Tesla Battery Supplier Denies Production Involvement In Plant That Caught Fire Today

Ramish Zafar
Image: Caixin Global

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Tesla Inc's battery supplier Contemporary Amperex Technology Co., Limited (CATL) has stated that it was not involved in production activities in a plant that caught fire earlier today. The fire took place at a tail gas tank factory belonging to Qujing Lintie Technology Co., Ltd., which is a joint venture between CATL and a German nanomaterials firm. This accident marks the second time this month when a facility associated with the battery supplier has been involved in an explosion, and CATL's statements swiftly followed to ensure that no misinformation about the incident started to make rounds in the media.

CATL Clarifies It Is Only A Shareholder In The Yunnan Plant That Caught Fire Earlier Today

The incident took place at roughly 10:00 local time today, and reports in the Chinese press suggest that twelve people were injured as a result. Following the fire, the Qujing city government dispatched rescued teams to the site, and since then all rescue work has been completed.

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Qujing Lintie is a joint venture between CATL and Dafeng Nanotechnogloies, with the former holding a 40% stake in the company and the latter holding the remaining. The joint venture firm is primarily responsible for research and development activities for nano-scale lithium battery materials and it was formed in 2018 with 100 million Chinese Yuan in registered capital.

It is also involved in the production of lithium iron phosphate with an autonomous production line. The fire comes days after CATL and the Jiang'an Country government signed a 1.8 billion Chinese Yuan agreement to set up a factory capable of producing 80,000 tons of lithium iron phosphate annually. The project, which is expected to completed in 36 months, comes when the electric vehicle industry in China continues to boom with Tesla Inc targeting its smaller competitors with price cuts to lure a greater segment of the market to its products.

Tesla's Model Y factory in Shanghai, China. (Image Credit: Tesla, Inc)

The fact that the plant which caught fire was a CATL joint venture raised eyebrows since another facility operated by Brunp Recycling Technology, a CATL subsidiary, was at the center of an explosion earlier this month. This facility was responsible for producing Cathode precursors for Lithium-ion batteries and it was more closely involved with CATL's operations than Qujing Lintie's plant is.

Located in the Ningxiang city of the Hunan province, the plant accounted for roughly 19% of Brunp's annual precursor output, and soon after the explosion, CATL was quick to clarify that the event will not affect the company's battery output. However, analysts were quick to note that this might not be the case if government officials decide to conduct safety reviews and order production flow changes in the company's remaining facilities, since the process would require production to stop.

Authorities are still trying to determine the cause of today's accident, and all injured have been shifted to the hospital. Since the Qujing facility is not integral to CATL's battery manufacturing, it is unlikely that its battery output, and by extension, Tesla's vehicle production will be affected by today's incident. Tesla and CATL have a two-year agreement that lets the former determine the number of batteries that it needs by June 2022. Tesla also plans to manufacture its own batteries, with chief executive officer Mr. Elon Musk often highlighting the problems involved in setting up adequate production facilities for this purpose.

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