China-based FDG Electric Vehicles (FDG) is broadening its upstream supply chain and establishing a new cathode materials factory. FDG Kinetic (FKL), Guizhou Guian Asset Investment and ALEEES (Advanced Lithium Electrochemistry) have entered into an agreement to establish a joint venture in Guizhou Guian New District to build a new production facility for cathode materials for lithium-ion batteries with a preliminary annual production target of 30,000 tonnes.
FDG is a vertically-integrated electric vehicle manufacturer. The Group’s core businesses include researching, designing and developing pure electric vehicles from the ground up, producing lithium-ion batteries, manufacturing cathode materials for lithium-ion batteries, as well as other direct investments. FDG is a partner in US-based Chanje, a start-up targeting the electric truck market. (Earlier post.) In September, FDG announced that its first shipment of electric trucks for Chanje was on its way to the US.
As a vertically-integrated pure electric vehicle original equipment manufacturer, FDG possesses the technical abilities to expand upstream in the battery and cathode materials segment, riding on the new wave of electrifying vehicles.
Global demand for electric vehicles has been surging—pushing upstream demand for batteries and cathode materials. The Group is confident that this new cathode materials project will tap directly into the ever-increasing demand for batteries and cathode materials; the company said it expects to see a positive impact soon.
The project enhances the Group’s strategic development upstream along the supply chain. When the project is completed, it will provide a stable and good quality supply of cathode materials to the Group’s electric vehicle production segment. The Group will own greater control of the cost while enhancing product performance to be even more competitive in the market.
In addition, given ALEEES’ leading technical expertise in manufacturing cathode materials for lithium-ion batteries, FDG expects the cooperation to become a new spotlight of the Group.
This is a subsequent cooperation between FDG and Guizhou Guian New District. The Guian New District Committee has been actively creating a vertically-integrated supply chain in Guian for the long term. The Guian Committee has agreed to offer the joint venture a subsidy of not less than RMB 120 million (US$18 million). Although the total investment for the project adds up to approximately RMB 2.3 billion (US$350 million), FKL is only expected to invest RMB 127.5 million (US$19.2 million) to make up the initial 51% share of the registered capital. The ongoing revenue stream will be reinvested into the project.
The core business of FKL includes researching, manufacturing and selling cathode materials for lithium-ion batteries and its related products. FKL also holds equity interests ALEEES and Sinopoly Battery, strategically positioning itself in the cathode materials and lithium-ion battery segment. FKL is a subsidiary of FDG Electric Vehicles.