Tesla Inc TSLA supplier Contemporary Amperex Technology Co Ltd — CATL — is eyeing increased production capacity to meet the rising demands of green energy vehicle manufacturers.
What Happened: CATL is planning to invest a total of 39 billion yuan ($6 billion) in lithium-ion battery production projects in three cities in Fujian, Sichuan and Jiangsu provinces, CNTech Post reported.
CATL's cumulative announced investment in capacity construction in 2020 totaled 73 billion yuan ($11 billion), more than its historical investment total, CNTech said, citing the investment bank CICC.
CICC estimates that CATL can cater to the demand needs of top-tier global EV makers, and in the process maintain a 25%-30% market share in the medium- to long-term.
Related Link: Tesla Unlikely To Cut Model 3 Prices In China, Leaves Door Open For Increases: Report
Why It's Important: With new energy vehicle demand likely to receive an impetus from the quest to contain pollution globally, demand for batteries is likely to increase.
Batteries account for roughly 40%-50% of the cost of an EV. They are also central to increasing the efficiency and range of EVs.
The expansion of battery suppliers can be considered as leading indicator for EV demand, and therefore should bode well for EV makers.
Related Link: Tesla Supplier LG Energy Solution Reaches $9.8B Battery Investment Deal With Indonesia
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