CATL Invests Heavily in Building a Hungarian Battery Factory

On August 12, Ningde Times announced that in order to further deepen the company's global strategic layout, promote overseas business development, and meet overseas market demand, it plans to invest in the construction of the Hungarian Times New Energy Battery Industrial Base Project in Debrecen, Hungary. The investment does not exceed 7.34 billion euros (about 50.9 billion yuan). The Hungarian State Secretary of the Ministry of Foreign Affairs and Foreign Economics Magyal Levintai said that the construction of its second European factory in Debrecen, Hungary, by Chinese battery manufacturer CATL, will be the largest investment project in Hungarian history.

It is reported that the Hungarian project of CATL is implemented by its wholly-owned subsidiary CATL New Energy Technology (Hungary) Project Management Co., Ltd. The company was established on February 4 this year. According to the plan, the Ningde era's Hungary project covers an area of about 2.21 million square meters, and will build a 100GWh power battery system production line. The total construction period is expected to be no more than 64 months. The first plant will start construction in 2022 after obtaining relevant approvals. The plant will supply Volkswagen, BMW, Stellantis and other groups, and Mercedes-Benz will also participate in the plant construction project.

Ningde Times said that this investment in the construction of production bases is in line with the company's global strategic development plan, and will further improve the company's overseas production capacity layout to meet the company's future business development and overseas market expansion needs. It is of great significance to promote the company's long-term and stable development. The investment and construction of this project will increase the company's capital expenditure and cash expenditure, but in the long run, it will have a positive impact on the company's global business layout and operating performance, which is in the interests of all the company's shareholders.

As for why the second factory was located in Hungary, Ningde Times said that, first of all, Hungary has a long history of automobile manufacturing industry, with good industrial facilities. Battery raw materials, separators and other auxiliary materials can be purchased in surrounding areas. The combination of battery technologies can better contribute to the electrification of European transport. Secondly, Hungary is located in the heart of Europe, with prominent geographical advantages, and has gathered a large number of vehicle companies. The establishment of local factories in Hungary allows the company to respond to customer needs in a timely manner. Thirdly, Hungary, especially the city of Debrecen, has an excellent investment environment, good infrastructure in transportation and logistics, and a large number of excellent industrial and skilled workers, which has provided a good development boost for CATL's investment and construction of factories in Hungary. "The Debrecen factory will further improve our competitiveness and help us better respond to the needs of European customers, thereby accelerating the electrification transformation in Europe. This CATL's investment in Hungary will be part of the company's efforts to improve its global strategic layout. Great strides." said Zeng Yuqun, chairman of CATL.

However, Ningde Times also stated that this investment still needs to be approved or filed by the company's shareholders meeting and the Chinese and Hungarian governments and relevant departments, and there is uncertainty.

It is understood that the Debrecen factory will be the second factory built by CATL in Europe after the Thuringia factory. In April, CATL announced that its first overseas factory in Thuringia, Germany has officially obtained a production license for 8GWh batteries, and the first batch of batteries will be off the assembly line by the end of 2022. The distance between the factory and Tesla's Berlin Gigafactory is no more than 300 kilometers.

In addition, CATL is also actively expanding overseas projects in the battery industry chain. On April 15 this year, Ningde Times also announced that Ningbo Puqin Times Co., Ltd., a subsidiary of its holding subsidiary Guangdong Bangpu Cycle Technology Co., Ltd., plans to invest in the construction of a power battery industry chain project in Indonesia. The construction period of the project is expected to be 5 years, and the total investment amount has been determined not to exceed 5.968 billion US dollars.

Overseas markets are becoming more and more important to CATL. According to the company's 2021 annual report, CATL's overseas operating revenue in 2020 will reach 7.908 billion yuan, accounting for 15.71% of total revenue; in 2021, overseas revenue will increase to 27.87 billion yuan, accounting for 21.38% of total revenue, a year-on-year increase An increase of 252.47%. In terms of gross profit margin, in 2021, CATL's domestic gross profit margin will be 25.14%, while that of overseas markets will reach 30.48%. At the same time, CATL has an overseas market share of about 18%. Industry insiders believe that compared with China occupying "half of the country", the overseas market expansion space of CATL is huge.