Author | Yuan Fang

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CATL is expediting its initial public offering (IPO) process on the Hong Kong Stock Exchange.

Currently, CATL has successfully submitted its IPO application, signifying a crucial step towards listing in Hong Kong. Upon listing, CATL will form an "A+H" share structure, joining Midea Group and SF Holding as another giant with a market value exceeding RMB 100 billion on the Hong Kong Stock Exchange.

According to Beijing Business Today, CATL's secondary listing plan has been progressing steadily since passing the Hong Kong Stock Exchange's hearing on April 10. The company's 2025 first-quarter financial report reveals revenues exceeding RMB 80 billion and net profits nearing RMB 14 billion. These impressive financial figures have bolstered CATL's confidence in its secondary listing, which will further strengthen its capital base and market influence.

An industry trend worth noting is that new energy vehicle manufacturers are initiating a wave of "De-CATL" and developing their batteries. Tesla's 4680 batteries have entered mass production, NIO has embarked on self-developing lithium iron phosphate batteries, and European automakers like BMW and Volkswagen are supporting alternative supply chains such as Northvolt. The latest data indicates that the revenue contribution from CATL's top five customers has declined from 60% to 50%.

This trend presents both challenges and opportunities for CATL. How to maintain its competitive edge while addressing market competition and automakers' strategic shifts will be a critical issue for CATL to address in the future.

1

Are Automakers "De-CATLing"?

CATL's dominance in the electric vehicle battery sector is undeniable. Financial reports show that CATL has ranked first in global electric vehicle battery usage for eight consecutive years from 2017 to 2024. By the end of 2024, its market share reached 37.9%, underscoring its absolute industry advantage.

Data reveals that CATL's global market share has long surpassed 30%. In 2024, its annual installed capacity reached 339.3GWh, significantly ahead of competitors, further cementing its position as a leading enterprise in the global electric vehicle battery field.

CATL boasts a diverse customer base, fostering deep collaborations with numerous domestic automakers and successfully entering the international market, becoming a key battery supplier for global automotive giants such as Tesla, BMW, and Volkswagen. Its products have garnered a solid reputation in the market for their reliable performance, advanced technology, and high quality.

In the domestic market, CATL also excels. Many domestic new energy vehicle manufacturers, whether transformed from traditional automakers or emerging startups, rely on CATL's batteries. For instance, popular models from automakers like SAIC, GAC, NIO, and Li Auto are equipped with CATL batteries. This extensive customer base makes CATL an indispensable player in the domestic new energy vehicle industry chain.

Despite CATL's significant market influence, automakers have accelerated the "De-CATL" process in recent years to gain greater supply chain control. GAC once bluntly stated that it was "working for CATL." To change this, it chose to develop in-house battery cells to achieve cost savings and reduce dependency on CATL for battery supply.

Simultaneously, Tesla, GAC Aion, and other companies are actively promoting the construction of self-built battery factories to reduce reliance on a single supplier by enhancing technological self-sufficiency. According to ECNS, Tesla's 4680 battery factory's yield has surged from 30% to 92%, indicating significant advancements in technology development and production management, allowing Tesla to become more autonomous in battery supply and further decrease its dependence on external suppliers.

This trend is intensifying. BYD, a leading domestic new energy vehicle company, began establishing its battery business years ago. Today, its subsidiary Fudi Battery not only fully meets its automotive production needs but also supplies batteries externally, becoming a formidable competitor to CATL in the domestic market. Great Wall Motors is also actively involved in the battery sector, with its Hive Energy continuously introducing new battery technologies and products to gradually increase its market share.

In addition to self-built battery factories, automakers are reducing their dependence on CATL by supporting secondary suppliers. China Lithium Energy Storage Technology (CLST) has rapidly risen with the support of numerous automakers, emerging as a force in the domestic electric vehicle battery market. EVE Energy has also gained market share leveraging its technological advantages and close automaker collaborations. More automakers are establishing deep ties with these secondary suppliers through equity investments, partnerships, and other means, aiming to break CATL's monopoly in the electric vehicle battery market.

2

Navigating the Automakers' "De-CATL" Trend

For automakers, over-reliance on a single supplier poses significant supply risks. If CATL encounters production issues, raw material shortages, or other unforeseen events, automakers' production plans will be severely impacted. It's understandable that automakers aim to avoid excessive reliance on CATL.

At the onset of the global pandemic in 2020, some automakers relying on a single battery supplier were forced to reduce or halt production due to battery shortages. To prevent such scenarios from recurring, automakers are seeking diversified battery supply channels to ensure production stability.

Battery costs constitute a significant portion of new energy vehicles' total cost, typically ranging from 40%-60%. Zeng Qinghong, chairman of GAC Group, once publicly lamented "working for CATL," reflecting automakers' frustration with high battery costs. As market competition intensifies, automakers strive to enhance their products' price competitiveness by reducing battery procurement costs. By supporting secondary suppliers or building their battery factories, automakers aim to effectively control battery costs. For instance, Tesla's self-developed 4680 batteries are estimated to save about 86% in production costs, with a cost reduction of RMB 69 per kWh, according to institutional calculations.

In the fiercely competitive new energy vehicle market, technological differentiation is crucial for automakers to stand out. Different automakers have varying needs for battery performance, energy density, fast charging capabilities, etc. Some automakers hope to achieve technological breakthroughs through self-developed batteries, creating products with differentiated competitive advantages. NIO, for example, is actively investing in self-developed 4680 batteries, aiming to lead in battery technology and provide superior user experiences. By mastering core battery technologies, automakers can better develop and customize batteries according to their product positioning and user needs, enhancing product competitiveness.

CATL's current strategy is to focus on technological innovation. Its CTP (Cell To Pack) technology reduces battery pack components by directly integrating cells, improving space utilization and energy density. The subsequent Qilin battery achieves a significant technological breakthrough, with its innovative structural design significantly enhancing battery safety, energy density, and fast charging performance. The Qilin battery boasts an energy density of up to 255Wh/kg, enabling 10-minute fast charging and a driving range exceeding 1000 kilometers. The launch of these advanced technologies allows CATL to lead the industry in product performance, providing superior battery solutions to customers and further strengthening its technological barriers.

Although CATL's senior management has publicly reiterated that they "resolutely do not manufacture vehicles" and emphasized their continued focus on providing high-quality electric vehicle batteries and related technologies to automakers, CATL's business expansion indicates a broader strategic aim to enhance its influence across the entire automotive industry chain through technological and business model innovation.

Recently, CATL launched the Rock Chassis (also known as CIIC integrated intelligent chassis or skateboard chassis), a technology that integrates batteries directly into the automotive chassis, simplifying new model development and significantly reducing R&D costs and time. This chassis technology not only lowers automakers' R&D costs but also improves new energy vehicles' driving range and safety standards.

This underscores that while CATL is not directly involved in vehicle manufacturing, it indirectly influences the automotive industry's development direction by providing core technologies, platforms, and services, thereby reinforcing its leadership position in the global new energy sector. This approach avoids competition with existing customers while expanding its market influence.

3

Inevitable Changes Amid Competitive and Cooperative Dynamics

Despite automakers' active promotion of the "De-CATL" trend, CATL's advantages remain difficult to shake in the short term. From a technological perspective, CATL's advanced technology and product stability make it the preferred choice for automakers in high-end models and applications requiring high battery performance.

Many high-end new energy vehicle models prefer CATL batteries to achieve optimal performance and driving range. In terms of production capacity, CATL boasts a large and stable capacity following years of expansion. Its global production bases can meet the large-scale order needs of many automakers, and the production capacity of secondary suppliers and automakers' self-built battery factories is still challenging to match in the short term. While secondary suppliers have gained market share, CATL's vehicle installation volume and market share remain industry leaders. According to the latest data, in the first quarter of 2025, CATL's electric vehicle battery installation volume in the domestic market still accounted for a significant proportion, maintaining a leading position despite market share fluctuations.

However, the rise of secondary suppliers poses certain challenges to CATL. Companies like CLST and EVE Energy have gradually diverted some of CATL's orders by leveraging price advantages and close automaker collaborations. Some cost-sensitive automakers will opt for more affordable secondary supplier batteries while ensuring product performance. This pressures CATL, as its market share is eroded, prompting it to continuously optimize its cost structure and improve product cost-effectiveness.

In the long run, there are numerous uncertainties in battery technology development, which could reshape the entire electric vehicle battery market landscape. New battery technologies such as solid-state batteries and sodium-ion batteries are under research and development and are expected to achieve commercial application in the future. Solid-state batteries offer higher energy density, safety, and charging and discharging performance, and once mass produced, they will significantly impact the existing liquid lithium-ion battery market. Sodium-ion batteries boast low cost and abundant resources, offering promising prospects in applications with relatively low energy density requirements. If other companies achieve breakthroughs in these new battery technologies and lead in commercialization, CATL's technological advantages will face severe challenges. Automakers are also closely monitoring new battery technology developments, with some already initiating related R&D projects to gain an early advantage in future technological competition.

As the global leader in the electric vehicle battery industry, CATL enjoys significant advantages in market position and technological strength, further enhanced through capital operations such as IPOs. However, automakers' acceleration of the "De-CATL" process, driven by considerations like reducing supply risks, controlling costs, and pursuing technological differentiation, poses challenges for CATL. To address these, CATL is striving to consolidate its market position through technological innovation, platforms, and services.

CATL must continue increasing investment in technological research and development, particularly in new battery technologies, to maintain its technological leadership. Simultaneously, it must optimize its cost structure and enhance product cost-effectiveness to address the new competitive and cooperative dynamics in the industry.

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