What’s new: Rather than using tariffs to steer electric vehicle (EV) battery production capacity to different countries, it ought to be spread out based on each one’s stake in the sector, Contemporary Amperex Technology Co. Ltd.’s (CATL) chief said.
CATL Chairman Zeng Yuqun proposed that capacity should be distributed proportionately, with China taking 40% due to its technological edge and the high efficiency of its investments. The Europe and the U.S. together should have 30% and battery material suppliers 30%, Zeng said Tuesday at the 15th Summer Davos in Dalian, Northeast China’s Liaoning province.
China currently undertakes well over half of global raw material processing for lithium and cobalt and has almost 85% of global battery cell production capacity, according to the International Energy Agency. Europe, the U.S. and South Korea each holds 10% or less of the supply chain for some battery metals and cells, it said.
Zeng said proportional distribution could offer governments a feasible alternative to depending solely on tariffs to limit imports of products they consider important.
The background: Zeng’s suggestion comes as the U.S. and Europe aim to bring EV battery manufacturing back home, and as countries exporting battery materials like Africa and Indonesia seek to build their own EV battery industry chains.
In recent years, CATL, which took LG Energy Solution Ltd.’s crown as the top supplier of EV batteries in non-China markets for the first four months of this year, has accelerated manufacturing localization overseas.
In November 2023, CATL announced plans to work with Stellantis NV to set up a factory for low-cost EV batteries in Europe.
The Chinese company is also working with Ford Motor Co. to build a factory in the U.S. state of Michigan.
Contact reporter Ding Yi (yiding@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
