French giant Total has teamed up with a Chinese battery maker, as oil majors around the world work to future-proof their businesses.
Total subsidiary Saft signed an agreement with Tianneng Energy Technology to expand their production of lithium-ion batteries.
They plan to use the Changxing Gigafactory which has a capacity of up to 5.5 gigawatt hours.
Production will be focused on supplying the market for electric bikes, vehicles, and energy storage.
“The JV will allow Saft to join forces with a Chinese partner, a world leading lead acid battery manufacturer, willing to develop its lithium-ion activities. It will also give Saft access to China’s booming battery market as well as highly-competitive mass production capacity to accelerate its growth,” said Total chief executive Patrick Pouyanne.
It follows a series of moves by big oil companies to move into the electricity sector as industry insiders predict that oil demand will peak within the next two decades.
Last week Shell entered the UK domestic energy market in a public way for the first time, rebranding First Utility, which it bought last year, as Shell Energy. The firm said it has moved all customers to renewable energy and plans to become the largest electricity supplier in the world.
Total, meanwhile, bought Direct Energie and its renewable energy and gas power plants last year. It hopes to reach 7m customers in France and Belgium in three years.
However, the firms also face challenges. Margins in the power space are lower than big oil is used to, and the transition will require huge investment. Despite signs of a shift, low carbon investments still remain a tiny sliver of oil majors’ capital spending.
And while they invest more in renewables and power, the firms are still pouring money into their traditional business.
Just yesterday Total itself announced another deal in China, signing a 10-year agreement for 700,000 tonnes of liquefied natural gas per year.