CATL CEO Zeng Yuqun: Betting on Green Energy, Potentially Challenging Tesla

CATL CEO Zeng Yuqun: Betting on Green Energy, Potentially Challenging Tesla CATL's founder and chairman, Zeng Yuqun, expressed in an interview last week that his company might consider building a factory in the United States if incoming President Donald Trump relaxes investment restrictions on Chinese companies in the electric vehicle supply chain. "We were interested in investing in the U

CATL CEO Zeng Yuqun: Betting on Green Energy, Potentially Challenging Tesla

CATL's founder and chairman, Zeng Yuqun, expressed in an interview last week that his company might consider building a factory in the United States if incoming President Donald Trump relaxes investment restrictions on Chinese companies in the electric vehicle supply chain. "We were interested in investing in the U.S. but the U.S. government rejected our proposal," Zeng said in the interview. "I am open to investing in the U.S."

This statement is the first comment from a major Chinese supplier about potential investment in the U.S. market since Trump's election. Trump's campaign team has not yet responded.

The U.S. market has long closed its doors to Chinese electric vehicle and battery manufacturers, a trend that intensified during Trump's first term. The U.S.'s protectionist trade policies, driven by national security and competition concerns, particularly target battery and electric vehicle companies, imposing heavy tariffs and other trade barriers. The Biden administration's consumer vehicle purchase subsidy policy explicitly states that electric vehicles using Chinese-made batteries are ineligible for subsidies. Additionally, any vehicle equipped with Chinese connected car technology is prohibited from entering the U.S. market. China's electric vehicle import tariffs are as high as 100%, effectively amounting to a ban.

U.S. policies have restricted global leading battery and electric vehicle companies like CATL and BYD from entering the U.S. market, hindering the country's efforts to accelerate its transition to electrification. Unlike CATL, BYD not only produces batteries but also manufactures electric vehicles, with global sales reaching levels comparable to Tesla.

In an August interview, Trump stated that he wanted to prevent Chinese car imports but was willing to allow Chinese car manufacturers to build factories in the U.S. "We will offer incentives, and if China and other countries want to come into the U.S., they will have to build a plant here and hire American workers, Trump said. It was this statement from Trump that kept Zeng Yuqun interested in expanding CATL's business in the U.S. "I hope the U.S. will open up to investment in the future," he said.

Currently, CATL's U.S. operations are limited to licensing agreements for battery production. Ford is partnering with CATL to build a factory in Michigan to produce low-cost lithium iron phosphate batteries for its Mustang Mach-E and F-150 Lightning pickup truck. Tesla has also reached a similar agreement with CATL to produce batteries in Nevada, with production expected to start in 2025. Zeng Yuqun revealed that this partnership agreement will allow CEO Elon Musk to focus capital on artificial intelligence and autonomous vehicles.

CATL is the primary battery supplier to Tesla's Shanghai factory, which is also Tesla's largest global profit source. Zeng Yuqun said he had in-depth discussions with Musk about the potential of autonomous driving technology. He believes Musk's reliance on purely cameras and AI technology is the right approach.

However, Zeng Yuqun clearly expressed his skepticism about Musk's investment in the 4680 cylindrical battery. "We had a deep discussion, and I told him that this design wouldn't be successful. He kept silent because he doesnt understand batteries," Zeng said. "He is good at chips, software, and hardware, but batteries are a different field."

Zeng Yuqun also questioned Musk's unrealistic timelines for new model and technology launches. Musk responded that such timelines are meant to motivate employees, considering projects longer than two years as "indefinitely long." Zeng Yuqun commented: "His problem is that he overpromises. I told him it might take five years, but he said two years. This is good for direction, but it can get you into trouble."

Currently, Zeng Yuqun is planning to transform the world's largest battery manufacturer into a green energy provider and significantly reduce the cost of electric vehicle development, breaking the industry's traditional growth pattern. In the interview, Zeng said that the business scale of developing a "zero-carbon" power system would far exceed the electric vehicle battery market, potentially reaching ten times its size.

CATL currently holds a 37% share of the global electric vehicle battery market and plans to build self-sufficient energy systems capable of powering large data centers or even entire cities. CATL's energy storage business grew by 33% last year, surpassing the growth rate of its electric vehicle battery business. Zeng Yuqun believes that the company has even greater opportunities in the green grid sector, including providing energy storage services for solar and wind power projects and building intelligent systems to support energy storage utilization for parked electric vehicles.

China has the highest electric vehicle adoption rate globally, with the proportion of new energy vehicles in recent years exceeding 50%. Zeng Yuqun said that CATL can build zero-carbon emission grids capable of powering large mining areas or entire cities, with plans extending beyond energy storage to include electricity generation. He revealed that CATL plans to collaborate with solar panel and wind turbine suppliers to develop green energy solutions for large data centers, including those serving AI companies. These enterprises generally require 100% clean energy supply and have the financial resources but lack the necessary technical support.

CATL will also launch a pilot project in the Democratic Republic of Congo, alongside a larger-scale and long-term project on Hainan Island in China, combining energy storage with offshore wind power.

CATL currently provides battery support for over one-third of the world's electric vehicles and hybrid vehicles. Now, Zeng Yuqun is pushing a new initiative launching a battery platform chassis with a range exceeding 800 kilometers, enabling customers to design customized electric vehicles by simply designing the interior and exterior. Zeng Yuqun said that this project has the potential to reduce new vehicle development costs from billions of dollars to around ten million dollars, providing entry opportunities for small and medium-sized automakers, especially in economies without established automotive companies. The company has also showcased the platform to Porsche and investors in the UAE.

In the European market, CATL is partnering with Stellantis to plan a joint battery factory in Spain, with an agreement expected to be reached by January next year at the latest. CATL already has a battery plant in Germany that has been operational for six years, and is building another new factory in Hungary. Zeng Yuqun said that the German and Hungarian factories are expected to become profitable in 2025 and 2026 respectively, with production costs in Hungary anticipated to be significantly lower than those of the German plant. These European battery factories primarily supply carmakers like BMW, Stellantis, and Volkswagen.

Zeng Yuqun pointed out that despite the EU's priority of promoting a clean energy transition, its imposition of a maximum 45.3% import tariff on Chinese electric vehicles is a "foolish decision." Collaboration between European and Chinese carmakers will better facilitate the market penetration of low-cost, long-range electric vehicles.

Zeng Yuqun also mentioned that although solid-state batteries are considered the next revolutionary technology, CATL's research and development team has grown to 20,000 people, with 1,000 dedicated to solid-state battery research. However, he is more optimistic about the potential of sodium-ion batteries, predicting that they may eventually replace half of the lithium iron phosphate battery market share. Sodium is abundant and inexpensive, and its electrochemical properties may reduce the risk of fires in electric vehicles. CATL has already launched a sodium-lithium hybrid battery suitable for electric vehicles. Zeng Yuqun estimates that the company will begin a small-scale rollout of solid-state battery technology in 2027, although this technology has been considered a potential breakthrough for next-generation electric vehicle batteries. However, in terms of commercialization, sodium-ion batteries may offer a more realistic advantage.