CATL (Contemporary Amperex Technology Co Ltd.), a leading Chinese battery manufacturer, is in discussions with General Motors (GM) to form a partnership based on a License Royalty Service (LRS) model. The objective of the partnership is to establish an LFP battery production facility in North America with a projected annual capacity equal to or greater than CATL’s current project with Ford.
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Potential locations for this new facility include the United States or Mexico, reflecting CATL’s strategy to deepen its commitment to the North American EV market. This move follows the U.S. Inflation Reduction Act (IRA), which offers significant tax credits for EVs that meet certain local production criteria, incentivizing CATL’s LRS model partnerships. Under the LRS model, CATL provides technical and equipment support, but does not get involved in manufacturing management or take an equity stake in the plants, instead earning from patent licensing and service fees.
Ford’s LFP battery plant in Michigan, with CATL’s technical and service support, is the first of its kind to be supported by an automotive manufacturer in the U.S.. It highlights the growing trend of collaboration between automotive manufacturers and battery manufacturers. CATL’s LRS model partnerships with Ford, GM, and Tesla are designed to leverage IRA incentives, allowing these companies to qualify for consumer subsidies while CATL minimizes its capital expenditure and risk.
Robin Zeng, Chairman of CATL, revealed ongoing technology licensing collaboration discussions with over a dozen automotive companies in Europe and the U.S., signaling CATL’s broader strategy to expand its global footprint through strategic partnerships.
Source: CNEVPOST
