According to people familiar with the matter, the world's largest battery manufacturer, CATL (CATL), is reconsidering plans to establish a battery factory in North America. The company has been looking for possible locations to build a factory in Mexico or South Carolina or Kentucky .
While the Inflation Reduction Act (IRA) is triggering a wave of investment in battery materials and manufacturing by several companies, the bill also requires that by 2024, half of battery materials must come from North America or countries with the most-favored-nation trade status. By 2026, this requirement will rise to 80%. Senator Joe Manchin (Joe Manchin) is one of the main designers of the IRA. He said the IRA aims to promote companies to mine and process battery materials in North America, aiming to break the industry’s dependence on China.
CATL is not against the production of batteries in the United States (or Mexico), but sources say that complying with the IRA will cost more materials than the cost of producing them in China and shipping them to North America, even if CATL is encouraged by the federal government to set up battery factories in the United States.
CATL supplies batteries to one-third of the world's electric vehicle , and has established a huge supply and processing infrastructure in China, making it highly competitive in battery prices. Sources said the battery factory planned to be built in the United States or Mexico will provide batteries to major customers such as Ford and BMW .
The terms of the IRA have aroused strong opposition from South Korean and European automakers. Volkswagen, BMW and Hyundai executives reportedly urged U.S. lawmakers to give automakers operating in the U.S. more time to meet the required battery procurement targets so they can qualify for tax benefits. But CATL’s change in ideas is the first example of automakers or major suppliers reconsider investment due to the new law.
The source said that CATL regards North America as a key market, but new regulations on battery material procurement in the United States have become the "banana peel" that drags down the company's investment plan. It is unclear how much time CATL is considering postponing its expansion plans in North America, nor is it clear whether the company will make other adjustments to its approach to close the cost gap.
The Inflation Reduction Act (IRA) gave some, but also took some. On the one hand, it has increased investment in renewable energy and battery storage. On the other hand, it puts huge obstacles for automakers who want their cars to meet the new tax incentives.
Europeans are not happy about this bill, and Koreans are even more unhappy. WTO (wto) also heard a challenge. As the backdrop of this farce, unless the U.S. election in a few weeks later leads to a change in control of the Senate and House of Representatives, the possibility of any significant change to the bill will be close to zero.
CATL may be a powerful factor in driving more affordable electric vehicles into the U.S. market, but current policies may convince it to abandon participation in the North American electric vehicle battery market. Politics is a delicate dance, and the little chaos here can lead to the big chaos there. Please wait and see the subsequent development -
(Original text from: Clean Technology Global Lithium Battery Network, Global New Energy Vehicle Network, New Energy Network Comprehensive)
Source: New Energy Network china-nengyuan.com
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