Gotion Hi-Tech battery factory landed in the United States, and the local government provided more than 500 million US dollars in incentives

The site of Gotion Hi-Tech (002074.SZ) battery factory in the United States has finally surfaced.

According to the official website of the Illinois state government, the governor of the state, JB Pritzker, and Li Jin, chairman of Guoxuan Hi-Tech, jointly announced on September 8, local time, that Gotion Hi-Tech will build a new lithium battery factory with an investment of 2 billion US dollars (about 14.6 billion yuan) in Manteno, Kankaki County, the state.

Covering an area of about 910 acres, the plant will focus on lithium-ion battery cells, battery pack production and energy storage system integration, and is expected to be put into operation in 2024. When completed, it is expected to produce 10 GWh of lithium-ion battery packs and 40 GWh of lithium-ion battery cells.

"Today, we are taking another step forward by announcing the largest EV battery production investment project in Illinois to date. JB Pritzker said.

Gotion Hi-Tech's Manteno plant, which the Illinois government has described as "the state's most significant new manufacturing investment in decades," will receive incentives worth US$536 million (3.9 billion yuan). These include a tax incentive totaling US$213 million (1.5 billion yuan) over 30 years, which requires a minimum investment of US$1.9 billion and the creation of 2,600 full-time jobs at least 120 percent of the average salary for similar jobs in Kankaki County.

Founded in 2006, Gotion Hi-Tech is currently the largest shareholder of Volkswagen China, and its main business includes power batteries and energy storage batteries. In the first seven months of this year, Gotion Hi-Tech ranked ninth in the world in terms of installed power batteries, with a market share of 2.1%.

In April this year, Gotion Hi-Tech revealed at the media open day event that the company had conducted in-depth research on the construction of a factory in the United States, and the progress was relatively smooth.A specific site will be determined soon。

Gotion Hi-Tech plans to build two factories in the United States, a battery plant and a battery materials plant. The Manteno plant announced this time is one of the battery plants, and the news that the battery materials plant is located in Michigan has been reported since October last year.

Chen Ruilin, vice president of the company's international business, said at the time that due to the impact of the US Inflation Reduction Act, it was imperative for Gotion Hi-Tech to build a factory there.

The Inflation Reduction Act, which went into effect earlier this year, provides a $7,500 federal tax credit for electric vehicles assembled in North America, but has strict standards for the sources of critical minerals, components and other sources in car batteries.

Starting in 2023, EVs must have more than 50% of their battery components and materials manufactured or assembled in North America to qualify for the $3,750 per vehicle tax credit. This percentage needs to reach 100% after 2029. Another $3,750 in tax incentives is related to critical minerals for batteries. Starting in 2023, 40% of battery critical minerals for electric vehicles will be mined or recycled in North America or countries with which the United States has a trade agreement. The proportion of raw materials localized will grow at a rate of 10% per year to reach 80% by 2027.

For Chinese battery companies, building factories in the United States can meet the above requirements, and at the same time, they can also obtain tax incentives and financial support from the U.S. government and local governments.

Gotion Hi-Tech disclosed in 2021 that its U.S. subsidiary signed a strategic agreement with a large U.S. listed car company, and the two sides will reach a cooperation on the supply of lithium iron phosphate batteries. Lithium iron phosphate battery is currently a mainstream technology of power batteries.

From 2023 to 2028, the above-mentioned U.S. automakers are expected to purchase a total of no less than 200 GWh of lithium iron phosphate batteries. Gotion Hi-Tech will meet the needs of the other party for the purchase of lithium iron phosphate batteries through exports and a new factory in the United States.

Two days before the announcement of the location of the Guoxuan Hi-Tech battery plant, EVE (300014.SZ), another Chinese lithium battery giant, announced that it would establish a U.S. joint venture with Daimler Trucks, Paccar and Cummins to invest in the construction of battery production capacity.

In addition, a number of Chinese-funded battery companies, including CATL (300750.SZ) and Envision Power, have also laid out production bases in the United States.

CATL has partnered with Ford Motor to build and operate its battery plant in the U.S., as well as license its patented battery technology, without direct investment.

Envision Power, which was born out of Nissan's automotive battery business, has three battery plants in the United States, located in South Carolina, Tennessee and Kentucky.