In order to safeguard its production capacity for electric vehicles, Mercedes-Benz announced that it has signed a new contract with Chinese battery supplier CATL to reinforce its supply of lithium batteries for years to come.
CATL, the leading global automotive lithium battery supplier, recently announced that it would open a new factory in Hungary to join battery supply chain produced locally in Europe. Mercedes-Benz then announced that they had reached an agreement with CATL to expand supply in a new collaboration.
As early as 2020, Mercedes-Benz had already partnered with CATL. Since its new battery factory is about to start construction, Mercedes-Benz has confirmed that it will become a flagship customer of this battery factory and also place the largest order.
As an indicator for the German auto industry, Mercedes-Benz has announced last year that it will achieve a strategic goal of full electrification by 2030. To achieve this, it is estimated that the amount of batteries required is as high as 200 GWh per year.
This volume cannot be digested by a single battery factory and, in order to ensure the diversification of its supply chain, Mercedes-Benz expects to use batteries from eight battery factories, four of which are located in Europe.
Although the two parties have not disclosed too much about the details of the partnership, the strength of CATL lies in lithium iron phosphate batteries (LFP). It is reasonable to speculate that this batch of new cars will probably use batteries from CATL’s Hungarian factor.
CATL currently has a battery factory in Germany, located in Erfurt. It started construction in 2019 and began production in 2022 with a production capacity of 8 GWh per year, which can be expanded to a maximum of 14 GWh in the future. However, this figure obviously underestimates the demand for lithium batteries for electric vehicles, so the Hungarian factory has been greatly upgraded, costing 7.5 billion euros, and maximum annual production capacity has reached 100 GWh.
In addition to higher capacity, the new battery plant is an advantage for European carmakers. The new factory will strictly limit carbon emissions. CATL stated that the Hungarian factory will be built to the standard of complete carbon neutrality, which will further reduce the carbon emissions of electric vehicles and help car manufacturers reduce carbon emissions.