CATL will supply to the world's fourth-largest automotive group and is considering the construction of a joint venture plant

CATL (300750.SZ) plans to build a joint plant in Europe.

On November 21, CATL announced that it had signed a strategic memorandum of understanding with Stellantis Group to supply lithium iron phosphate batteries to Stellantis Group in Europe.

According to the joint statement of the two companies, CATL and Stellantis will cooperate in the long term on the two strategies. The first is to develop a technology roadmap for Stellantis Group's battery electric vehicle batteries and identify opportunities to further strengthen the battery value chain; Second, the two sides are exploring the possibility of establishing a joint venture on a reciprocal basis.

Stellantis Group is the world's fourth-largest automotive group, formed by the 50:50 merger of PSA Group and Fiat Chrysler Group, headquartered in the Netherlands. Its brands include Abbas, Citroën, Dodge and others. By 2030, the company plans to make all passenger cars sold in Europe fully electric.

According to Reuters, Maxime Picat, global head of procurement and supply chain at Stellantis, said that the joint venture plan aims to build a new gigafactory in Europe to produce lithium iron phosphate batteries. Compared with ternary lithium batteries, another mainstream battery technology, lithium iron phosphate batteries have relatively low performance, but they also have lower production costs.

"The long life and high thermal stability of lithium iron phosphate battery technology will enable Stellantis to provide customers with high-quality, durable and affordable electric vehicles, ranging from B-segment to C-segment sedans, crossovers and SUVs," the joint statement from CATL and Stellantis said. ”

Picat did not disclose where the plant might be located. He said the two sides are in discussions about the joint venture plan and it will take several months to finalize it.

If the plant is successfully finalized, it will be CATL's third European plant after the German plant and the Hungarian plant.

CATL expressed optimism about the European market at the third quarter of this year's earnings briefing. "In the past two years, the European market has been somewhat volatile due to the macro environment, but Europe is firm in the transition to new energy and has issued a lot of policy support. At present, the market has different views on the situation in Europe next year, and with the weakening of the factors affecting the growth of the industry in the early stage, the development trend of the European new energy market is improving. ”

In the European market, CATL's German plant has been put into operation, and the Hungarian plant has a planned production capacity of 100 GWh, and the first phase has started construction and is expected to be completed in about two years. In the first half of this year, CATL's overseas revenue accounted for 35.49% of total revenue.

According to the latest data from South Korean research institute SNE Research, from January to September, CATL's market share in the global power battery market excluding China was 28.1%, which has tied the first place LG New Energy.

Under the background of fierce competition in the Chinese market and the successive policies introduced by Europe and the United States to promote the development of the local new energy industry, more and more enterprises have begun to target overseas markets and choose to go overseas.

Europe is the second largest new energy vehicle market after China, and local power battery companies in Europe are still unable to meet the local market demand. According to Wang Zidong, deputy secretary-general of the China Automotive Power Battery Industry Innovation Alliance, by 2028, the shortage of power battery supply in Europe will reach 378 GWh.

Europe has become the choice of many businesses. Up to now, domestic battery companies such as China Innovation Aviation (03931.HK), EVE Lithium Energy (300014.SZ), and Sunwoda (300207.SZ) have announced their production capacity in Europe.

In addition to Europe, the United States has also become a place for domestic battery companies to go to sea. In February this year, CATL and Ford Motor announced that they would build a battery plant in Michigan, with a total investment of US$3.5 billion (about 23.8 billion yuan). Ford owns the new plant, while CATL provides pre-construction and operation services, as well as licenses for patented battery technology.