Aluminum giant sees growth in China

Atlanta-based Novelis, a leading producer of rolled aluminum and aluminum recycling, pledged that it will continue its partnership with China and expand investment in China's automotive industry, especially the electric vehicle sector.

"The driving force behind our business strategy in China is the nation's increasingly strict policy against pollution," said Pierre Labat, vice-president for global automotive at Novelis, told China Daily.

In 2014, the $10 billion company with 24 operating facilities in 10 countries chose Changzhou, Jiangsu province, as the site for its first manufacturing facility in China, due to the area's convenient logistics and government incentives for foreign investment and resources.

Starting with a $100 million investment from scratch, Novelis' Changzhou plant now boasts an annual production capacity of 120,000 tons of heat-treated aluminum sheet, and meets the rapidly growing demand from conventional and new generation automakers for rolled aluminum to be used in lighter, more fuel-efficient vehicles.

To help solve its climate change and emissions issues, China has issued strict regulations and proposed radical amendments to emissions legislation which have resulted in a boost to electric vehicle (EV) manufacture and sales.

According to the comprehensive framework, auto manufacturers are to meet aggressive sales targets for EVs and plug-in hybrid EVs of 7 percent by 2020 and 19 percent by 2025.

Novalis decided to cash in on the transformation of China's automotive industry and push forward its existing business in the world's second-largest economy.

Already with a foothold in North America, Europe and Asia where demand for auto aluminum is high, Novelis believes the market potential in China is about to explode.

"If we look at our total automotive sales in the world, China is currently about 10 percent, fairly small," said Labat. "But it's our fastest growing market that yields highest-percentage of growth, six-fold explosive growth since we went there five years ago."

In March, Novelis expanded its portfolio of automotive customers into the EV sector by adding Shanghai-based electric vehicle startup NIO to its client pool, which already included Ford, Audi, Jaguar, Land Rover, GM, BMW, Mercedes Benz, Kia, and others.

According to the agreement, NIO's electric SUV ES8 models will adopt Novelis' aluminum alloys to create a wide range of structural vehicle components and parts.

The EV startup, which draws investment from Baidu, Tencent, Temasek, Sequoia Capital, Lenovo and other institutional investors, unveiled its full-size 7-seat ES8 at the Shanghai Auto Show in April. More than 16 feet long, the ES8 has an all-aluminum body to minimize weight and optimize performance.

NIO founder and chairman William Li called the partnership "mutually beneficial."

"It will bring confidence and new capacities to the booming global EV market. We will work together closely and push forward application of lightweight materials in the next generation of electric vehicles," he said.

The NIO partnership marks Novelis' first major commitment in the premium EV market in China, said Todd Summer, Novelis' vice-president of global research and development.

"We are now positioning ourselves as being more than a material supplier. We are collaborators and problem solvers to meet the increasing demand from a new generation of automakers," Summer said, adding that supply for NIO will come from the Changzhou plant.

Hiring around 200 local employees, the Changzhou plant can now serve auto manufacturers in China, Asia and beyond.

"We are considering expanding in Changzhou later this year," said Labat. "It's very, very clear that the market there is mature enough for us to grow bigger."

Over the past five years, Novelis has relied solely on the Chinese local team to develop business. "The key to our success is that we have a strong local team and we've built a strong relationship with the local government," said Labat.

"We are also willing to go the extra mile to educate potential customers and enable them to adopt our services," he added.