Chinese battery manufacturers Europe's car industry benefits from Chinese expertise

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Chinese battery manufacturers are pushing into Europe: AESC is investing over one billion euros in a new LFP battery factory in Spain. There, 900 jobs are to be created. The factory is part of a comprehensive strategy by Chinese companies to meet the growing demand for cost-effective batteries.

Chinese battery manufacturers are following domestic automakers to Europe. In the Spanish Cáceres, AESC has just laid the foundation for a new battery factory, investing more than one billion euros. The "Automotive Energy Supply Corporation" (AESC), headquartered in Yokohama, Japan, near Tokyo, has been majority-owned by the Chinese Envision Group since 2019, but still prefers to present itself as a "Japanese battery manufacturer." The new Gigafactory is further evidence of the great interest of Chinese battery manufacturers in the European market.

It is a factory for LFP batteries, i.e., the cost-effective variant to the currently dominant lithium-ion batteries. LFP or lithium iron phosphate batteries do not contain expensive nickel or cobalt. They have a 20 to 30 percent lower energy density than lithium-ion batteries, but cost about the same. For Spanish Prime Minister Pedro Sanchez, who personally traveled to the remote region of Extremadura in the southwest of the country for the cornerstone ceremony, the new battery factory is a "victory against relocation and industrial decline".

Chinese battery manufacturers bolster European presence

The new LFP battery factory is only the second in Europe, after the Serbian manufacturer ElevenEs started operating the first facility of this kind in Subotica in April. AESC, founded in 2007 as a joint venture between Nissan Motor and Tokin and gradually sold to the Chinese energy conglomerate between 2018 and 2019, counts automakers such as Mercedes-Benz, Toyota, Nissan and Renault among its customers. The company already has two other battery factories in Europe, in Sunderland, UK and Douai, France.

Despite the overall geopolitical situation, which is increasingly characterized by China-skepticism to outright China-hostile tones, Chinese battery manufacturers persist in striving to be close to their customers with their production—and thus continue to rely on increasing demand for power batteries of all kinds on the world market.

"Whoever goes overseas is a hero"

Whether LFP batteries will prevail in competition with other types of batteries is currently still disputed. Leading Chinese manufacturers like BYD and CATL, however, are investing in this technology in order to serve, among other things, the particularly strong growing segment of affordable electric and hybrid vehicles in China. In the global context, the new AESC factory in Spain, which will create 900 new jobs there and is scheduled to go into operation in 2026, is therefore another example of the global expansion of Chinese power battery producers.

Including AESC, ten Chinese battery manufacturers already produce in Europe or are preparing their production there. Four Chinese manufacturers have plants in the USA. The world market leader CATL, CALB, SVOLT, and Gotion High-Tech have opened new factories outside of China in the recent past.

The expansion wave of Chinese battery brands is not limited to Europe or North America, but is literally a "Go-Global" strategy. Gotion Hi-Tech opened a new factory in Thailand in December 2023, SVOLT followed suit there in February this year with their own factory. At the end of last year, a new slogan suddenly appeared on all CATL employees' laptops, the Chinese specialist portal CNEVPOST reports. "Whoever goes overseas is a hero of our company. Go out and go overseas!".

CATL, the undisputed market leader for car batteries in China and worldwide, already has eight factories outside of China in operation or in the pipeline, including in Thuringia, Hungary, Indonesia, Michigan, Nevada, and—like AESC—in Spain. (heh)

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