Likai Electric joins hands with North American partners to promote factory construction in the United States

Battery materials factory Likai Electric (5227) announced the signing of a memorandum of cooperation with a North American partner. The two parties are planning to invest in trial production of lithium iron phosphate (LFP) lithium battery cathode materials. According to the memorandum, the North American partner will simultaneously invest 25,000 tons of annual production lines in Likai Radio South Plant and the United States, and work with Likai Electric to promote the goal of shipping 25,000 tons of LFP in the United States in 2028.

Likai Electric said that Likai Electric Texas currently has a permanent agreement with a large North American customer for 25,000 tons of LFP per year, and Taiwan has a 20-year contract with a North American customer for 100,000 tons of LFP battery material precursor per year. At present, the two parties have selected two factory locations in Tainan and the United States. The joint venture will use Taiwan as the starting point for product verification and subsequent production capacity replication.

Likai Electric explained that in this cooperation, the North American partners will be responsible for funding the construction and purchase of production lines. After passing verification and shipment in the fourth quarter of 2027, the United States will simultaneously launch large-scale commercial production. The establishment of Taiwan's production line and customer certification will become an important basis for linking up with the U.S. factory expansion plan.

Likai Electronics also pointed out that the two parties will be able to accumulate process operation, product quality, customer certification experience and a U.S. employee training base in Taiwan, and serve as a reference for the design and introduction of U.S. production lines. The U.S. investment layout is simultaneously advancing relevant plans to connect early preparations with Taiwan's verification operations. This model can help shorten the exploration process of subsequent factory establishment, reduce execution uncertainty when copying production capacity across countries, and improve the coordination between mass production planning and customer needs.

In terms of capital allocation, North American partners will be responsible for the main investment in the production line, which is expected to reduce the capital expenditure pressure required by Likai Electric to expand production capacity and increase the flexibility to promote subsequent overseas layout. Likai Electric will also negotiate with its partners on technical contributions and operational responsibilities through a joint venture structure to establish a clearer division of labor in production line construction, customer certification and commercialization promotion, laying the foundation for cross-border cooperation.

Although Likai Electric still suffered losses in the third quarter, the company stated that this is because the Tainan plant is entering the peak period of plant construction, and the preparation costs for plant construction in North America are high. In the short term, expenses are bound to increase, affecting the number of losses. The current cooperation structure has been determined, and it will begin to converge in the fourth quarter. A Dharma teaching session was also held at the Tainan factory on December 21.