In order to expedite the formation and vertical integration of its own industry chain, Chinese battery manufacturer Gotion Hi-Tech announced on May 9 that it has signed an MoU with Jujuy Energía y Minería Sociedad del Estado (JEMSE) for comprehensive strategic cooperation. The two parties earlier held a virtual signing ceremony. Together, they will seek to enhance the security of the supply of local lithium resource, build a new lithium carbonate refinery, and expand business operations in the downstream sections of the battery supply chain.
Gotion said Argentina’s Juyjuy Province is part of South America’s “lithium triangle” where there is a concentration of lithium brine deposits. Local mining companies already have a wealth of experience in extracting lithium from brine deposits at low costs. As for JEMSE, it is controlled by the provincial government and committed to the continuous improvement in mining technology and capacity. At the same time, JEMSE is promoting the development of renewable energy projects, including those under the category of integrated PV and energy storage. Furthermore, JEMSE has established close ties with Chinese companies as well as companies from France, Australia, Canada, the US, Japan, etc.
Under the agreement, JEMSE, to the best of its ability, will provide Gotion with exploration and mining rights over an area of approximately 17,000ha. This will be done in accordance with local laws, and the provisioning of rights is subject to the validity of JEMSE’s own mining rights. In so doing, Gotion is expected to have obtained a guaranteed source of lithium.
Gotion, in turn, will build a refinery for producing battery-grade lithium carbonate in the free trade zone of the province. The refinery will complement the local mining sector and make JEMSE its main beneficiary with respect to the pricing of the lithium resource. To ensure the successful setup of the refinery, JEMSE will provide land, energy (e.g., electricity and natural gas), transportation, and raw materials (e.g., lithium brine, industrial-grade lithium carbonate). As a guarantee of partnership, the refinery will be a joint venture, though the division of the ownership is not specified in the MoU and will be arranged later.
Additionally, the two parties will cooperate in the downstream sections of the supply chain, such as cathode materials and battery manufacturing. They will also team up to capture opportunities in the North American and European markets. Gotion said this MoU is of great significance because it expands the supply of mineral resources, helps realize the aims of the company’s strategy for the upstream sections, and contributes to the company’s global expansion. By working with JEMSE, Gotion will be able to further raise its global market share for EV batteries.
Gotion Continues to Increase the Speed of Its Global Expansion
Gotion’s main offerings are as follows: materials for LFP batteries, LFP battery cells, materials for ternary batteries, ternary battery cells, EV battery modules, battery management systems, and energy storage battery modules. Its products are widely adopted in commercial BEVs, passenger BEVs, special-purpose vehicles, hybrid vehicles, LSEVs (including e-scooters and e-bikes), and energy storage equipment.
Since its establishment, Gotion has adhered to the operating principle of “cultivating strong root in the home market while branching out internationally”. Furthermore, Gotion has been committed to growing its presence in the global market for EV batteries. Many foreign companies have formed strategic ties with Gotion and are now providing a steady stream of battery orders. In sum, Gotion is gradually building out its global battery supply network.
In July 2021, Gotion and Volkswagen signed an MOU for strategic cooperation in the field of battery technology. Both parties will jointly develop a battery industry chain in Europe. Specifically, they will set up processing capacity for every stage of the product lifecycle, from upstream materials to battery manufacturing to recycling. Volkswagen China also became the majority shareholder in Gotion in December 2021.
Gotion is also in the process of acquiring Bosch’s plant in the German city of Göttingen. The transaction, which also encompasses 100% of Robert Bosch Aftermarket Solutions and its employees, is expected to be completed this year. Gotion intends to convert the plant into its base of operation in Europe, and it will leverage the talents that have been cultivated by Bosh to set up local battery production. This way, the company will be able to quickly respond to the demand of its European clients.
Turning to South Asia and Southeast Asia, Gotion’s subsidiary Hefei Gotion High-Tech Power Energy Co. and Tata Group’s subsidiary Tata AutoComp System Ltd. signed a joint venture agreement in May 2019. Named Tata AutoComp Gotion Green Energy Pvt. Ltd., the joint venture manufactures and sells battery packs and battery management systems used in EVs. Tata pointed out that Gotion’s LFP batteries are cheaper to produce and safer in a tropical environment when compared with conventional Li-ion batteries.
Also, in August 2021, Gotion and VinFast signed a letter of intent on cooperation in the R&D and production of LFP battery cells. VinFast is Vietnamese EV startup, and it could jointly build a battery plant with Gotion in Vietnam so as to further expand its presence in the Southeast Asian market.
Regarding the North American market, Gotion announced in December 2021 that its overseas sub-subsidiary Gotion Inc. and an undisclosed US car manufacturer had entered into a strategic supply and localization agreement. Under the agreement, Gotion will deliver no less than 200GWh of LFP batteries to the car manufacturer during the period from 2023 to 2028. The minimum quantities before 2024 and 2026 are set at 24GWh and 120GWh respectively.
Gotion’s battery sales have been growing rapidly thanks to the continuous increase in overseas orders. According to its recent financial report, Gotion’s revenue exceeded RMB 10 billion for the first time in 2021, totaling RMB 10.356 billion. In the same year, its revenue from overseas markets soared by 232.58% year on year to RMB 528 million. As for the first quarter of 2022, Gotion’s revenue came to RMB 3.916 billion, up 203.14% year on year.
It is also worth noting that Gotion plans to issue Global Depository Receipts (GDR) and apply for a listing on the Swiss Stock Exchange. The company made the announcement this March 17. Gotion said it wants to raise more capital to fund the global expansion and internationalization of its business operations. The company plans to add new EV battery production capacity and supporting processing capacity in Europe, North America and Asia. It also plans to develop a new generation of cutting-edge production lines for EV batteries.
At a conference call held this May 6, Gotion stated that it will complete overseas listing this July. Moreover, Gotion mentioned that fluctuations in prices of raw materials will continue to influence its profitability this year. Hence, ramping up efforts on securing lithium resource will ensure a stable supply of lithium carbonate and lower procurement costs. Gotion noted that it initiated a new capacity expansion project in the Chinese city of Yichun (Jiangxi Province) in August 2021. The project will add 100,000MT per year of production capacity for lithium carbonate. The first phase of the project is expected to enter operation this year.
This article is a translation of a Chinese article written by Wendy at TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain.