Zhong Guoxuan to Build Battery Factory in Illinois, USA

Chinese battery manufacturer Guoxuan is building a battery factory in Illinois, USA. This move is seen as China expanding its global production capacity, while the US is effectively creating a workaround for the Inflation Reduction Act (IRA) to meet battery demand.

According to Chinese economic media Caixin on the 10th, Guoxuan is investing $2 billion (approximately 2.668 trillion KRW) to construct a power battery factory, aiming for completion next year.

The factory is located in Manteno, about 80 km from Chicago, and plans to produce power battery cells and battery packs with capacities of 40 gigawatt-hours (GWh) and 10 GWh respectively. The Illinois state government stated that the factory will create more than 2,600 local jobs. Battery production is expected to begin next year, with deliveries likely to North American customers.

Caixin also reported that Guoxuan will receive incentives from the state government, including tax reductions totaling approximately $213 million over 30 years. Guoxuan is a Chinese battery company whose major shareholder is Volkswagen China (holding a 24.77% stake). Volkswagen China is a wholly owned subsidiary of Germany’s Volkswagen in China. If the US defines Chinese companies as those with "Chinese capital as the largest shareholder" under future IRA detailed regulations, Guoxuan could avoid regulatory restrictions.

According to the China Automotive Power Battery Industry Innovation Alliance, Guoxuan’s battery installation market share in China from January to July this year was 4%, ranking fifth. Korean research firm SNE Research announced that Guoxuan’s global power battery installation volume holds a 2.1% market share, ranking ninth. The company reported sales of 15.24 billion yuan (approximately 2.7697 trillion KRW) and a net profit of 210 million yuan in the first half of this year.

With its recent active expansion of production capacity, Guoxuan’s establishment of a battery factory in the US is expected to have a decisive impact on expanding its overseas market. Chairman Li Zhen of Guoxuan stated last September that the company’s battery production capacity would reach 300 GWh by 2025. Of this, 200 GWh will be in China, with the remainder distributed across Europe, the US, and Southeast Asia.

Since the US passed the IRA in August last year, Chinese companies have been seeking workarounds to enter the US market. Besides Guoxuan, CATL announced in February that it would invest $3.5 billion with Ford Motor Company to build a local battery factory. Ford owns all the factory shares and pays CATL licensing fees, thereby avoiding regulations. Tesla is also reportedly cooperating with Chinese CATL in a similar manner.

This content was produced with the assistance of AI translation services.