According to insiders, the Chinese battery cell manufacturer CATL is curbing its expansion plans in North America in view of new US rules on the origin of battery raw materials. The company has slowed the search for possible sites for new factories since August, two people familiar with the process told Reuters. CATL itself could not initially be reached for comment. Under US rules, embodied in the Inflation Reduction Act, only electric cars that meet domestically produced battery targets are eligible for tax breaks. CATL would be the first major supplier to put investment plans under scrutiny because of this law.
The American law stipulates that by 2024 automakers must source half of the raw materials in batteries from North America or from allied countries, and by 2026 the proportion should rise to 80 percent. Democratic Senator Joe Manchin said the goal is to reduce the industry’s reliance on Chinese raw materials and boost domestic investment. Manchin had co-authored the law. Top managers from car manufacturers such as Volkswagen, BMW and Hyundai have already asked US MPs to advocate for a longer period.
In recent months, Reuters had reported on CATL plans to build factories in the US and Mexico, from which customers such as Ford and BMW could be supplied. The Munich-based company obtains the batteries for its new class electric cars in Europe and China from CATL, among others. In the US, however, BMW opted for batteries from Envision AECS.
On the other hand, CATL is massively expanding its production worldwide. This is paying off for the Chinese: Profits tripled in the third quarter to roughly 1.3 billion euros, according to a mandatory notification to the stock exchange. Sales increased by 232.5 percent to 13.8 billion euros. CATL supplies battery cells for every third electric car battery worldwide. According to calculations by the analysts at Soochow Securities, production is expected to increase to 300 gigawatt hours in the current year. It was only in August that the Chinese announced the construction of a factory in Debrecen, Hungary, for 7.3 billion euros, from which Mercedes-Benz and BMW, among others, will be supplied.