China’s Contemporary Amperex Technology Co Ltd (CATL, 新能源科技), the world’s biggest maker of batteries for electric vehicles, is considering at least two locations in Mexico for a manufacturing plant to potentially supply Tesla Inc and Ford Motor Co.
The battery manufacturer is considering Ciudad Juarez, in the state of Chihuahua, and Saltillo, in Coahuila, people familiar with the deliberations said.
Both are near the Texas border. The company is contemplating an investment of as much US$5 billion in the project, the people said.
Photo: Reuters
Ciudad Juarez is attractive in part because it is close to the San Jeronimo-Santa Teresa port of entry into New Mexico. That would provide a route around the border crossings of Texas, which is the home of Tesla’s new factory, but in the past few months has taken measures that complicated shipping and entry into the US.
Texas Governor Greg Abbott in April increased inspections of commercial vehicles, stating a desire to crack down on illegal drug trafficking and immigration. Analysis by one economics research body found that it cost the state’s economy more than US$4 billion in lost output due to shipping delays and bridge blockades.
The Ningde, China-based CATL is also considering splitting its investment across two locations — one in the US and one in Mexico, the people said, adding that a final decision has not been made and the total size of the investment is fluid.
The battery maker and Dearborn, Michigan-based Ford declined to comment. Austin, Texas-based Tesla did not respond to a request for comment.
CATL’s shares rose 3.5 percent yesterday in Shenzhen.
Backed by China’s strategic push into electric vehicles, CATL is riding a boom in demand for EVs as countries work to reduce carbon emissions and consumers embrace cleaner vehicles. The company, which completed an initial public offering in 2018, controls more than 30 percent of the global EV battery market.
CATL has been contemplating a battery plant in the US for years, but rising geopolitical tensions between Washington and Beijing have complicated the effort. It is also under competitive pressure to speed a decision, as rivals like LG Energy Solution Ltd, Samsung SDI Co and Panasonic Holdings Corp sign deals with automakers to build battery plants in the US.
The US-Mexico-Canada Agreement on trade, negotiated under then-US president Donald Trump, further complicated CATL’s plans by introducing higher wage requirements for vehicles to trade duty-free, along with stricter content rules. A CATL site would help Mexico, which has long been a major part of the auto industry’s supply chain, cement its role in the region’s electric vehicle production.
An expanded presence in North America could unsettle US officials who are keen on supporting domestic suppliers. US President Joe Biden is allocating billions to cultivate the US battery supply chain and wean the auto industry off its reliance on China, but those efforts would take years to come to fruition through US start-ups and partnerships with South Korean and Japanese companies.
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