Lithium Related Media Articles, page-27996

China’s battery giant eyes globaldomination in Trump era

CATL pulled off the world’s biggeststock listing so far this year. But the global maker of EV batteries has becomecaught in the US-China trade rift.

rolling hills dominate the skyline of nondescript Ningde city onChina’s southeastern coast, except for one structure. A massive glass buildingwith a curving facade shaped like a giant lithium-ion battery pack towers abovethe metropolis.

This is the headquarters of the world’s largest battery maker,Contemporary Amperex Technology Company, or CATL. Since its founding in 2011,the company has enjoyed meteoric growth partly thanks to China’sstate-sponsored support of renewable energy.

The company’s products power more than one-third of the world’selectric vehicles and it has branched out into storage systems for energygrids.

Last week, CATL’s plans for global domination of cutting-edgebatteries were given a major boost with the world’s largest shareoffering so far this year. CATL raised $HK35.7 billion ($7 billion) in a secondary listing in Hong Kong. Shares surged as much as 18 per cent on Tuesday as investors poured into one of China’s most strategically important companies.

CATL says it plans to use the proceeds of the listing to fundits international expansion plans.

But the company has found itself caught in the crossfire of adeepening rift between the United States and China, as Donald Trump’sadministration and Beijing lob sanctions, blacklists and tariffs at each other.

“This is the most geopolitically sensitive listing by a Chinesecompany in years,” said Christopher Beddor of Gavekal Research.

American investors were largely shut out of the listing. Thecompany changed the share sale to what is known as a Reg S offering, whichprevents the sale of stock to onshore US investors and exempts it from havingto make certain regulatory filings in the United States.

US legislators also demanded JPMorgan and Bank of Americawithdraw from underwriting the listing, a scenario that JPMorgan chiefexecutive Jamie Dimon refused.

“If we thought it was wrong, wewouldn’t do it,” Dimon told Bloomberg TV.

One in three cars

Unlike its main competitor, BYD, CATL’s batteries are made from nickel-manganese-cobalt and are used for long-range electric vehicles. It has also integrated its battery systems into solar panel development and powers some grid-storage systems in the US.

Economists say last week’s successfullisting might open the door for foreign capital to get a slice of China’sstate-backed success stories.

“Global investors still have appetiteon good-quality assets from China in fast-growing sectors, and it can be anexample for more Chinese firms to follow, especially for those who want toexpand overseas,” said Gary Ng, a senior economist at Natixis.

Founder and major shareholder RobinZeng Yuqun has capitalised on Beijing’s support for dominance of the electricvehicle and solar panel sectors, both key pillars of the country’s strategicpush into advanced manufacturing.

CATL supplies 38 per cent of the global EV battery market,according to SNE Research, a market research and consultancy firm.

Its car-making customers include Tesla, BMW, Toyota andVolkswagen. By late last year, its batteries were used in one out of everythree EVs worldwide, powering about 17 million vehicles.

CATL is hungry to crack more lucrative Western markets, asChina, the world’s second-largest economy, struggles with lower domesticconsumption, an ongoing property crisis and high unemployment.

The listing proceeds will bankroll a $US7.6 billion ($11.8billion) expansion across Europe, including new factories in Germany, Hungaryand Spain. The pitch to investors was that such expansion plans would sidestepTrump’s tariffs on Chinese exports and China’s brutal domestic EV price war.

Pentagon blacklist

But the spotlight has also broughtscrutiny. In January, the US Defence Department added CATL – alongside Chinesegaming giant Tencent – to its military blacklist. The Pentagon named CATL amilitary company, amid concerns its batteries are used in developing equipmentfor the People’s Liberation Army.

The US House Select Committee on the Chinese Communist Partysent Dimon and Bank of America CEO Brian Moynihan letters in April urging themto withdraw from the listing, citing the blacklisting.

Founder Zeng last week dismissed the US espionage claims as“completely groundless”. “It’s fine that different people hold different viewsagainst us,” Zheng said in Hong Kong, just hours after the stock listing.

“We’re OK to just do business with those who share the samevalues. We never want to sell any products to the military or for warfare.”

The US government has targeted Chinese companies as it moves tolimit China from accessing American markets out of national security concerns,a policy that Trump began in his first term and which president Joe Bidencontinued. But CATL has become an indispensable part of the clean energy supplychain, making it difficult for companies to disentangle themselves.

The successful secondarylisting, CATL is listed in Shenzhen, also reflects the allure for investors ofbuying into a blue-chip stock that’s at the fore of the world’s EV revolution,even despite ongoing turbulence in Sino-US relations

CATL was an early beneficiary of Beijing’s high-tech sectorsupport, which includes financial incentives for automakers that use Chinesebattery cells. Between 2009 and 2021, around 100 billion yuan ($21.4 billion)in subsidies were also handed to car buyers purchasing Chinese EVs, accordingto an estimate by China Merchants Bank International.

CATL leaned into that support, rapidly expanding its R&D,securing state grants, and forging early partnerships, most notably with BMW,which validated its global credentials. Today, the company has 20,000 R&Dstaff, $US2.6 billion ($4 billion) in annual research spending, and nearly30,000 patents.

This technical firepower has kept CATL ahead of rivals such asBYD – which builds and supplies its own electric vehicles with its batteries –and South Korea’s LG Energy Solution. CATL has also been somewhat insulatedfrom Beijing’s past crackdown on tech moguls, largely because Zeng has kept alower profile than high-flyers such as Alibaba’s Jack Ma.