn page.
Huang’s LinkedIn page says his mandate is to “establish the corporate structure and strategy for CATL’s manufacturing project in North America ”.
A spokesman for the Kentucky economic development agency declined to comment on CATL’s plans in the state.
The expansion of the presence in North America could worry the US authorities, who are very interested in supporting national suppliers. President Joe Biden is pouring billions into growing America’s battery supply chain and freeing the auto industry from its reliance on China, but these efforts will take years to bear fruit through American startups and partnerships. with Korean and Japanese companies.
