Subsidiary of Chinese EV Battery Firm Gotion High-Tech Reaches Supply Deal With Major U.S. Automaker

Gotion High-Tech, a leading Chinese power battery maker, issued an announcement on Monday morning at the Shenzhen Stock Exchange (SZSE), revealing that Gotion, Inc., an overseas wholly-owned subsidiary of the company, has become the supplier of a major listed automobile company in the United States.

Gotion, Inc. and its American client recently signed a ‘Strategic Supply and Localization Agreement’ to reach strategic cooperation in the supply and procurement of ferrous lithium phosphate batteries (LFP) batteries.

In accordance with this agreement, Gotion, Inc. shall ensure that the battery quantity required by the client is met from 2023 to 2028, according to the supply agreement. The client expects the total battery purchase amount to be no less than 200GWh during the demand period. Gotion, Inc. agrees to meet the client’s battery procurement demand by negotiating and allocating existing or newly built production capacity in China, as well as newly built production capacity in the U.S.

In addition, the American client will support the costs of construction, equipment procurement and other expenses required by Gotion, Inc. to build a factory in the U.S. through phased prepayment. This prepayment can be used for payment deduction or joint ventures at a later time, and the rest will be paid by Gotion, Inc. in installments according to the agreement.

According to the announcement of Gotion High-Tech, on the one hand, based on the needs of this American client, the company will export LFP batteries through its battery production base in mainland China – on the other hand, both parties plan to produce and supply LFP batteries locally in the U.S., and to jointly explore the possibility of establishing joint ventures in the future. These LFP battery products will be used for electric vehicles and other applications in the U.S. and global markets where the client operates.

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Since this transaction involves sensitive trade details, Gotion High-Tech did not disclose the basic or product-related information regarding its new client. It is worth noting that between 2018 and 2020, Gotion, Inc. did not carry out any transactions with this American client.

Gotion High-Tech said, “If this agreement is fully implemented, it will have a great positive impact on the company’s operating performance in future related years, but will have little impact on the company’s operating performance in 2021.”

Data show that Gotion High-Tech was established in 2006 and started to produce LFP batteries in 2007. Mainly engaged in the R&D, production and sale of power lithium batteries, as well as transmission and distribution equipment, Gotion High-Tech is a power battery enterprise second only to CATL and BYD in the Chinese market.