Chinese electric-vehicle makers are accelerating their shift to self-developed batteries, chipping away at CATL's once-unassailable position as the industry's dominant supplier, according to a report by 电厂, a publication under the Chinese outlet 虎嗅.
CATL, the world's largest battery maker, has long been the default choice for Chinese EV brands, with its market share in domestic passenger vehicles reaching 46.7% in the first half of this year. But automakers are now diversifying suppliers or bringing battery development in-house to cut costs and secure supply chains, the report said.
Li Auto and Leapmotor lead the shift
Li Auto, previously one of CATL's most loyal customers, has moved from using CATL as its sole battery supplier to a dual-source strategy. Starting this year, all Li Auto models use both its own batteries and CATL's, the report said. The company's new MEGA, i9, and i6 models will increasingly rely on its own 5C battery packs, with the i6 expected to have no CATL version at all. In September, Li Auto invested 2.65 billion yuan (about $373 million) to become the second-largest shareholder of Sunwoda Power, a battery subsidiary of Sunwoda, to support its in-house battery industrialization.
Leapmotor has also made a bold move, starting production at its own battery cell line in September, according to the report. The line, built in partnership with CALB, can supply batteries for 500,000 to 600,000 vehicles annually, covering about half of Leapmotor's target of 1 million sales this year. The company plans to launch a wholly-owned venture, Lingzhen New Energy, to produce cells by 2027 and install them in vehicles by 2028. Leapmotor's battery chief, Song Yining, said self-development could cut costs by 10% compared with external sourcing, given the company's scale.
Xpeng, which has long invested in multiple battery suppliers including CALB, SVOLT, and Sunwoda, introduced a new battery integration technology called One-Stop Battery on its G9L model in September. The technology reduces battery pack components by 25% and production costs by 15%, the report said. Xpeng's CEO, He Xiaopeng, said the company will handle battery pack design, battery management systems, and thermal management in-house, while relying on its invested suppliers for cells.
Cost pressures and the 'de-CATL' trend
The shift is driven by rising raw material costs and a new battery consumption tax. Battery-grade lithium carbonate prices have surged from 75,000 yuan per tonne last July to a peak of 200,000 yuan in May, before easing to 130,000 yuan, the report said. Cell prices have risen about 17% over the past nine months, pushing up vehicle manufacturing costs. Seres, which makes AITO-branded EVs, saw its average cost per vehicle increase by 15,000-20,000 yuan (about $2,100-$2,800) due to higher battery and chip prices, while Nio's CFO said per-vehicle costs rose by 14,000 yuan in the second quarter.
Additionally, a 2% consumption tax on lithium batteries took effect on September 1, doubling to 4% next September, adding about 430 yuan (about $60) to the cost of a 60 kWh battery pack this year, and 860 yuan next year, the report said.
Despite the erosion of its exclusive supply deals, CATL remains the market leader, with its share actually rising from 43.42% last year to 46.04% in the first half of this year. Nio's main brand is one of the few still using CATL as its sole battery supplier, though its sub-brands Onvo and Firefly have brought in other suppliers. The report notes that CATL still holds a technological and quality gap that second-tier suppliers have yet to close.
