THE securities regulator has approved the 13.1 billion yuan (US$1.97 billion) initial public offering (IPO) of battery giant Contemporary Amperex Technology Co. (CATL).

The China Securities Regulatory Commission (CSRC) approved the IPO at a meeting Wednesday, Xinhua said Thursday, citing a statement on the CSRC website.

CATL said the funds from the listing on the Shenzhen Stock Exchange will help drive the company’s expansion at a time when demand for electric car batteries is expected to soar.

The Ningde-based firm, founded in 2011, is a supplier to domestic carmakers like SAIC Motor Corp. and Geely Automobile Holdings Ltd. and has agreements with international automakers like BMW and Volkswagen.

China is aggressively pushing plug-in vehicles and has poured in tens of billions of yuan in investment, research funding and subsidies, drawing many new automakers to launch projects.

CATL competes with Japan’s Panasonic Corp., South Korea’s LG Chem Ltd., domestic rival BYD and Tesla Motor Inc.

The firm held 10.5 percent of the global electric vehicle battery market in 2016, behind only BYD and Panasonic, according to BNP Paribas.

CATL’s move to list on China’s NASDAQ-style ChiNext board would also give investors a potential way into a company pegged as one of the battery champions in the world’s largest market for electric cars.

Chairman Zeng Yuqun said in March that CATL is close to picking one of three sites in the European Union for its first overseas plant.

The company is exploring Germany, Hungary and Poland for the plant, according to a person familiar with the plan.

The expansion in Europe comes on top of a plan to build a factory in the company’s home base of Ningde, Fujian Province, which would quintuple its production capability and make it the world’s largest electric vehicle battery cell maker.

The pending initial public offering would help finance the construction of the plant in China. The European facility would supply major carmakers in the region, including BMW AG, Zeng said.

Volkswagen AG has already agreed to use CATL batteries in models it makes in China. That could lead to more overseas contracts for CATL and a shot at a chunk of the 50 billion euros (US$62 billion) Volkswagen plans to spend to power its electric vehicles over the next decade or so. Nissan Motor Co. has also chosen CATL for a new electric vehicle model it plans to introduce in China soon, people familiar with the matter said.

CATL will open a sales office in Japan in May, Liang Chengdu, dean of CATL Research Institute, said in March in Tokyo.

Japanese carmakers including Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. have all said they are considering CATL batteries for their local electric vehicles in China. CATL also opened a sales office in the United States last year.

(SD-Agencies)