Tesla Supplier CATL Plans to Sell $9B in Stock to Increase Production Capacity

One of the leading electric vehicle battery manufacturers in the world and the main Tesla supplier in China, CATL, plans to sell $9 billion in stock. The proceeds will be used to increase its production capacity and research and development.

Contemporary Amperex Technology Co. (CATL), which is one of the world's largest manufacturers of lithium-ion batteries, strives to keep up with the times and meet the needs of the industry. In a bid to meet the growing demand for batteries for electric vehicles, the company announced that it expects to raise up to ¥58.2 billion, equivalent to $9 billion, via a share placement to large investors, according to The Wall Street Journal.

The proceeds from the sale will be used by CATL to increase the production of lithium-ion batteries at its factories in the Chinese provinces of Fujian, Guangdong, and Jiangsu. Some of these funds will be invested in research and development, as well as to replenish working capital.

At the end of July, CATL introduced a sodium-ion battery, which has a lower density and uses cheaper raw materials than batteries made from lithium-ion metals. However, the company also unveiled a solution that can combine sodium-ion and lithium-ion cells into one package, compensating energy density shortfalls while maintaining its benefits.

“Sodium-ion batteries have unique advantages in low-temperature performance, fast charging and environmental adaptability,” CATL Chairman Zeng Yuqun said. “Moreover, they’re compatible and complementary with lithium-ion batteries. Diversified technical routes are an important guarantee for the long-term development of the industry.” According to its statement, CATL wants to deploy the sodium-ion battery on an industrial scale and plans to form a basic production chain in 2023.

Lithium prices will continue their upward trend in 2021 and 2022 as demand for lithium-ion batteries picks up amid the global shift towards electric vehicles. Therefore, its cost will be kept at a high level. At the same time, sodium has a lower cost and is abundant in the earth's crust.

CATL is currently the main battery supplier for Tesla's Shanghai factory. The California-based manufacturer is steadily increasing its production capacity and will launch a more affordable and compact electric car model in the future, which should become very popular. In addition, CATL supplies batteries to Chinese electric vehicle manufacturers NIO, XPeng, and Li Auto, as well as other brands such as Mercedes-Benz Daimler AG. According to analysts, it holds 30% of the global electric vehicle battery market and more than half of the Chinese market.

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