Contemporary Amperex Technology Limited (CATL) is expected to maintain its leading position in China’s electric vehicle (EV) battery market over the next year, despite recent pressure on its stock and increased efforts by automakers to diversify their battery suppliers, analysts said.
In recent weeks, several Chinese car manufacturers have taken steps to reduce their reliance on CATL. Xiaomi and Li Auto have announced partnerships with smaller battery producers such as CALB Group, while Xpeng has revealed plans to develop in-house battery packs within the year. These moves come amid a challenging environment for EV makers, many of which are grappling with thin profit margins due to a domestic price war that has persisted since last year.
CATL’s shares, listed in Shenzhen, have suffered a sharp decline since mid-August, falling 25.7%. From their peak in early May, the stock has dropped by 36.5%. The company’s shares continued to slide recently, with decreases of 1.6% in Shenzhen and 0.59% in Hong Kong reported on 25 September.
Despite the investor concerns, CATL retained a commanding 41.1% share of the Chinese EV battery market in August, according to data from the China Automotive Battery Industry Innovation Alliance (CABIA). BYD followed with 21%, CALB held 6.51%, while EVE Energy and Gotion High-Tech accounted for roughly 6% each. CATL’s net profit currently exceeds that of domestic automakers, reflecting a profitability gap that some industry observers find unusual.
Yale Zhang, managing director of Automotive Foresight in Shanghai, said the profitability disparity has prompted carmakers to explore alternatives. “It will take some time—possibly a year or two—to see whether the diversification strategies will unfold as planned,” Zhang noted. He added that rivals to CATL would need to prove their technological and quality capabilities, alongside competitive pricing, to effectively challenge CATL’s dominance.
Concerns about the quality of some alternative batteries have surfaced. For example, CALB’s batteries drew scrutiny after a widely-used model in ride-hailing vehicles reportedly warped significantly after about two years of use.
Kenny Ng Lai-yin, a strategist at Everbright Securities International, suggested that CATL’s stock may be oversold. Ng pointed out that, so far, the diversification efforts have not eroded CATL’s market share or earnings.
Fitch Ratings’ Asia-Pacific corporate ratings director Yang Jing emphasized the structural advantages supporting CATL’s position. “Supply-chain diversification by some Chinese carmakers is unlikely to threaten CATL’s global leadership,” Yang said, citing the company’s broad customer base, technological edge, and strong presence in expanding overseas markets for EV batteries and energy storage systems. High capital and technological barriers, along with talent concentration, further underpin CATL’s market strength.
Overall, while the battery landscape in China is experiencing shifts, experts caution that CATL’s entrenched market position and ongoing innovation will likely enable it to sustain dominance in the near term.