China-based lithium-ion battery maker Gotion High-Tech has produced the first batch of battery packs at its new factory in California's Silicon Valley.

The company said last week (December 29) that the first batch of battery packs rolled off the production line at its factory in Fremont on December 21. The factory is also the location of Tesla’s main U.S. car production plant and headquarters and focuses on portable and products for the residential energy storage system (ESS) market, with capacities ranging from 3kWh to 30kWh. The plant is planned to have an annual production capacity of 1GWh, although the company did not mention in its announcement when it planned to achieve this capacity.

As such, the plant is a smaller production facility in anticipation of growing U.S. static energy storage demand and will not produce battery cells, but for Guoxuan Hi-Tech, it marks a move toward "Made in the USA." The first step in the production strategy. It is also an early addition to the relatively small base of factories in the United States dedicated to manufacturing static storage products.

The company is currently developing two much larger factories in the United States, including an electric vehicle battery production plant in Michigan that is already under construction, and a split production plant in Illinois with annual capacity of 10GWh battery packs and 40GWh lithium-ion cells. Single unit, targeting the electric vehicle and ESS markets.

The Illinois plant was announced last September, with Governor J.B. Pritzker welcoming the company to the state. The plant will receive a total of $536 million in state incentive programs. To qualify for the $213 million REV Illinois will receive over the 30-year period, Guoxuan Hi-Tech will need to invest at least $1.9 billion to create a factory and create at least 2,600 well-paying local full-time jobs.

Incentives for Domestic Investment In addition to growing U.S. end-market demand for lithium-ion electric vehicles and ESS making them increasingly attractive to manufacturers, state-level incentives (such as those received by Guoxuan Hi-Tech in Illinois) or others In addition to incentives offered by states such as Georgia and Arizona to manufacturers to locate factories there, the federal Inflation Reduction Act (IRA) has been the biggest factor in attracting investment in U.S. battery production.

As has reported multiple times, this means billions of dollars pouring into U.S. gigabit factory plans for manufacturers based both here and overseas, often at the expense of production plans in Europe .

Of particular interest is the 45X Manufacturing Tax Incentive, which provides government incentives of up to $35 per kWh for U.S.-made battery cells (other clean energy technologies have different amounts). As reported in mid-December when the U.S. Treasury Department and IRS released guidance on how the tax incentives would work, this represents a significant portion of manufacturing costs, averaging around $100 per kilowatt-hour by some estimates. Dollar.

In September last year, Guoxuan High-tech and renewable energy developer Omate Technology announced a multi-year 750MWh battery supply agreement, linked to the cost of lithium carbonate. In addition, the company's new ESS battery pack factory built in Pune, India, as a joint venture with Tata Autocon, has started supplying battery energy storage system (BESS) units a few weeks ago.

Guoxuan Hi-Tech is currently strengthening its presence in or entering other markets, including the large BESS market in Japan, where the company aims to sell 1GWh per year through a partnership with renewable solutions company Edison Power; and Thailand, where it plans to build a battery pack and module factory , once again targeting the electric vehicle and ESS battery markets; and Vietnam, where the company will start construction of Vietnam's first lithium iron phosphate (LFP) battery factory in late 2022 in a joint venture with local partners.