LDN - Business

CATL to build electric car battery cell factory in Thuringia: sources

[June 29, 2018] FRANKFURT/LONDON (Reuters) - China's Contemporary Amperex Technology Ltd (CATL) will build a battery cell factory in the German state of Thuringia to supply European carmakers including BMW <BMWG.DE>, three sources said on Friday.

An official signing ceremony will take place at a summit in Berlin with China's Premier Li Keqiang on July 9, two of the sources said.

CATL will produce lithium-ion cells at the plant for use by German carmakers in battery packs for electric cars.

"The location of Thuringia... is correct," the third source said.

Global and local automakers are bolstering their electric vehicle capabilities and China, the world's largest car market, has emerged as a leading player due to a government push to encourage zero-emission vehicles.

German automakers, shaken by a diesel-emissions cheating scandal, are also pouring cash into electric vehicles and have grown reliant on a raft of Asian suppliers as they raise production.

CATL is China's dominant battery maker. BMW rival VW <VOWG_p.DE> recently picked CATL, and South Korea's Samsung and LG Chem <051910.KS> to deliver $25 billion worth of batteries.

This month Tesla's <TSLA.O> chief executive said he favors Germany as the location for the carmaker's first European battery factory. [nL4N1TM3FG]

BMW confirmed on Thursday that the carmaker had awarded a contract worth just over 1 billion euros ($1.16 billion) to CATL so the Chinese battery maker can build a factory to make cells for electric cars in Europe.

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People walk past the R&D centre of Contemporary Amperex Technology Ltd (CATL) in Ningde, Zhejiang province, China, December 16, 2016. REUTERS/Jake Spring/File Photo

Thuringia's Economy Ministry on Friday said it was negotiating with CATL about locating production in Thuringia.

"As far as we know, several locations across Europe are being considered for such an investment. These discussions have not been concluded," it said.

Local newspaper Thueringer Allgemeine said the investment may be made in the eastern German city of Erfurt, on the same site as a solar cell plant operated by Solarworld, a company which was deemed insolvent in March.

CATL declined to comment.

The Chancellor's office in Berlin had no immediate comment. Germany's Economy Ministry said it was not involved in a decision to attract an investment from CATL.

($1 = 0.8590 euros)

(Reporting by Edward Taylor in Frankfurt, Sun Yilei in London aditional reporting by Markus Wacket in Berlin and David Stanway in Shanghai; editing by Jason Neely)

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