CATL (Contemporary Amperex Technology Co. Ltd.) remains China's most profitable battery maker, earning 2.4 billion yuan (about $338 million) per day in the first half of 2026. Yet its share price has dropped roughly 36% since May, erasing more than 760 billion yuan (about $107 billion) in market value — equivalent to the entire valuation of BYD, or 1.3 times Xiaomi, or eight Li Autos, according to Chinese business outlet Huxiu.
Revenue for the first half reached 276.9 billion yuan (about $39 billion), up 54.8% year on year, while net profit rose 42% to 43.3 billion yuan (about $6.1 billion). The company's domestic market share for power batteries stood at 46.7%, with a gross margin of roughly 24%. By contrast, 22 listed automakers in China reported combined net profits of about 17.8 billion yuan (about $2.5 billion) in the same period — less than half of CATL's haul.
Automakers hedge their bets
The disconnect between record earnings and a falling stock price reflects a growing "de-CATL" movement among automakers. Li Auto, for example, announced in September that its first all-electric model, the i9 Home, will launch with CATL 5C ternary lithium batteries for initial deliveries, but will switch fully to its own in-house batteries as production scales up. The company has also invested 2.65 billion yuan (about $373 million) in battery maker Sunwoda, becoming its second-largest shareholder with an indirect 11.17% stake.
Other automakers are following suit. Xiaomi's "Long Arm" battery cells come from CALB and Sunwoda; Aito has added CALB and Gotion High-tech as suppliers; and Xpeng has promoted CALB to its largest supplier. Automakers, squeezed by thin margins — the auto industry's profit rate fell to 3.6% in the first seven months of 2026, below the 6.5% average for downstream industrial firms — are looking to cut costs and secure more flexible supply chains.
CATL's dominance has also been challenged by BYD, which is supplying its second-generation blade battery to Hongqi's next-generation pure-electric platform through their joint venture FAW FinDreams, with BYD holding 51% and FAW 49%. BYD's vertically integrated model — from lithium mining to cell production to complete vehicles — gives it a cost advantage that is forcing the market to reprice CATL's technology premium.
Can automakers really build better batteries?
CATL argues that making cars and making batteries are different skills. "You can build cars, but that doesn't mean you can build batteries," said Ni Jun, CATL's chief manufacturing officer, at a recent open-house event. The company says it spent 22.1 billion yuan (about $3.1 billion) on R&D in 2025 and over 90 billion yuan (about $12.7 billion) in the past decade, including 1,700 days of testing for Mercedes-Benz batteries.
Industry observers note that CATL's early start gives it a patent moat. Its Qilin battery, for example, uses liquid cooling plates on the sides of every cell, an approach competitors cannot easily replicate due to patents. Automakers have responded by buying cells from battery makers and assembling packs themselves — a strategy that captures some profit and bolsters the "self-developed" narrative, but may not guarantee quality.
Recent recalls illustrate the risks. In July, GAC Aion's AION S was recalled due to batch failures in CALB batteries, and Volvo's EX30 was recalled over thermal runaway risks in Sunwoda batteries. A single battery-maker switch can save money, but a batch failure can erase those savings overnight.
CATL is fighting back. It has increased marketing spending by 33.44% to 2.16 billion yuan (about $304 million) in the first half, and launched a consumer-facing battery lookup tool in May that reveals whether a vehicle uses CATL batteries exclusively or in a mix. A NielsenIQ survey found that 37.1% of Chinese consumers would abandon a purchase if their preferred model did not use CATL batteries.
CATL founder Robin Zeng has said the company is "holding up the price" of batteries and warned that a price war would make the industry worse off than solar. But even if CATL cuts prices, automakers may simply pass the savings into the next round of vehicle price cuts. The real question, as one industry insider put it, is whether CATL can continue offering something competitors cannot match — at a price automakers are willing to pay.
