(Repeats article first published on Monday. No changes to
* CATL valued at $11.5 bln as of end-Oct
* Riding subsidy-driven boom in electric vehicle sales
* Expanding abroad, customers include BMW
By Jake Spring
NINGDE, China, Dec 26 A dusty village on the
outskirts of Ningde, a third-tier city in China's southeast,
seems an unlikely place for the headquarters of a potential
global leader in future automotive technology.
Yet China's top-down industrial policy diktats - move up the
value chain, clean up polluted urban skies, and shift to plug-in
cars - have Contemporary Amperex Technology Ltd (CATL) poised to
go from hometown hero to national champion, and beyond.
China's answer to Japan's Panasonic Corp and South
Korea's LG Chem Ltd has tripled its production
capacity for lithium-ion car batteries in the past year to keep
up with a surge in China's sales of electric cars.
After a second major funding round completed in October, the
company's value quadrupled to 80 billion yuan ($11.5 billion),
CEO Huang Shilin said last week.
CATL, which hopes to list on Beijing's over-the-counter
exchange as part of plans to raise at least another 30 billion
yuan by 2020, could be a dominant force globally.
It has already overtaken LG Chem in lithium-ion car battery
output, and is chasing down Panasonic and Warren Buffett-backed
BYD Co Ltd .
CATL plans to grow its battery capacity sixfold by 2020 to
50 gigawatt hours, which could put it ahead of Tesla Motor Inc's
gigafactory in Nevada.
"We continue to walk where the country guides us," Huang
said. "We hope by 2020 we can achieve performance and price that
lead the world."
The company, founded just five years ago, is already pushing
beyond China's borders, with offices in Sweden, Germany and
France and plans to build a factory in Europe. Company
representatives say that because of non-disclosure agreements
they can only list BMW as a customer for now.
Despite the ambitious expansion, the emerging segment's
dependence on government policy and rapidly evolving technology
is not without risk.
A123, a U.S. automotive battery maker, went from IPO to bust
in just three years as battery costs remained stubbornly high
and orders dried up.
"People think we're a big successful company, but we think
we're in jeopardy every day," marketing director Neill Yang
said. "The market environment and technology changes so fast
that if we don't follow the trend we could die in three months."
BUILDING A CHAMPION
To become a Chinese champion, a battery maker must first
shed any foreign investment to be eligible for subsidies and
other policy support, people in the industry say.
Before he set up CATL, Robin Zeng had started Amperex
Technology Ltd (ATL), a company now majority-owned by Japan's
ATL initially had a 15 percent stake in CATL, but liquidated
that holding last year, Yang said, when electric vehicle sales
first started to take off. He declined to elaborate on the
circumstances of that divestment.
TDK separated from CATL to focus on batteries for mobile
consumer electronics, but still collects royalties on some
intellectual property used by CATL, a spokesman for the Japanese
"The reason is strategic and confidential. ATL still keeps a
close relationship with CATL," said a person familiar with the
situation, who was not authorized to speak to the media.
ATL and CATL still share a Ningde campus, although the front
gate and main office bear only the ATL name.
Zeng, a Ningde local with a doctorate in chemistry, appears
to be the remaining link between the two companies he founded.
He declined an interview request.
While government support for electric cars has driven demand
for components such as batteries, Beijing is also rolling out
other policies that could benefit leading producers like CATL,
by forcing smaller firms to consolidate or go out of business.
The Ministry of Industry and Information Technology (MITI)
said last month it is considering a rule that would increase
minimum production requirements for battery makers by around 40
times to 8 gigawatt hours.
Only BYD and CATL are roughly in line with that minimum,
though Chinese media reports suggest Hefei Guoxuan High-Tech
Power Energy Co Ltd and Tianjin Lishen Battery Joint-Stock Co
Ltd may be close to or above that level by next year.
Yang said subsidy support for batteries is fairly modest
compared to those for producing electric vehicles, which
totalled $4.5 billion last year alone.
CATL has been nominated as one of three battery makers -
with Guoxuan and Lishen - for incentives under China's 13th
Five-Year Plan, promising around $15 million if it can meet
targets, Yang said. He noted, though, that a single production
line costs $40 million.
Among national 2020 targets: to halve battery costs to below
1 yuan ($0.144) per kilowatt hour, and improve energy density by
To get there, CATL is ramping up spending on research and
development, where it employs more than 1,000 people with
advanced science degrees.
"The strength of their R&D investment is quite large," said
Fu Yuwu, chief of the Society of Automotive Engineers of China,
adding he hopes the company can become a global leader.
"They have such large scale and the support of China's huge
market, all the more reason they should do a good job of
internationalizing," he said.
($1 = 6.9505 Chinese yuan renminbi)
(Reporting by Jake Spring, with additional reporting by Sijia
Jiang in HONG KONG, Norihiko Shirouzu in BEIJING and Adam
Jourdan in SHANGHAI; Editing by Ian Geoghegan)