CATL takes 20% stake in CarbonScape for wood-based battery graphite

The world's largest battery maker is betting on forestry waste to break China's grip on graphite supply.

CATL invested in New Zealand startup CarbonScape, which converts forestry by-products into battery-grade graphite, targeting a material that makes up as much as 50% of a lithium-ion battery's anode by weight.

"This collaboration will allow our proprietary technology to undergo pilot-scale testing at CATL's facilities, followed by technology optimization before eventual full commercial deployment," CarbonScape CEO Ivan Williams said.

CATL and Hong Kong-based Lochpine Capital jointly hold a 20% stake in CarbonScape, with CATL taking a board seat. The companies aim to bring commercial bio-graphite production online before the end of 2030. More than 75% of graphite used in batteries today comes from oil-based feedstocks, according to the companies.

Each electric vehicle contains 50 kilograms to 100 kilograms of graphite — more than lithium, nickel and cobalt combined. Global demand for battery-grade graphite is expected to grow sixfold between 2025 and 2040, driven by EVs and energy storage, requiring substantial new production capacity outside traditional supply chains.

CarbonScape's technology produces graphite from widely available forestry residues — sawdust, wood chips and logging waste — at what the company says is cost parity with conventional graphite and with a carbon-negative footprint. The process addresses two constraints facing automakers: the carbon intensity of synthetic graphite production and the geographic concentration of natural graphite processing, where China controls more than 70% of global capacity.

"Graphite was the forgotten giant of the battery supply chain," CarbonScape chief commercial officer Vincent Ledoux-Pedailles said. "What we have built at CarbonScape is the only proven pathway to produce battery-grade graphite from forestry residues, at target cost parity with conventional graphite and with a carbon-negative footprint."

CATL executive president Oscar Luo said sustainable innovation across the battery value chain was essential to advancing the global energy transition. "CarbonScape's technology introduces a novel method for producing battery-grade graphite from renewable resources, embodying a true breakthrough in material science," he said.

The partnership gives CarbonScape access to CATL's global manufacturing network and customer base, which includes Tesla, BMW, Mercedes-Benz, Volkswagen, Honda Motor, Hyundai Motor, NIO and Li Auto. For CATL, the investment secures a potential supply of lower-carbon anode material at a time when Western automakers are under pressure to localize battery supply chains and meet tightening sustainability requirements.

The companies said the collaboration would combine CarbonScape's bio-graphite technology with CATL's experience in industrialization, manufacturing and large-scale deployment. CATL's board seat and equity stake align incentives beyond a standard offtake agreement, making the scale-up easier to finance.

CATL shares traded 1.2% lower in Hong Kong on Monday. The company, which commands roughly 37% of the global EV battery market, has been expanding its raw material investments across lithium, nickel and now graphite as it seeks to control more of the supply chain from mine to battery pack.

This article is for informational purposes only and does not constitute investment advice.