On December 20, Guoxuan Hi-Tech issued an announcement that the company's overseas wholly-owned grandson company, Guoxuan, is a supplier of a large listed automobile company in the United States, and the two sides recently signed the "Strategic Supply and Localization Agreement", hoping to reach strategic cooperation in the supply and procurement of lithium iron phosphate batteries (hereinafter referred to as "LFP batteries").
Because the transaction involves keeping trade secrets, Guoxuan Hi-Tech did not disclose the counterparty of the transaction, but pointed out in the introduction that between 2018 and 2020, there was no transaction between Guoxuan and the customer, and in addition, the car company ranked first in the global car company in terms of market capitalization.
According to the 2020 annual report of Guoxuan Hi-Tech, the company currently maintains business contacts with many customers including Jacque Automobile, Chery Automobile, SAIC-GM-Wuling, Geely Commercial Vehicles, Changan Automobile, SAIC Maxus, BAIC BJEV, India Tata, Formosa Plastics Group, EBUSCO and many other customers, and there are no US car companies.
Yin persimmon financial reporter found that according to market data, in the current world's top ten car companies by market capitalization, there are five American companies, including Tesla, Rivian, General Motors, Ford, Lucid. At present, Rivian and Lucid's car has just been mass-produced, and it mainly uses ternary lithium batteries, which is less likely. The rest are GM, Ford and Tesla, but the market share of the two traditional car companies in the United States is also very limited.
In contrast, Tesla seems to be the most likely partner.
Previously, Tesla said in the third quarter earnings report that for the standard endurance version of the Model 3 and The Modern Y, the world is switching to lithium iron phosphate batteries, and it is expected that deliveries will achieve an average annual growth of 50% in the next few years. With the rapid growth of deliveries, in addition to the Ningde era, Tesla is also looking for new battery suppliers, after media reports that BYD will supply blade batteries for Tesla.
However, as for whether Guoxuan Hi-Tech's partner is Tesla or other car companies, it still needs to be revealed later.
From the specific content of the agreement, the United States Guoxuan will ensure that the number of batteries required by the customer is met from 2023 to 2028 according to the supply agreement signed or proposed with the customer, and meet the customer's battery procurement needs by negotiating the allocation of the company's existing or new domestic production capacity and the new production capacity in the United States, and the total amount of battery procurement expected by the customer during the demand period is not less than 200GWh.
As for the cooperation method, Guoxuan Hi-Tech said that the customer will support the construction costs, equipment procurement costs and other expenses required by Guoxuan to build a factory in the United States through a phased advance payment. At the same time, the two sides will conduct friendly consultations on the joint establishment of a joint venture or other cooperation efforts to jointly explore the possibility of establishing a joint venture company. In addition to the joint venture to build a battery production base, the scope of the joint venture may cover investment in upstream materials and downstream battery recycling industries.
For the impact of this cooperation, Guoxuan Hi-Tech said that this will have a great positive impact on the company's operating performance in the relevant years in the future, and the impact on the company's operating performance in 2021 will be small. The specific amount of impact is determined based on actual occurrence. The signing of the agreement will help the company to expand its scale and increase the company's sustained profitability and global market share. At the same time, accelerating the process of internationalization of the company and consolidating the leading position in the industry is in line with the company's long-term development strategy and the interests of all shareholders.
Affected by the news, Guoxuan Hi-Tech opened high in the morning, but then turned from up to down, as of the morning close, down 3.1%.