How China’s EV battery king CATL powers up profits while EV makers struggle
Consolidation, scale and technology advantages enhance pricing power as firm’s domestic market share hits 18-month high
Amid the oil crisis, CATL’s market capitalisation hit an all-time high of HK$2.7 trillion (US$345 billion) on Monday, after its shares rewrote records multiple times in both Shenzhen and Hong Kong, touching 433.33 yuan and HK$701, respectively.
The world’s bestselling power battery maker for nine years in a row, CATL in March reported a net profit of 72.2 billion yuan for last year, up 42 per cent from a year earlier.
The figure is only 8 per cent lower than the combined profits of China’s top four listed carmakers – BYD, Chery, Geely Auto and SAIC – which reported net income of 78.6 billion yuan. CATL earned 2 per cent more profit than the 70.59 billion yuan made by the country’s 11 listed carmakers, including smaller and loss-making players.
“The EV battery industry, with its high requirement for safety, technology and economies of scale, has formed a higher concentration than downstream car manufacturing, where different companies with different backgrounds have been drawn into much fiercer competition,” said Paul Gong, head of China auto research at UBS.