Together with Daimler and Paccar, EVE can build a battery factory in the United States

Another Chinese lithium battery giant has laid out a production base in the United States.

On September 6, EVE Lithium Energy (300014.SZ) 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. EVE will hold a 10% stake in the joint venture, with the remaining three investors each holding 30%.

Daimler Trucks and Paccar are the world's four largest truck manufacturers, and Cummins is a well-known American power equipment manufacturer.

According to a joint press release issued by the three foreign companies, the joint venture plant will produce lithium iron phosphate batteries with an investment of US$2 billion to US$3 billion (about 14.6 billion yuan to 22 billion yuan) and an annual production capacity of 21 GWh.

With its advantages in safety and cost, lithium iron phosphate batteries accounted for 62.4% of domestic loading last year and have surpassed ternary batteries for two consecutive years. But according to the Financial Times, lithium iron phosphate's share of the U.S. market was only 9% last year.

The joint venture will obtain a license for the development, manufacturing and commercialization of battery products from EVE, and pay the license fee as agreed, and the batteries produced by the joint venture will be mainly used in designated North American commercial vehicle fields. The three foreign companies and their affiliates will become the main customers, purchasing the vast majority of the plant's products.

According to data released by South Korean research institute SNE Research, from January to July this year, EVE's lithium power battery loading volume ranked eighth in the world, with a market share of 2.2%.

The U.S. joint venture plant will be EVE's third overseas production base this year, and the company has disclosed plans to set up battery manufacturing plants in Hungary and Malaysia. Among them, the investment amount of EVE's Hungarian project does not exceed 9.97 billion yuan, and the product is a large cylindrical battery for passenger cars. The project will be constructed in phases with a construction period of four years.

In the first half of this year, EVE achieved operating income of 22.976 billion yuan, a year-on-year increase of 53.93%, and a net profit of 2.151 billion yuan, a year-on-year increase of 58.27%. The company's lithium battery-related business has accounted for more than 30% of the operating income in the same period. In the first half of this year, EVE also signed lithium iron phosphate battery supply contracts with ABS and Powin, customers in the energy storage industry in the United States, with a supply volume of more than 23 GWh.

Before EVE's official announcement to build a factory in the United States, a number of Chinese battery companies, including CATL (300750.SZ), Guoxuan Hi-Tech (002074.SZ), and Envision Power, have built factories in the United States.

CATLIt has partnered with Ford Motor to provide preparatory and operational services for the latter's battery plant and to license the patented battery technology, but does not involve direct investment. The cooperation project was officially announced in February this year, and the factory will be located in Michigan, USA, and will build a lithium iron phosphate battery factory, with a total investment of 3.5 billion US dollars (about 25.6 billion yuan).

Gotion Hi-Tech在今年4月举行的媒体开放日活动上透露，公司已就美国建厂事宜进行了深入调研，目前进展较为顺利，即将确定具体选址。Gotion Hi-Tech计划在美国建立两座生产基地，一座工厂生产电池，另一座工厂生产电池材料。其中，电池材料工厂选址密歇根州的消息去年10月就已传出。

It was born out of Nissan's automotive battery businessEnvision Power已在美国布局三座电池工厂。去年10月，Envision Power宣布将在美国南卡罗来纳州建设电池工厂，为同位于该州的宝马集团斯帕坦堡工厂供应圆柱电池。该公司在美国的田纳西州和肯塔基州还拥有两座工厂。

The "Inflation Reduction Act", which came into effect this year, has become an important reason for the above-mentioned lithium battery companies to compete for layout in the United States. The bill provides a $7,500 federal tax credit for electric passenger vehicles assembled in North America, but has strict standards for sources such as critical minerals and components in EV batteries. Commercial vehicles are subject to different tax credits than passenger vehicles and are not subject to the above-mentioned origin requirements.

The bill clarifies that starting in 2023, electric passenger cars must have more than 50% of their battery components and materials manufactured or assembled in North America to be eligible 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 passenger 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.