The production base is expected to complete its first production line with a capacity of 6 GWh by March 2024 and all 36 GWh lines by the end of 2025.

(A rendering of the design of GAC Aion's battery base project. Credit: GAC Aion)

GAC Aion, the new energy vehicle (NEV) sub-brand of GAC, has officially started construction of its power battery project, marking one of the most high-profile moves by an automaker into battery manufacturing.

GAC Aion's project, located in Guangzhou, where it is headquartered, officially broke ground on December 11 with a planned total investment of 10.9 billion yuan ($1.57 billion), according to a press release yesterday.

The site, which is owned by GAC Aion's subsidiary called Yinpai Battery Technology Co, covers an area of about 666 mu (444,000 square meters) and is the largest power battery manufacturing project and energy storage project in the region, the release said.

The production site's workshops are expected to be delivered in October 2023, with the first production line with a capacity of 6 GWh to be completed by March 2024 and all 36 GWh to be completed by the end of 2025, GAC Aion said.

After the entire line is completed, the plant can meet the battery needs of 600,000 vehicles, the company said.

The production site will have an annual output of RMB 21 billion and will bring 15,000 jobs to the region, with an additional output of over RMB 180 billion.

In addition to battery development and production, the site will also have sales and service capabilities, a GAC Aion press release said.

GAC Aion announced its "Neutron Star Strategy" at the company's Technology Day in April last year, when it said it would conduct research and development of power batteries and cells.

On April 9, 2021, GAC unveiled its silicon sponge negative cell technology, which it said was a lighter and smaller cell technology that would improve cell energy density, power density and low-temperature battery characteristics.

GAC said at the time that its research institute had built a complete team of power battery cell professionals after 10 years of planning and 5 years of research, and had developed a technology that made the silicon cathode inside the battery as soft as a sponge.

On October 29, 2021, GAC said the group agreed to GAC Aion's plan to invest RMB 336 million in a battery pilot production line.

The purpose of the move is to accelerate the application of in-house developed battery technology, validate battery process maturity, product consistency and product cost, and stockpile mass production process technology, the announcement said.

GAC Aion has initiated the construction of a battery R&D pilot line this year and has entered into strategic cooperation with upstream raw material suppliers including Ganfeng Lithium and Nanjing Hanrui Cobalt Co, it said in the press release Sunday.

GAC Aion expects to build up to 2,000 stations with both charging and battery swap capabilities in 300 cities in China by 2025, according to the release.

Behind the launch of GAC Aion's power battery site construction is the pressure on car companies due to the dramatic rise in battery costs over the past two years.

In a speech at the 2022 World EV & ES Battery Conference on July 21, GAC Chairman Zeng Qinghong said half of the automaker's batteries come from CATL, and that battery costs account for 40 to 60 percent of NEVs.

"I'm actually working for CATL now," Zeng said at the time, complaining about the high cost of batteries.

The next day, CATL chief scientist Wu Kai said at the event on July 22 that the company was not yet losing money, but was largely struggling on the edge of a slight profit.

"Where are the profits going? You can imagine," Wu said at the time, suggesting that upstream raw material suppliers were taking most of the profits.

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