Charging up Asian EV business on the road to full automotive electrification

Recording breaking sales 

The electric car adoption is still in its infancy, but the sector is already expanding rapidly and ubiquitously. In 2021, sales of electric vehicles (EVs) doubled from the previous year to a record 6.6 million units¹ and their use enabled a net reduction of 40 million tons of greenhouse gas emissions¹. Given the size of its population, the Asian market is also poised for huge rise, led by China which accounted for half of the growth last year. More EVs were sold in China in 2021 (3.3 million) than in the entire world in 2020¹.

To meet the accelerating demand, driven by increasing environmental awareness, national incentive policy and technological improvements, the various elements of the EV supply chain will have to catch up from raw material extraction to battery manufacturing and EV sales. In line with its sustainability strategy, Crédit Agricole CIB is firmly committed to helping all stages of production shift into higher gear, as illustrated by the following financings completed in 2022, to support the energy transition of road passenger transportation which accounts for about 10% of global CO2 emissions¹.

Asia leading the way in clean car development

Asia stands as one of the major operation hubs for the EV value chain. Starting with the supply of essential raw materials, the region is home to three of the six countries with the world's largest reserves of nickel, with Indonesia being the world's largest nickel producer with 22% of known reserves. In the country, Crédit Agricole CIB accompanied Merdeka Copper & Gold and its anchor sponsor Provident Capital in the construction of an acid iron metals (AIM) plant, as the Mandated Lead Arranger of the $260 million loan financing signed in August 2022. The plant, whose end-products feed a local battery-grade nickel-producing plant, is critical to the EV battery production and forms part of Merdeka’s broader ambition to develop an integrated electric car battery value chain in the region.

In the battery metals segment, Crédit Agricole CIB has also strengthened its position with opportunities in lithium production, another key component of the EV battery manufacturing sector. POSCO Holdings, South Korean Green Steel, Material & Energy Company, has recently mandated us for a $412 million K-Sure covered facility, including a $98 million final take, for the construction and operation of a lithium project in Argentina to produce lithium hydroxide for the EV battery industry.

Focusing on battery cell makers, Crédit Agricole CIB financed South Korean SK On’s battery manufacturing plant in Hungary, with an annual capacity of 30 GWh to power about 430,000 cars, through a participation in a $2 billion green facility in October 2022. We also helped supply the next generation of batteries – the cylindrical type that comes with higher capacity and yet require shorter charging time.

In the car manufacturing and distribution segment, automakers have also entrusted us to assist them on their financing requirements to support their business expansion plan in response to the growing demand with new EV models on the market.

As an illustration, we made a breakthrough in our relationship with NIO, a China leading EV player and one of the only companies to take a full-stack self-research approach to the development of core smart car technologies such as electric motors, energy replenishment and intelligent driving systems, by supporting both its ambitions in Europe through rental guarantees for leasing and locally through yield enhancement solutions for its cash balance in Hong Kong.

In December 2022, we also worked with several onshore and offshore external investors and acted as Sole Arranger for the CNY1.6 billion (~USD230 million) cross-border green RMB reverse forfaiting, to fund French carmaker Renault’s EV purchase from a local supplier in China.

An ambitious journey that requires financing 

With increasing awareness to fight climate change and the boost around electric mobility, nations and industries have ramped up investments in order to push up the adoption of EVs and ultimately automotive electrification. There is a clear momentum for Crédit Agricole and a strategic role to play by helping EV actors reach their goals. As a strong partner to the automotive sector, with a total exposure of €21.4 billion to car manufacturers and dealers², Crédit Agricole aims for a reduction of -50%³ in CO2e/km driven by its customers or the cars they manufacture by 2030, a more ambitious target than the International Energy Agency (IAE) net-zero emissions scenario (more here).

With the mission to finance the real economy, Crédit Agricole CIB is engaged in taking the automotive sector to the next level by continuously supporting industry players and advocating oil-dependent mobility actors to catch up carbon pathways. We accompany clients with bespoke cutting-edge green expertise in advisory and product offerings spanning across project, export, receivable and supply chain finance, technical guarantee issuance upon demand or any other investment solutions they require.

¹Source: International Energy Agency (IEA) & International Council on Clean Transportation (ICCT)
²Exposure at default for all Crédit Agricole S.A. entities, end of 2021.
₃The perimeter includes Original Equipment Manufacturers (OEMs) financing as well as Consumer finance and leasing businesses.