Shanghai (ZXZC)- Hefei Guoxuan Battery Material Co.,Ltd., a subsidiary of China's No. 3 power battery manufacturer Gotion High-Tech, inked an agreement on July 16 with Hefei Lujiang Hi-tech Industrial Development Zone Management Committee to initiate the project of high-nickel ternary cathode material with an annual capacity of 30,000 tons.

The signing of agreement came after Gotion High-Tech struck a deal with Volkswagen (China) Investment Co., Ltd. in late May for the German auto giant planning to become the biggest shareholder of the Hefei-based battery suppliers. It indicated that the collaboration has been pushed to a new phase.

(Photo source: Gotion High-Tech)

The Chinese battery manufacturer said then it intended to raise money by making a non-public issuance of stocks towards Volkswagen Group China. Upon the completion of the stock transfer, the German automaker will hold 440,802,578 shares in Gotion High-Tech, valued at €1.1 billion.

The transaction will make Volkswagen Group the first foreign automaker that directly invests in Chinese battery manufacturing, and is expected for completion at the end of 2020.

The money raised will be used to construct a high-specific-energy power lithium battery facility with an annual capacity of 16GWh, build a manufacturing base that is able to output 30,000-ton high-nickel ternary cathode material per year, and supplement working capital.

The battery maker also revealed that it will become an authorized supplier to the German auto giant, and has a chance to offer batteries to the all-electric vehicles Volkswagen deploys in China.

(Photo source: Gotion High-Tech)

Covering an area of roughly 350 mu (233,333 square meters), the yet-to-be-constructed high-nickel ternary cathode material project is projected to start trial operation in 2023. The investor, Hefei Guoxuan Battery Material Co.,Ltd., mainly puts works into the R&D, production and sales of lithium iron phosphate and ternary cathode materials.

Gotion High-Tech said its current capacity is primarily based on lithium iron phosphate batteries, but it is taking active steps to advance the planning of ternary battery capacity with the Lujiang-based project serving as one of key parts.