China-headquartered lithium-ion battery maker Gotion High-Tech has produced the first battery pack at its new factory in California’s Silicon Valley.
The company said last week (29 December) that the first pack came off the production line at its plant in Fremont – which is also home to Tesla’s main US automobile production plant and HQ – just over a week before that, on 21 December.
The factory is dedicated to products for the portable and residential energy storage system (ESS) markets ranging from 3kWh to 30kWh. It has a planned 1GWh annual production capacity, although the company did not mention in an announcement when it aims to ramp to this figure.
While it therefore represents a fairly small production plant by the expected scale of growing demand for stationary energy storage in the US and won’t be producing cells, for Gotion High-Tech it marks the completion of a first step towards a ‘Made in USA’ production strategy. It is also an early addition to the US’ relatively small base of factories dedicated to producing stationary storage products.
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The company is currently developing two much larger factories in the country, including an EV battery production plant in Michigan which is already under construction, and a split production plant in Illinois with annual production capacity of 10GWh of battery packs and 40GWh of lithium-ion battery cells aimed at both EV and ESS market segments.
The Illinois factory was announced in September, with governor JB Pritzker welcoming the company into the state. Gotion is getting a state incentive package totalling US$536 million for that plant. To qualify for US$213 million over 30 years through ‘REV Illinois’, one of two incentive schemes it will be eligible for, an investment of at least US$1.9 billion into the creation of the plant and the creation of at least 2,600 well-paid local full-time jobs is required on Gotion’s part.
Incentives for domestic investment
In addition to the growing end-market demand for lithium-ion vehicles and ESS in the US making it an increasingly attractive destination for manufacturers, and state-level incentives such as those Gotion received in Illinois or offered by other states such as Georgia and Arizona to manufacturers that locate there, the federal Inflation Reduction Act (IRA) has been the biggest magnet for investment in US battery production.
As has been noted numerous times on Energy-Storage.news, that has meant billions pouring into US-based gigafactory plans from domestically-headquartered and overseas makers alike, often at the expense of planned investments in European production.
Of particular interest are the manufacturing tax credit incentives, called 45X, which offer up to US$35/kWh of government incentives on battery cells manufactured in the US (and different amounts for other clean energy technologies). As reported by Energy-Storage.news as the US Treasury and IRS released guidance on how the tax credits will work in mid-December, that’s a significant portion of the cost of manufacturing, which by some estimates averages at roughly US$100/kWh.
In September, Gotion High-Tech and renewable energy developer Ormat Technologies announced a 750MWh multi-year battery supply deal, index-linked to the cost of lithium carbonate. Elsewhere, a new ESS battery pack factory the company built in Pune, India, through a joint venture with Tata AutoComp has begun supplying battery energy storage system (BESS) units a few weeks ago.
Other markets Gotion is currently ramping up its presence in or entering include Japan’s grid-scale BESS market where it is targeting 1GWh a year of sales through a partnership with renewable solutions company Edison Power, Thailand where it plans a pack and module gigafactory, again targeting both EV and ESS battery market segments, and Vietnam, where it broke ground in late 2022 on the country’s first-ever lithium iron phosphate (LFP) battery factory, again through a joint venture with a local partner.
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