Mercedes-Benz will join China’s Contemporary Amperex Technology in building a battery factory in Hungary. Photo: Mercedes-Benz.
Mercedes-Benz will join China’s Contemporary Amperex Technology in building a battery factory in Hungary. Photo: Mercedes-Benz.
Mercedes-Benz will join China’s Contemporary Amperex Technology in building a battery factory in Hungary. Photo: Mercedes-Benz.
Mercedes-Benz will join China’s Contemporary Amperex Technology in building a battery factory in Hungary. Photo: Mercedes-Benz.

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Technology

Mercedes in pact with China's Amperex Technology to build battery factory in Hungary

The $7.6bn plant will have a capacity of 100 gigawatt hours, enough to power more than a million cars

bloomberg

August 13, 2022

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Mercedes-Benz will join China’s Contemporary Amperex Technology Company, CATL as it is known, in building a battery factory in Hungary with an investment of as much as €7.3 billion ($7.6bn), with some of Europe’s leading car makers set to become customers too.

The plant will have capacity of 100 gigawatt hours, enough to power more than one million cars, and will run on renewable energy, the world’s biggest electric-vehicle battery maker CATL said on Friday.

Planned to be built in Debrecen, the complex will be in proximity to customers BMW, Stellantis and Volkswagen, CATL said.

“There is no doubt that our plant in Debrecen will enable us to further sharpen our competitive edge, better respond to our European customers, and accelerate the transition to e-mobility in Europe,” said Robin Zeng, founder and chairman of CATL.

The Debrecen plant, which will be Hungary’s biggest investment ever, will create about 9,000 jobs, Hungary’s Deputy Foreign Minister Levente Magyar told the MTI state news service. While CATL didn’t say when production would start, Mercedes said the batteries would go into its next generation of EVs, due to go on sale from around mid-decade.

Car makers including VW and Stellantis have embarked on ambitious plans to make batteries, mostly with partners, to ensure enough supply of the core EV components.

VW is building six facilities in Europe alone, while Mercedes has joined Stellantis and TotalEnergies in a €7bn battery venture and is pursuing a total of eight facilities globally. The European Union is also pushing for a regional battery supply chain that lessens dependence on dominant Asian players, led by Sweden’s Northvolt.

“This new state-of-the art European CATL plant in Hungary is another milestone for the scale-up of our EV production together with our key partners,” said Markus Schaefer, chief technology officer at Mercedes.

Mercedes first forged a partnership with CATL in 2020, while BMW is a foundation customer for the Chinese company’s factory in Erfurt, Germany, that is due to start production at the end of this year.

CATL’s Hungary investment follows a flurry of other announcements from the company on new battery sites, including a 14 billion yuan ($2bn) investment in east China’s Shandong province and a 13bn yuan battery project in Fujian province, where CATL is based.

CATL has also been considering an investment of up to $5bn in either Mexico or the US, though that announcement has been delayed after US House Speaker Nancy Pelosi travelled to Taiwan, sources said.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Red flags
  • Promises of high, fixed or 'guaranteed' returns.
  • Unregulated structured products or complex investments often used to bypass traditional safeguards.
  • Lack of clear information, vague language, no access to audited financials.
  • Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
  • Hard-selling tactics - creating urgency, offering 'exclusive' deals.

Courtesy: Carol Glynn, founder of Conscious Finance Coaching

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Updated: August 13, 2022, 4:30 AM
TechnologyRenewable energy