Contemporary Amperex Technology to Raise $9 Billion in Stock Sale

Contemporary Amperex Technology to Ramp up Manufacturing

Contemporary Amperex Technology, the leading battery maker in China, is raising $9 billion via a share offering to expand its manufacturing. The company is aiming to capitalize on the growth in electric vehicles and the demand for lithium-ion batteries. CATL, which was founded in 2011, supplies batteries for Tesla’s (TSLA) plant in Shanghai and other EV manufacturers.

In addition to pouring proceeds into its battery plants in Fujian, Guangdong, and Jiangsu provinces, CATL will invest in research and development. With prices for raw materials rising, the company is working on ways to produce cheaper batteries with sodium ions. The goal is to make prices for EVs in line with gas-powered cars.

CATL’s Stock Rises

As demand for EVs climbs, so has CATL’s stock price. In 2020 the company’s revenue increased 10%. In the first quarter of 2021 it almost doubled to $3 billion. The stock is up 150% so far this year, setting a new high earlier in August. In addition to Tesla it counts NIO (NIO), XPeng (XPEV), Li Auto (LI), and Mercedes-Benz (DMLRY) as customers. With a market capitalization of around $180 billion it is one of China’s most valuable listed companies. The stock is outperforming its battery-maker rivals including Panasonic (PCRFY) and LG Chem.

CATL previously sold shares to investors, raising $3 billion a little over a year ago. This latest stock sale will have as many as 35 investors including insurance companies, financial institutions, and asset-management firms.

EV Market Poised for Strong Growth

The EV market across the globe is taking off as concerns about global warming prompt governments, politicians, business leaders, and citizens to call for greener alternatives. That is driving sales of EVs to record highs. 220,000 EVs were sold in China in July—double the number sold during the month a year ago.

Earlier this month US President Biden made a big commitment to an EV future, calling for half of all vehicles produced in the US by 2030 to be EVs. China wants EVs to account for 20% of all new cars by 2025 and 50% by 2035. With those kinds of commitments from two of the world’s biggest markets, it is understandable that shares of CATL have been surging and it wants to cash out.

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