Chinese EV battery firm China Aviation Lithium Battery Technology (CALB) is going public in Hong Kong. It is expected to go public with a $2 billion IPO. The company was formed in 2015 under Luoyang Company, as a wholly-owned unit of the China Airborne Missile Academy. This academy is part of the state-owned aerospace and defense firm aviation industry corp of China.
CALB makes battery cells, modules, and packs for electric vehicles and industrial-scale energy systems — both in high demand as China amps up its storage facilities, with consumer interest in EVs surging and an energy crisis holding back the factory floor of the world.
Every global player is trying to build scale — quickly. Last week alone, firms from Panasonic Holdings Corp. to Toyota Motor Corp. announced billions of dollars of commitments for production facilities. Around the world, industrial policy focused on EVs and batteries is also getting more aggressive, with the introduction of the US Inflation Reduction Act and China’s extension of its EV subsidies that were due to expire this year. Beijing has already handed out about $15 billion in the past decade.
CALB’s capital raise will fund a speedy expansion of its production bases across the country. Since 2019, the company’s spending on construction in progress has more than doubled each year, as has capacity. Manufacturing and operating staff account for almost half of the employees, while research and development technicians make up around 45%. Facilities are expected to range from 10-gigawatt hours to 20-gigawatt hours, with an investment of 5 billion yuan ($724 million) to 10 billion yuan in each. It may not reach CATL’s scale any time soon but it has been expanding at a faster pace. Over the next two years, the company expects its effective production capacity to grow to approximately 55 GWh, compared to CATL’s more than 170 GWh as of 2021. It has set up industrial bases across the country, from Changzhou in the south to Hefei in the east and all the way to Xiamen, Chengdu, Wuhan and Jiangmen.
To circumvent supply chain hiccups, CALB stocked up on raw materials and finished goods. It’s also secured supplies with a stake in metals giant Tianqi Lithium Corp., alongside the likes of LG Chem Ltd., plus a 2.5 billion-yuan contract with Yunnan Energy New Material Co., which makes separators — a key component in power packs that’s increasingly scarce. All told, these moves are designed to ensure it can keep expanding at home and, eventually, abroad.
Until recently, Luoyang, which designs and produces batteries for civil and military industrial use, was a controlling shareholder. It became a subsidiary in preparation for going public and to “minimize the impact and potential risk which could be resulted from the military-industrial business,” CALB’s offering document noted.