Morocco builds a $2B battery factory

From the newsletter

COBCO, a joint venture between Chinese battery manufacturer CNGR Advanced Material Co and Moroccan holding company Al Mada, has launched a $2 billion battery factory in Morocco. The 200-hectare factory, which is strategically located near the Jorf Lasdar port, has the capacity to produce batteries for 1 million electric vehicles annually. 

• The construction of the facility commenced in 2023 after CNGR and Al Mada established the joint venture. The facility began production of nickel-based battery materials, a vital ingredient for lithium-ion batteries.

• Once fully operational, it is set to produce 70 gigawatt-hours of energy annually—enough to power over 1 million EVs. COBCO aims to build a sustainable battery supply chain, focusing initially on nickel-cobalt-manganese (NCM) components.

More details

• CNGR holds a 50.03% stake, while Al Mada owns 49.97% of the JV. Founded in 2014 and listed on the Shenzhen stock exchange, CNGR holds an estimated 23% share of the global market for electric batteries.

• Morocco's proximity to Europe, abundance of critical minerals, and free-trade agreements with both the EU and US have attracted a growing number of Chinese companies that have pumped billions of dollars into building EV batteries and manufacturing plants.

• The country has a robust automotive sector, which topped its exports at $14 billion in 2023, mainly to Europe. Leading automakers such as Stellantis and Renault have built manufacturing hubs in Morocco.

• But, COBCO is not the only battery manufacturer in Morocco. In April 2024, the Moroccan government approved the construction of a factory near Tangier by Chinese electric battery maker BTR New Material Group to produce key component cathodes.

• In 2023, the Moroccan government and China’s Gotion agreed to probe the possibility of setting up an EV battery plant in the kingdom, with an eventual investment of up to $6.3 billion. Batteries that are made in Morocco can be used both by its local automotive industry or exported to other countries across the world.

• As a whole, Africa’s battery manufacturing capability remains small compared to other continents. This is despite the continent having most of the key minerals used in battery making such as lithium, nickel, copper and manganese. 

Our take

• Africa currently represents a small portion of global EV battery demand, but the continent’s demand is expected to grow significantly. This growth will be primarily driven by the demand for electric two and three-wheelers, along with stationary battery energy storage systems (BESS). While most attention in Africa has been directed by investors towards assembly of EVs, the battery manufacturing, recycling and refurbishment space holds significant investment potential.

• Initial analysis by UKAID indicates that countries like Tanzania and Morocco could achieve cost-competitive battery production under certain conditions. For instance, Morocco could produce lithium-ion phosphate (LFP) batteries that sell at $72/kWh and Tanzania at $68/kWh, compared to $68/kWh in Europe, which benefits from subsidies. African countries should borrow a leaf from established battery manufacturing hubs such as Europe and incentivize local production of batteries through tax breaks and subsidies.

• The EV market in Africa is growing rapidly, and it will only grow further as the continent’s population continues to rise. Africa’s EV market is projected to grow from $15.80 billion in 2024 to $25.40 billion by 2029. Currently, the cost of a battery is the single largest driver of the price of EVs. This means that EV firms that will manage to get batteries cost-effectively will have an edge in the industry.