Battery Maker Helping Power China Electric Car Boom Plans IPO

  • CATL forecasts $15 billion in sales by 2020 on China’s EV boom
  • Battery maker behind BYD plans first overseas plant in Europe

Contemporary Amperex Technology Co., China’s second-biggest maker of batteries for electric vehicles, is planning an initial public offering to fund an expansion as the government pushes to boost the sale of plug-in cars.

The company plans to list on China’s over-the-counter stock market as soon as possible, CATL Marketing Director Neill Yang said in an interview. The maker of lithium-ion batteries will use the funds raised to build new factories, with Yang forecasting as much as a 10-fold increase in sales to 100 billion yuan ($15 billion) by 2020.

Battery makers are expanding production capacity to support rising sales of plug-in vehicles, as China overtook the U.S. to become the world’s largest EV market with a tripling in deliveries last year. Global demand for vehicle batteries may jump fivefold by 2020 and China probably will account for more than half of global capacity by then, according to estimates by Bank of America Merrill Lynch.

“The new-energy vehicle market is growing faster than we had expected,” Yang said last week. “We now have plenty of orders to fill because the demand is shifting toward the best companies in the industry.”

Building Capacity

CATL had capacity of 2.4 gigawatt-hours last year and plans to as much as triple that this year, Yang said. The company has two plants in China and will start building a third domestic factory soon, he said. Its local customers include BAIC Motor Corp. and Geely Automobile Holdings Ltd.

The company is preparing to build its first overseas plant in Europe and will pursue business with U.S. carmakers, Yang said. The company’s three European customers include BMW AG, and it’s trying to woo more global automakers, he said.

CATL was founded in 2011 by TDK Corp.-owned Amperex Technology Co. The company may pass Warren Buffett-backed BYD Co. to become the largest Chinese battery maker in 2018, according to Bank of America Merrill Lynch.

Other competitors include Wanxiang Group, which bought A123 Systems and Fisker Automotive Inc., and is planning to build an electric vehicle factory in Hangzhou.

China Factories

Japanese and Korean companies are also opening China factories. Samsung SDI Co. and LG Chem Ltd. have built plants in Xi’an and Nanjing. Panasonic Corp., the world’s largest EV battery maker and supplier to Tesla Motors Inc., is building a factory in Dalian, targeting production in 2017.

“With a lot of companies announcing aggressive plans for the battery making business, the competition is getting more and more fierce,” said Zheng Hu, an analyst at Bloomberg New Energy Finance in Beijing. “Eventually, there will be a consolidation in the industry.”

For now, domestic suppliers benefit from preferential policies to support the industry, while Korean and Japanese battery makers have so far been excluded from receiving Chinese incentives.

CATL is preparing for the day when the subsidies become negligible, Yang said.

“What we will do is to make ourselves stronger and compete with foreign manufacturers on a level playing field globally.”