Shanghai (ZXZC)- Chinese power battery suppliers are scrambling to expand their battery capacity to satisfy the market demands rising with the rapidly growing new energy vehicle (NEV) sales.

As one of the main players in the country's power battery domain, Gotion High-Tech hit an annual capacity of 28GWh by the end of 2020 and is ambitious to increase the volume to 300GWh by 2025, according to the company's 2021 semi-annual financial results. Notably, the target is three times as much as the previously expected.

The company has built and planned ten domestic manufacturing bases for power batteries and relevant materials through its Hefei-based wholly-owned subsidiary, Hefei Gotion High-Tech Power Energy Co.,Ltd. (Hefei Gotion). Four of them are located in Hefei city, the capital of Anhui province, and the other six are situated in Qingdao, Tangshan, Nanjing, Nantong, Liuzhou, and Yichun.

Among the aforesaid four bases in Hefei, the one located in the city's Hefei Xinzhan High-tech Industrial Development Zone (Hefei Xinzhan) focuses on manufacturing power batteries and belongs to a project the company signed this year.

Hefei Gotion，Hefei Xinzhan High-tech Industrial Development Zone signing agreement; photo credit: Gotion Hight-Tech

On July 20, Hefei Gotion inked an agreement to build in Hefei Xinzhan a plant dedicated to manufacturing Volkswagen's unified cells with a total designed capacity of 20GWh per year. The first phase of 10GWh is expected to be completed within 18 months. However, the company has not revealed when the plant construction will start.

The abovementioned deal was signed after Hefei Gotion and Volkswagen (China) Investment Company Limited agreed on July 12 that Gotion High-Tech will develop the German auto giant's first-generation unified cells for the volume segment.

Aside from the Xinzhan project, Gotion High-Tech also made a great deal of efforts this year to strengthen its self-supporting capability of supplying battery-used raw materials.

Gotion High-Tech, Yichun Economic & Technological Development Zone signing agreement; photo credit: Gotion High-Tech

On March 24, Gotion High-Tech and Yichun municipal government signed contracts for the building of a mining joint venture and a lithium resource industrial park. The latter, whose construction began on May 22 at Yichun Economic & Technological Development Zone, is set to have facilities for extracting, processing, and applying lithium carbonate resources.

The cooperation with Yichun was further deepened with the signing of agreements with local authorities of Yichun’s two counties—Yifeng and Fengxin—in early August. Per the deals, Gotion High-Tech planned to build another two lithium carbonate plants in this city. When fully completed, the two factories would have a total annual production capacity of 100,000 tons of lithium carbonate, and the capability of developing and utilizing 3 million tons of mined ore. The Yifeng facility was set to be operational at the end of 2022, while the Fengxin-based one would kick off production 18 months after its construction begins this year.

In Lujiang, a county under the administration of Hefei city, Gotion High-Tech plans to build a new factory to supply raw materials for the production of lithium batteries. Under the agreement Hefei Gotion penned on July 25, the company would build a plant with a manufacturing capacity of 200,000-ton high-end cathode materials per year. The facility is expected to begin production in 2025 and targets an annual output value of 10 billion yuan ($1.567 billion).

Feidong Gotion battery material base grounding ceremony; photo credit: Gotion High-Tech

What's more, in Feidong, another county administered by Hefei, Gotion High-Tech is building a factory focusing on the recycling and cascade utilization of lithium batteries and relevant raw materials.

The company broke ground on the Feidong factory on July 23. On the ground of the agreement signed on March 22 with local government, the project involves a total investment of 12 billion yuan ($1.88 billion) and is planned to be completed within 24 months after the construction commences.

Gotion High-Tech is also seeking external assistance to improve its strength along the power battery industrial chain. In mid-September, the company announced the tie-up with Jiangxi Special Electric Motor Co.,Ltd. (JSMC), a Yichun-based company engaging in the R&D, production, and sales of motors and lithium battery energy products, who agreed to provide Gotion High-Tech with no fewer than 500-ton battery-grade lithium carbonate per month. In addition, both parties would explore more possible cooperation on such fields as energy storage and NEV-used electric motors.

The partnership with JSMC would aid the stable supply of raw materials and the decrease of long-term procurement costs for Gotion High-Tech, said the company.

Göttingen plant; photo credit: Bosch

Overseas markets, especially Europe, are also taken into account. To minimize the costs of serving OEMs outside China and abide by local laws and regulations, Gotion High-Tech decided to build its first Europe-based battery production base in Göttingen, Germany.

It should be clarified that Gotion High-Tech will not build a new plant but covert an existing production facility. To this end, the company took over all shares in Robert Bosch Aftermarket Solutions GmbH, which owned a plant in Göttingen, in July. There are still no official details on the purchase price, the timetable, and the planned production capacity.