NIO’s Hong Kong shares climbed 8.6% to HK$26.60 following news that Chinese battery titan CATL is negotiating to acquire a controlling stake in Nio Power

No Power runs over 3,000 battery-swapping stations in China. Last month, CATL pledged up to RMB 2.5 billion ($342 million) to Nio Power, according to Reuters’ sources. Nio Power was valued at over RMB 10 billion ($1.3 billion) after a 2024 fundraising. However, CATL’s offer remains undisclosed.

CATL has stayed mum about obtaining a controlling stake in Nio Power. Meanwhile, NIO has sidestepped specifics but noted it’s fostering battery swap station growth “with multiple investors, including CATL.”

“Nio and CATL will deepen collaboration on capital and business and further consolidate the strategic partnership to jointly build the largest battery swapping network globally,” noted NIO.

CATL’s push aligns with chairman Robin Zeng’s vision to morph the firm into a green-energy leader. Fresh off a deal with Sinopec to build 10,000 swap stations—500 this year—CATL aims to supplant a third of China’s gas stations. Nio Power, a linchpin for NIO, serves its drivers and rivals like Tesla and BYD. However, NIO’s hefty investments have dented profitability.

NIO’s 3,240 swap stations, mainly in China, swap batteries in under three minutes, tackling EV range woes. With co-development efforts expanding swap-compatible EVs, a CATL deal could reshape NIO’s footing against intensifying competition from BYD and others in China.

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Lawmakers in Washington argue that CATL’s ties to the Chinese military may result in security threats. According to Citi estimates, CATL’s electric vehicle (EV) and electric storage systems (ESS) accounted for 4% and 35% of the US market in 2023, respectively. 

CATL joins a list of other Chinese companies, like tech giant Tencent Holding, with connections to China’s military. As of this writing, Washington has not placed any restrictions on the Chinese companies in that list. However, the designation might dissuade US companies from working with those on the list. 

CATL’s new designation might not affect Tesla’s operations in the United States. The Chinese battery supplier primarily works with Tesla’s Gigafactory Shanghai in China. Tesla Giga Shanghai exports vehicles to markets outside China, including Europe and Canada. However, it has not shipped Tesla cars to the United States for some time. 

Reuters reported that Tesla and CATL discussed a potential license agreement for the Chinese company’s technology in Nevada. Tesla is currently expanding its battery production facility in Nevada.

Besides Tesla, Ford will use CATL technology in its battery production plant in Marshall Township of Western Michigan. General Motors is reportedly also considering using CATL technology in battery production.

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CATL and the FAW Jiefang subsidiary created a joint venture in September 2023. The pair will work on product development and business model innovation under their recent deal. 

According to CN EV Post, FAW Jiefang currently has seven product lines. It aims to be China’s top provider of green and intelligent solutions.

Meanwhile, CATL launched Tectrans last year, a commercial vehicle battery brand. China’s top electric vehicle battery supplier struck multiple deals for commercial EV applications in Germany during the IAA Transportation 2022 event. 

CATL and FAW Jiefang are prepared to produce new commercial energy vehicles, including an all-electric version. 

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The Bolivian government will hold a 51% stake in CBC’s lithium extraction plants. The project will be located in the Uyuni salt flat in Southwest Bolivia. The Uyuni salt flat falls within the lithium triangle, which is shared between Bolivia, Chile, and Argentina. 

According to Omar Alarcon, the head of state-run lithium company YLB, the Chinese consortium estimates its two extraction plans will produce 35,000 metric tons of lithium annually. 

“This service contract will develop a final design for engineering, construction, operation, and maintenance of a plant that will produce 10,000 tons of lithium carbonate per year and another plant producing 25,000 tons of battery-grade lithium carbonate per year,” Alarcon said during a press conference. 

Alarcon added that CBC’s lithium extraction plants will be based on its technology. The Chinese consortium will build “at its own cost and risk.” The $1 billion investment represents CBC’s initial construction cost. 

Battery supplier CATL is reportedly part of the CBC consortium. The lithium extraction plants in Bolivia would give Chinese EV suppliers like CATL an edge in the North American market. However, China’s future in North America’s supply chain is uncertain. President-elect Trump is considering strict regulations on products from China or Chinese companies. CATL remains hopeful that Trump will approve its expansion into the United States.

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In an interview, CATL founder Robin Zeng commented that zero-carbon electric grids might be ten times larger than supply EV batteries. As of this writing, CATL holds 37% of the global market share for electric vehicle batteries. 

Zeng is setting his sights on a new sector for CATL’s future. 

Tesla has already shown that entering the energy market can be lucrative. Musk predicted long ago that Tesla’s energy business would eventually pass the company’s automotive division. Tesla Energy is living up to Musk’s expectations. In Q3 2024, Tesla’s energy division reported a record gross margin of 30.5%.

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During CATL’s live broadcast for the new Tectrans batteries, it was noted that the electrification of heavy-duty commercial vehicles has resulted in a few challenges to producing battery cells. Some issues CATL has addressed with the Tectrans batteries include short range, slow energy replenishment, and rapid life decay, reported CN EV Post.

“Tectrans represents a quantum leap in battery technology for commercial vehicles, offering unprecedented energy density, faster charging capabilities, and enhanced durability.

“This innovative system is poised to transform the electric commercial vehicle landscape, providing fleet operators with extended range, reduced downtime, optimized cost-effectiveness, and improved overall efficiency,” CATL noted in September during IAA Transportation 2024.

The China-based company has introduced two batteries for commercial vehicles so far: the Tectrans – T Superfast Charging edition and the Tectrans – T Long Life edition.  The T-Superfast Charging edition has a 4C peak charging rate, enabling a 70% charge in 15 minutes. Meanwhile, the T Long Life editions have an estimated lifespan of up to 15 years or 2.8 million kilometers (1.7k miles).

CATL also plans to release a Tectrans – Bus edition for long-distance passenger transport. The Bus edition reportedly features an industry-leading energy density of 175 Wh/kg. 

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In a conversation earlier this year, CATL Chairman Robin Zeng told Elon Musk that the cylindrical 4680 battery “is going to fail and never be successful,” according to a report from Reuters this week. Zeng made the statements to Musk in a meeting with the Tesla CEO on his Beijing visit in April, and the chairman also said that the Tesla CEO was better equipped to handle other technologies than battery cells.

“We had a very big debate, and I showed him,” Zeng said. “He was silent. He doesn’t know how to make a battery. It’s about electrochemistry. He’s good for the chips, the software, the hardware, the mechanical things.”

Tesla working on four dry cathode 4680 battery variants: The Information

Tesla’s 4680 battery cell and CATL licensing

In September, Tesla announced that it had produced its 100 millionth 4680 battery cell at Gigafactory Texas, after reaching 50 million units in June. The company is also in the process of expanding its Gigafactory Nevada to add a dedicated 4680 cell production facility, expected to ramp up to 500 GWh in the long term.

The report also highlights a licensing deal Tesla has with CATL for technology related to producing batteries in Nevada, expected to officially launch in 2025, according to a person with knowledge of the matter who spoke to Reuters under the condition of anonymity.

Zeng on FSD Supervised and Musk’s promise timelines

In addition to discussing battery technology, the chairman said that he and Musk talked about the company’s focus on autonomy, adding that he agrees with Tesla’s overall approach to the topic. Unlike other companies that are developing self-driving systems, Tesla’s Supervised Full Self-Driving (FSD) only utilizes cameras as sensors, rather than using multiple layers of different redundant technologies.

“He’s all in,” Zeng told Reuters regarding Musk and Tesla’s FSD strategy in a statement earlier this month. “I think it’s a good direction.”

Despite his support for the company’s approach to FSD Supervised, Zeng also noted that he thinks Musk tends to set unrealistic timelines for new vehicle technologies, and he even asked the Tesla CEO during the April conversation, saying two-year timelines may as well be “infinity.”

“His problem is overpromising. I talked to him,” the chairman added. “Maybe something needs five years. But he says two years. I definitely asked him why. He told me he wanted to push people.”

Musk has addressed criticisms of his timelines before, pointing to his optimism as a necessary part of his accomplishments.

While certainly not perfect, my batting average for most predictions is quite good.

My schedule optimism, without which I probably wouldn’t even have tried to do many endeavors, gets the best of me sometimes, but I always deliver in the end.

— Elon Musk (@elonmusk) December 30, 2023

“Now, admittedly I’m a little optimistic sometimes,” Musk said during this year’s Annual Shareholders Meeting. “You know, I don’t have a complete lack of self awareness. But if I wasn’t optimistic, this wouldn’t exist this factory wouldn’t exist.”

The CEO later went on to add that he believes he’s been “pathologically optimistic from birth.”

CATL hopes for U.S. factory under Trump

CATL also told Reuters that it would build a U.S. production facility if President-elect Donald Trump would allow it.

“Originally, when we wanted to invest in the U.S., the U.S. government said no,” Zeng said. “For me, I’m really open-minded.”

“I do hope that in the future they are open to investments,” the chairman added.

In August, Trump expressed that he would be open to Chinese companies building factories in the U.S., despite the country’s recent passage of a 100-percent tariff on electric vehicle (EV) imports.

“We’re going to give incentives, and if China and other countries want to come here and sell the cars, they’re going to build plants here, and they’re going to hire our workers,” Trump said in a statement to the publication in August.

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CATL’s new LFP cell has 620+ miles of range and ultra-fast charging

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CATL’s founder and chairman, Robin Zeng, recently said that his company has always wanted to invest in the United States.

“Originally, when we wanted to invest in the US, the US government said no. For me, I’m really open-minded,” said Zeng told Reuters.

The relationship between Chinese battery suppliers and US companies has been scrutinized under the present administration. CATL has ties to Tesla, Ford, and, most recently, General Motors. In 2023, CATL’s relationship with Ford was questioned by the United States government. 

Ford had announced plans to build a $3.5 billion battery in Marshall, Michigan. The legacy automakers also planned to license technology from CATL for its billion-dollar battery plant.

In February 2023, Florida Senator Marco Rubio called an investigation into Ford’s plans to license technology from CATL.

“I am alarmed at Ford’s plan to establish a large, Michigan-based factory, structured as a wholly owned subsidiary that licenses its technology from CATL. 

“As such, I write to request a Committee on Foreign Investment in the United States (CFIUS) review of the licensing agreement, as well as demand that no federal funds – especially monies or tax credits granted via the Inflation Reduction Act (P.L. 117-169) – go to enrich PRC national champion CATL, or any other Beijing-supported company, directly or indirectly,” stated an emailed statement to TESLARTATI from Rubio’s office. 

The US Congress’ House Ways and Means Committee wrote to Ford about its collaboration with CATL and how it might go against the purpose of the Inflation Reduction Act (IRA). Under the IRA, China is designated a “Foreign Entity of Concern” (FEOC). 

In an email to Ford CEO Jim Farley, US Department of Energy Secretary Jennifer Granhold stated that her department’s “number one” priority” is to avoid having taxpayer dollars flow to China.

In March 2024, news broke that General Motors was considering using CATL technology in a joint battery plant. The GM-CATL joint battery factory was reportedly planned for North America, in the United States or Mexico.

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“The impact [to] CATL’s overall production operation is relatively small,” a CATL spokesperson noted. 

According to Barron’s, CATL’s recent fire incident was first reported when local firefighters were alerted about the blaze before 11:30 AM local time (0330 GMT). Dongqiao Economic and Technological Development Zone reported that CATL quickly evacuated everyone on the 15,000 square meter facility when the flames were discovered. 

CATL officials commented that the blaze was discovered by Z plant’s fire monitoring system, allowing the company to respond to the fire immediately. The battery supplier’s Chairman, Robin Zeng, stated that the fire was not a big problem.

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Based on Teslarati’s understanding, Japanese company TDK Corp. will fund and operate a new plant in the United States. The new TDK facility will locally assemble LFP cells using CATL technology. 

TDK’s plant is expected to be located in the US South, creating over 1,000 jobs in the area. People familiar with the matter hinted that General Motors will purchase TDK’s finished products. 

According to a Bloomberg News report, GM declined to comment on the speculation. 

“Our EV strategy is focused on designing products that continue to lower cost, improve performance, and localize production. Battery technology is key enabler of that strategy,” stated a GM spokesperson.

Earlier this year, GM initiated negotiations with CATL to license the Chinese company’s LFP battery technology. CATL and General Motors were also considering a potential joint factory in North America, either in the United States or Mexico. 

Given the United States’ sentiments toward electric vehicle (EV) imports and materials from China, a partnership between GM and CATL seems less likely. Ford’s plans to build a battery factory in Michigan using CATL technology has already drawn scrutiny from the US House of Representatives. Some US Representatives warned Ford against its reliance on China to produce EV batteries.

GM’s involvement with CATL might draw some scrutiny as well. Any plans between the two companies will highly depend on the upcoming 2024 US Presidential Elections. 

GM will not have an equity stake in TDK Corp’s battery facility. TDK will license technology directly from CATL and can offer its finished batteries to automakers for purchase. Since TDK’s batteries will be made in the United States, automakers will likely qualify for subsidies under the Inflation Reduction Act.

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