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Business deals

China's CATL to supply Honda with EV batteries through 2027

Fujian Province-based company to set up R&D facility for automaker in Japan

A Honda electric-vehicle prototype displayed at a Beijing motor show. The Japanese automaker plans to power its new electric offerings in China with CATL batteries.   © Reuters

TOKYO -- Chinese auto battery maker Contemporary Amperex Technology announced Tuesday that it will partner with Honda Motor to develop lithium-ion batteries, its latest effort to expand its global footprint.

Under an agreement signed Monday, CATL will supply 56 gigawatt hours worth of batteries to Honda through 2027. To aid the Japanese automaker's research and development, the Chinese company will also set up in the first half of this year a facility in Japan's Tochigi Prefecture, one of Honda's R&D hubs.

Heavy, large-capacity batteries used in electric vehicles are not suited for long-distance shipping. So Honda plans to use CATL batteries mainly in cars sold in China, as least for the time being.

The automaker has different battery suppliers by region. For the home market of Japan, for instance, it procures them from a joint venture with GS Yuasa as well as from Panasonic. In North America, Honda is jointly developing batteries with General Motors, with plans to source them from the American partner.

Fujian Province-based CATL, founded in 2011, has quickly grown into one of the world's largest auto battery makers along with Panasonic. The company supplies German automakers BMW and Volkswagen, and is also strengthening business ties with Japanese companies to cultivate global demand. Nissan Motor employed CATL batteries in its electric vehicles rolled out in China last year.

With Sony commercializing lithium-ion batteries for electric vehicles in 1991 ahead of global competition, the field had been seen as a forte for Japanese companies. But as the technology became generalized, newcomers like CATL have caught up.

CATL is moving to set up production facilities not only in its home market of China but also Germany to expand its global capacity. It is expected to eventually supply batteries to Honda models sold across the world.

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