With the explosive growth of China's new energy vehicle industry, Contemporary Amperex Technology (CATL), the country's largest automotive lithium-ion battery maker, is increasing its production capacity to meet the soaring demand.
CATL announced on December 29 that it will invest in lithium-ion battery production projects in Fuding City, Fujian Province, Yibin City, Sichuan Province and Liyang City, Jiangsu Province, with a total investment of no more than RMB 39 billion ($6 billion).
Among them, the project in Fuding City is a lithium-ion battery production base with an investment of up to RMB 17 billion.
The project in Liyang City is a power battery and energy storage lithium battery R&D and production project (Phase IV), with an investment of up to RMB 12 billion.
The project in Yibin City is an expansion of the local power battery manufacturing base, with an investment of up to RMB 10 billion.
Phase I of the project in Fuding and Yibin will be completed in no more than 26 months from the start of construction, and Phase II of the project is planned to start within two years after the construction of Phase I. The project in Liyang will be completed in no more than 24 months from the start of construction.
CATL's move comes at a time when China's new energy vehicle industry chain is expected to explode further.
The new-energy vehicle chain is much like real estate in the 2000s, with a large enough market and the replacement of traditional energy vehicles starting to accelerate, according to Zhang Yidong, global chief strategy analyst at China Industrial Securities.
Commenting on CATL's move, China’s top investment bank CICC said Wednesday that CATL's cumulative announced investment in capacity construction in 2020 totaled 73 billion yuan, more than its historical investment total.
With capacity ramping up across the board and optimistic expectations for policy, global installed power battery demand may be expected to reach more than 1,300 GWh in 2025, CICC said, adding that CATL will add a combined capacity of about 120-150 GWH in the next 2-4 years.
CATL has the ability to steadily match the demand of global top tier car companies and is expected to maintain a 25%-30% global leading share in the medium to long term, CICC said, adding that high quality supply is relatively scarce in the context of the demand explosion.
Considering the short-term industry boom speed up and medium to long-term expectations across the board, CICC raised CATL target price significantly by 50% to RMB 450.
GF Securities said that the new cycle of global new energy expansion is coming, Chinese lithium battery equipment enterprises will usher in opportunities, and China-made lithium battery equipment enterprises are expected to further expand their international market share in the future.
After years of development, Chinese lithium battery equipment companies have gradually overtaken Japanese and Korean companies in many aspects such as technology, efficiency and stability, and are entering the international market with the experience of mature domestic production capacity, GF Securities said.
CATL, listed in Shenzhen, jumped 10 percent to 340 yuan today, with the stock up 216 percent year-to-date.