Chinese Lithium-Battery Firm Seeks Portuguese Partners

“At present, CALB has set up several industrial bases to build industrial clusters in the Yangtze River Delta, Southwest, Central and the Greater Bay Area to achieve a full range of domestic industrial layout, and make overseas industrial layout to become a leading global enterprise!” according to the firm’s website. (Photo from CALB's website)

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China Aviation Lithium Battery Technology (CALB) is seeking Portuguese companies for involvement in its €2 billion manufacturing complex, described as "one of those big investment bangs" by a former Minister of the Economy.

The company is the world’s fourth-largest supplier of electric-vehicle batteries. Its project in Sines Municipality, Portugal, is its first in Europe.

"To achieve the defined objectives, establishing relationships with Portuguese authorities and companies is crucial. The development of these contacts is the basis that will allow us to work together in various business areas in the future," said a company statement, according to Expresso (October 23).

Recognized as an expedited Project of National Interest (PIN), China Aviation Lithium Battery Technology's lithium-battery industrial unit obtained environmental approval, albeit with 92 conditions, in March 2024, reported Expresso (March 15, 2024). Among the measures was "the minimization of the felling and destruction of cork oaks and holm oaks, whether isolated or in settled areas". 

The project has a capacity of 15 GWh (gigawatt-hours) on land in the Industrial and Logistics Zone of SINES (ZILS), according to the Portuguese Environmental Agency (APA) in its 44-page document issued on March 7, 2024. By comparison, a production capacity of 60 gigawatt-hours would supply batteries for about 1 million electric vehicles, Swedish lithium-battery producer, Northvolt, which has since declared bankruptcy, told CNBC (December 29, 2021).

Its output will be the equivalent of about 187,000 batteries for electric cars, according to Expresso (February 20, 2025). 

It will be located on 45 hectares of approximately 92 hectares in the Industrial and Logistics Zone of Sines (ZILS).

China Aviation Lithium Battery Technology expects to create 1,800 direct jobs, according to Expresso (March 15, 2024).

The Scope Definition Proposal (PDA) of CALB's battery complex states that there are five stages in manufacturing lithium batteries, which will take place in five linked buildings: production of electrodes; cell manufacturing; formation/assembly; packaging, and the manufacture of casings.

In addition to the battery-production process, there will be several support infrastructures, including a cooling tower, an oil boiler system for heat transfer, a steam boiler system, a dehumidifier, a hot water system, a gas extraction system and a firefighting control center.

In its endeavor to involve local companies, China Aviation held a conference in Sines on October 23 to bring together potential partners and suppliers, reported Expresso (October 23).

The company did not commit to any specific volume of national participation, only an intention "to benefit both the local economy and the global transition to cleaner and smarter solutions", reported Expresso.

Previous Conference in February

In February, China Aviation Lithium Battery Technology held a previous conference at the Instituto Superior Técnico, in Lisbon.

The then-Minister of Economy Pedro Reis, CALB President Liu Jingyu, and representatives of companies, including Volkswagen Autoeuropa and Mota-Engil, a Portuguese conglomerate of more than 200 companies in construction, engineering and other areas, attended the event, which took place two days before the European Commission (EC) presented its Clean Industrial Deal, a package geared to stimulate the decarbonization of European industry.

The European Union (EU) is keen on reducing European dependence on external suppliers by becoming more self-sufficient. It initiated, in October 2017, the European Battery Alliance (EBA), whose annual market value was estimated at €250 billion from 2025 onwards. Europe relies on imported critical raw materials, including lithium.

Just 3 percent of global battery-cell production takes place in Europe, according to research for international consultancy firm McKinsey, reported BBC News (January 3).

In September 2024, AMG (Advanced Metallurgical Group) Lithium opened Europe’s first lithium refinery in Bitterfeld-Wolfen, Germany, according to Euro News (September 19, 2024).

In his Lisbon presentation, Pedro Reis highlighted the importance of the lithium-battery project, which expects an annual turnover of €1.6 billion focused on exports to Europe.

“This is one of those big investment bangs that only happen every now and then and that help to bring about many others. We have many competitors who fought for this investment”, he told journalists, according to Expresso (February 28).

Possible €350 Million European Incentive

China Aviation Lithium Battery Technology could receive up to €350 million in support under the European reindustrialization incentive scheme, reported RTP News (February 25).

The European incentive scheme for reindustrialization and acceleration of innovation and new technical skills “allows support of up to 35 percent, hence the figure that has been suggested of €350 million", said Pedro Reis, in statements to journalists at the Lisbon presentation.

Pedro Reis explained that the investment project had been submitted to the Portuguese Agency for Investment and Foreign Trade (Aicep), so that it can assess CALB’s extent of eligibility for public support.

The administrator of Aicep, Madalena Oliveira e Silva, explained: "The contracting must take place in 2025, but normally, contracts take some time, because we have to study, we have to discuss everything that is eligible and what is not, the percentages of support, the intensities of support, and only then can we have a finished negotiation proposal that passes the contracting.”

The Lisbon presentation was preceded by a meeting between the leaders of CALB and Volkswagen Autoeuropa, signaling the Chinese company's interest in supplying Volkswagen's Portuguese factory. However, a source close to CALB assured Expresso that it was a courtesy contact, without any concrete path of future collaboration between the two companies having been established, reported Expresso (February 28).

CnEVPost (February 25), a Shanghai website focused on the electric-vehicle industry in China, reported that CALB said it already has received orders from a number of international customers, including Toyota, Volkswagen, Ford and Audi, according to a local media report in Jiemian, China.

CALB expects to start production in 2028, reported Reuters (February 21).

Possible Future Phases

The company’s project already includes an area large enough for a second phase, which would almost double the facilities of the first phase, foreseeing an additional battery capacity with storage of 30 GWh (gigawatt-hours), double the 15 GWh-capacity of the first phase, reported Expresso (February 28). There are no licenses for this second phase yet.

Also, the possibility of a third phase was brought up by the Chinese company in talks with the Portuguese government. It would require about 60 hectares of additional land, which has not yet been contracted, and it would allow battery production with an additional capacity of 45 GWh. The total battery-production capacity of the Sines complex would be 90 GWh.

China Aviation Lithium Battery Technology

China Aviation Lithium Battery Technology was the world’s fourth-largest supplier of electric-vehicle batteries in 2024, according to CnEVPost (February 25).

Expansion has been rapid for CALB. According to the firm’s website:

--In 2012, located in Jiangsu, China Aviation Lithium Battery Technology expanded industrial distribution;

-- In 2018, it restructured itself to focus on the passenger-vehicle market;

-- From 2019 to 2022, the company expanded production facilities into nine other cities in China and,

-- In 2022, it was listed on the Hong Kong Stock Market.

“At present, CALB has set up several industrial bases to build industrial clusters in the Yangtze River Delta, Southwest, Central and the Greater Bay Area to achieve a full range of domestic industrial layout, and make overseas industrial layout to become a leading global enterprise!” according to the firm’s website.

Chinese Battery-Maker CATL Already in Europe

Portugal is scheduled to be the site of CALB’s first overseas factory complex, according to CnEVPost (February 25).

However, CALB is not the first Chinese lithium-battery manufacturer to operate in Europe.

CATL (Contemporary Amperex Technology), the world’s largest supplier of electric-vehicle batteries, beat its rival, CALB, to it.

CATL and CALB have been suing each other, during the past several years, over patent infringements, reported China IP Law Update (October 26, 2024). Most recently, CALB said that CATL had sued its Hong-Kong-listed peer for infringing a patent on battery modules, reported Reuters (January 17, 2025). CATL is seeking compensation of 60 million yuan ($8.19 million) as part of the lawsuit.

CATL´s most recent European investment is in Spain.

CATL and Stellantis, a multinational automotive company, plan to invest €4.1 billion to build one of Europe's largest electric-vehicle battery factories in Spain, encouraged by lower costs and government funding, reported Reuters (December 10, 2024).

The lithium component is expected to be imported from Brazil.

The equal joint venture in Zaragoza in northeastern Spain is scheduled to start production by the end of 2026 and could reach a capacity of 50 gigawatt hours - enough to power an average of 700,000 cars a day, according to the Netherlands-based Electric-Vehicle Database.

The plant will supply lithium-iron-phosphate batteries for small- and medium-sized cars, said the companies, reported Reuters.

Stellantis was formed from the merger in 2021 of the Italian–American conglomerate Fiat Chrysler Automobiles (FCA) and the French PSA Group, formerly PSA Peugeot Citroen. The company headquarters are in Hoofddorp, Netherlands.

Spain, Europe's second-largest car producer, in 2020, announced a €5 billion plan to attract production of electric vehicles and batteries using European Union pandemic relief funds, reported Reuters (December 10, 2024).

Stellantis has received around €300 million euros from that plan, according to the government.

The Zaragoza plant will be CATL's third investment in Europe; the other two are wholly owned by the battery maker.

CATL operates a six-year-old factory in Germany, its first in Europe, with a total investment of €1.8 billion to achieve an ultimate production capacity of 14 gigawatt hours.

It is building a new plant in Hungary with an investment of €7.3 billion and planned capacity of 100 GWh.

Chinese Dominance

The top 10 electric-vehicle battery manufacturers in the world and their market share in 2024 were listed by CnEVPost from SNE Research, whose company produces automotive batteries, solar cells and other products in South Korea, according to Bloomberg:

1.      CATL                         (China)           37.9%;

2.      BYD                          (China)            27.2%;

3.      LG Energy Solution  (South Korea) 10.8%;

4.      CALB                        (China)             4.4%;

5.      SK On                       (South Korea)   4.4%;

6.      Panasonic                 (Japan)            3.9%;

7.      Samsung SDI           (South Korea    3.3%;

8.      Gotion Hi-Tech         (China)              3.2%;

9.      Eve Energy              (China)              2.3%;

10.  Sunwoda                  (China)              2.1%;

11.  Others    

How is it that there is such dominance -- 77.1 percent -- of the lithium-battery market by China?

China’s Belt and Road Initiative (2013)

Raw materials are critical for a broad range of goods.

These materials are needed to deliver clean energy technologies for the green transition, such as lithium, cobalt and nickel for producing batteries, among other clean energy technologies, advanced technologies for the digital transition, such as gallium for semi-conductors, and defense and space applications, such as titanium and tungsten, according to The Future of European Competitiveness (September 2024), by Mario Draghi, the economist who headed the European Central Bank (2011-2019).

As an example, one smartphone might contain up to 50 different metals.

In 2013, China adopted the Belt and Road initiative, which included active investment in mining assets in Africa, Indonesia and Latin America as well as investment in overseas refining and other industrial facilities, with the aim of securing strategic access to raw materials, according to The Future of European Competitiveness.

As a result, China dominates global critical mineral supply chains. The country is the leading source of numerous critical minerals and accounts for almost 70 percent of the world’s output of rare earth minerals.

Moreover, it holds a quasi-monopoly on the processing and refining of critical minerals.

Regarding refining operations, the market has become even more concentrated over time.

For example, China holds half of all planned lithium chemical plants; Indonesia possesses nearly 90 percent of planned nickel refining facilities, and Chinese firms own 15 out of 19 copper and cobalt mines in the Democratic Republic of Congo.

Between 2018 and the first half of 2021, Chinese companies invested $4.3 billion to acquire lithium assets, twice the amount invested by companies from the United States, Australia and Canada combined during the same period.

China’s overseas investment in metals and mining through the Belt and Road Initiative reached a record high of $10 billion in the first half of 2023 alone. Current plans are set to double the ownership of Chinese companies of overseas mines containing critical minerals.

Recently, China also issued a rare earth regulation to further protect domestic supply, laying out rules on the mining, smelting and trade of critical materials. The regulations say rare earth resources belong to the state, and the government will oversee the development of the industry around rare earths, according to Mario Draghi’s The Future of European Competitiveness (September 2024).

Growth in Lithium-Battery Market

The global battery market is advancing rapidly as demand rises sharply and prices continue to decline, reported the International Energy Agency (March 5, 2025). Cheaper battery minerals have been an important driver.

Lithium prices, in particular, have dropped by more than 85 percent from their peak in 2022. However, rapid advancements in the battery industry itself are also supporting price declines. 

China produces about three-quarters of lithium batteries sold globally. In 2024, average prices dropped faster there than anywhere else in the world, falling by nearly 30 percent. Batteries in China were reported to be cheaper than in Europe and North America by more than 30 percent and 20 percent, respectively.

Why are Chinese batteries cheaper?

China benefits from the following:

1.      Extensive manufacturing know-how;

2.      Supply-chain integration with access to critical minerals at below market cost;

3.      Cheaper battery chemistry by prioritizing lithium-iron phosphate (LFP). Initially thought to be unsuitable for electric cars due to their lower energy density, after years of research and development, Chinese producers have honed LFP batteries, which now cover nearly half the global electric vehicle market after more than tripling their share within the past five years. They are about 30 percent less expensive than their main competitor, lithium-nickel-cobalt-manganese-oxide (NMC) batteries,

4.      Fierce domestic competition as China is home to nearly 100 producers.

European Lithium-Battery Industry

The European Union’s share of the global production of most critical raw materials is lower than 7 percent, according to Mario Draghi’s The Future of European Competitiveness.

Many battery producers in Europe are postponing or cancelling expansion plans because of uncertainty about future profitability. Production costs in the region are about 50 percent higher than in China, reported the International Energy Agency (March 5).

Meanwhile, the battery supply-chain ecosystem is still relatively weak, and there is a lack of specialized workers, according to Draghi.

Other Battery Producers

Despite China’s current market dominance, battery production is also moving fast elsewhere, reported the International Energy Agency (March 5).

South Korea and Japan already are big players; in the United States, battery manufacturing capacity has doubled since 2022 following the implementation of tax credits for producers, and Southeast Asia and Morocco are emerging as potential production hubs for batteries and their components.

The European Union is not keeping pace with its competitors, wrote Mario Draghi. It is lacking a comprehensive strategy covering all stages of the supply chain (from exploration to recycling).

The recently approved Critical Raw Materials Act (CRMA) takes steps in the right direction, but greater efforts are needed in this area.

On March 16, 2023, the European Commission adopted the Critical Raw Materials Act (CRMA). The regulation of the European Parliament and of the Council establish a framework for ensuring a secure and sustainable supply of critical raw materials, according to the International Energy Agency (IEA) (October 28, 2024).