CATL Might Bring Battery Capacity to America With Mexico Plant, Report Says.

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The electric-vehicle battery giant

Contemporary Amperex Technology

might be readying its first plant targeted at supplying North American auto makers.

Bloomberg reported Sunday that the company, better known as CATL, was likely to build a plant in Mexico to serve North American auto makers, including

Ford Motor

(ticker: F) and

Tesla

(TSLA). Ford declined to comment, while

Tesla

and CATL didn’t immediately respond to requests for comment.

A Mexican plant would be a beachhead into the North American EV market, helping CATL defend its dominant position. CATL is the world’s largest maker of EV batteries, with a market share of more than 33%, according to SNE Research. It has 10 production facilities: nine in China and one in Erfurt, Germany. Mexico could be the first for the North American continent.

EVs account for a bigger share of new car sales in China and Europe than in North America, but that is slated to change in coming years as EV models proliferate. Bank of America analyst John Murphy says almost 100 launches of new EV models are planned for North American between 2023 and 2026. That is more than are slated for vehicles powered by gasoline engines.

All those EVs will require batteries. Auto makers, along with other battery companies such as

SK Innovation

(096770.Korea) and

Panasonic

(6752.Japan) have announced enough battery capacity to make roughly eight million to 10 million EVs a year. That capacity comes online, very roughly, between 2022 and 2026.

Most car companies are building some of their own capacity, alone or in partnership with battery makers, but will continue to buy directly from battery makers themselves. It’s a dual sourcing strategy.

Tesla is “basically telling suppliers literally go. As much as you can make, we’ll take,” said CEO Elon Musk at his company’s annual meeting of shareholders in October 2021. Musk has also called batteries the new oil, underscoring the logic behind his effort to secure as much supply as possible for Tesla’s vehicle and stationary backup power businesses.

Now it looks as if CATL is entering that fray.

CATL is the largest battery maker. It is also the most valuable, with a market capitalization of about $200 billion. That is as much as

General Motors

(GM), Ford, Chrysler’s parent

Stellantis

(STLA),

SK Innovation
,

Panasonic
,
and the battery maker

LG Chem

(051910.Korea) combined.

CATL stock gained 3.5% in overseas trading. Tesla, Ford and GM shares were up about 2%, 1.9%, and 0.9%, respectively, in premarket trading. Futures on the

S&P 500
and

Dow Jones Industrial Average
were up about 1% and 0.9%, respectively.

Write to Al Root at [email protected]