Chinese electric-vehicle makers are increasingly taking battery development in-house, a shift that has rattled the market leader CATL. According to Huxiu, the latest sign came on September 7, when Li Auto's app began offering its new-generation MEGA with a self-developed 5C ternary lithium battery instead of a CATL pack. By the fourth quarter, all new Li Auto models are expected to use the company's own cells.
Li Auto is not alone. Xiaomi, Nio and Xpeng have all announced plans to develop their own batteries, a trend that has weighed on CATL's shares. The battery giant's A-share price briefly fell below 300 yuan (about $42.3) in intraday trading, a one-year low and a drop of more than 35% from its May peak, erasing over 700 billion yuan (about $98.6 billion) in market value.
From BMW's apprentice to the industry's default
CATL's rise was built on a rigorous standard handed down by BMW. When BMW sought a battery supplier for its Zhi Nuo 1E model, it approached the then-one-year-old CATL and provided an 800-page German technical specification covering materials, production processes, testing and certification, down to a cell thickness tolerance of 0.1mm and discharge efficiency at minus 30 degrees Celsius. CATL engineers spent two years working with BMW to meet these requirements, building what was then Asia's largest power-battery testing center.
That early order was small in revenue but invaluable in know-how. CATL founder Robin Zeng has repeatedly credited BMW's support for helping the company build a world-class manufacturing system. By the first half of 2026, CATL held about 39.9% of the global power-battery market and 46.7% of China's passenger-vehicle segment.
Now the roles are reversed. Li Auto and CATL enjoyed a decade-long partnership, with over 1,000 researchers involved. The 5C Qilin battery, launched in March 2024, was their closest collaboration and the industry's first 5C ultra-fast-charging solution, according to Li Auto. But CATL later supplied similar 5C cells to Zeekr and others, and intellectual-property disputes have blurred the line between co-development and CATL-led design.
Automakers seek control, CATL defends consistency
Li Auto's battery chief Liu Zhimin says the company adopts a full-stack in-house approach, starting at the material level—cathode, anode, electrolyte and formula—with prototype validation in its own labs. The company has set 9,400 control standards across cell and pack levels and claims a defect escape rate at the parts-per-billion (PPB) level, matching CATL's benchmark.
CATL's chief manufacturing officer Ni Jun responded publicly on September 18: "Knowing how to build cars doesn't mean you know how to build batteries. Professionals should do professional work." He emphasized consistency—a vehicle pack contains hundreds or thousands of cells, and small differences in capacity, internal resistance or self-discharge can amplify over thousands of charge cycles, affecting range and lifespan. Chairman Robin Zeng put it succinctly: "Making one battery is easy; making ten billion identical ones is hard. Batteries have a barrel effect—the worst cell determines the pack's performance."
CATL's eighth-generation production line, about one kilometer long, has nearly 7,000 quality-control points and uses AI to adjust for environmental and material fluctuations in real time. Ni also warned that cells leaving the factory with identical parameters may diverge over their lifecycle.
The real challenge for automakers, however, is not in the factory. NielsenIQ research cited by Huxiu shows that Chinese consumers weigh battery choice at 13.8% in purchase decisions—higher than smart features or driving performance—and 81% trust the CATL brand. One Li Auto customer reportedly cancelled her order after learning the battery would switch from CATL to an in-house unit. Second-hand market data from Huxiu's field visits shows CATL-equipped versions of the same model retain 3-5% more value than those with other batteries.
Li Auto's president Ma Donghui argues that customers buy the brand, not a component. "Users buy Li Auto products because they trust our brand, quality, performance and service," he said. "They don't go to the supplier when something goes wrong." The company outsources cell manufacturing to Sunwoda and CALB while handling pack assembly itself.
As automakers push for control over battery definition, CATL is unlikely to cede ground easily. The industry's next battleground may be not just chemistry, but the trust that comes with it.
