Is the battery giant losing its edge, or are automakers simply refusing to keep footing the bill? Over the past four months, its market value has plunged by more than 760 billion yuan, a sum equivalent to wiping out one BYD, 1.3 Xiaomi, or 8 Li Auto companies. The company suffering this massive valuation loss is not some struggling enterprise with disappointing earnings, but Contemporary Amperex Technology Co., Limited (CATL), whose profit-generating prowess borders on extraordinary.
In the first half of the year, CATL reported revenue of 276.9 billion yuan, a 54.8% year-on-year increase, and a net profit of 43.3 billion yuan, up 42%, translating to daily earnings of approximately 240 million yuan. However, since late August, CATL shares have entered a continuous decline, with the stock price hitting 295.5 yuan on September 21st, roughly 36% below its May peak of 467 yuan, pushing the market capitalization below 1.4 trillion yuan and reaching a one-year low.
Where the Market's Concern Lies
With record earnings but a stock price stuck at the bottom, what exactly is the market trading on? The answer points to a growing unwillingness among automakers to continue working for the battery behemoth.
On the evening of September 16, Li Auto unveiled its new all-electric model, the i9 Home. At the launch, CEO Li Xiang announced that the first batch of vehicles would feature CATL's 5C ternary lithium batteries, but as Li Auto's self-developed battery production ramps up, future vehicles will fully transition to in-house batteries. Considering batteries account for about 40% of a vehicle's total cost, many consumers check the battery brand before purchasing a car. CATL remains one of the most trusted names in this space, making Li Xiang's statement particularly telling.
The strategy appears clear: use CATL batteries as a credibility boost for the initial launch phase, then gradually switch to more cost-effective self-developed batteries once supply and demand stabilize. As early as the Q2 earnings call in late August, Li Xiang had already hinted that starting in the second half of the year, all Li Auto models would begin incorporating self-developed batteries. This aligns with the company's broader supply chain ambitions. On September 4, Sunwoda announced that Li Auto plans to invest 2.65 billion yuan to acquire an 8.79% stake in Sunwoda Power. Upon completion, Li Auto entities will hold an indirect 11.17% stake, becoming Sunwoda's second-largest shareholder.
Li Auto is hardly alone in this endeavor. Xiaomi's "Dragon Armor Battery" sources its cells from CALB and Sunwoda. AITO has added CALB and Gotion High-Tech as battery suppliers. XPeng has even elevated CALB to its top supplier position. Automakers that once queued up for CATL batteries are now almost universally diversifying their supply chains.
This is not a reflection on CATL's quality, but rather a survival imperative under immense cost pressure. Take Li Auto: despite holding over 87 billion yuan in cash reserves, a recent sales slump and a higher share of budget models dragged its Q2 vehicle gross margin down to 9.4%. Data from the China Passenger Car Association is even more stark, showing the auto industry's profit margin fell to 3.6% in the January-July period, well below the 6.5% average for downstream industrial enterprises. Cost reduction has become non-negotiable for automakers.
In contrast, CATL commanded a 46.7% share of domestic power battery installations in the first half, with a gross margin around 24%. Industry statistics show that the combined net profits of 22 listed automakers in the first half totaled around 17.8 billion yuan, less than half of CATL's earnings. This disparity has even drawn public commentary. A well-known media figure recently suggested on social media that CATL should proactively rethink its relationship with domestic EV makers, noting that automakers feel like they are working for the battery giant. The sentiment echoes an earlier observation that the industry has long suffered under CATL's dominance.
"The battery is just a supplier; if automakers aren't making money, why should suppliers be raking it in?" queried a salesperson at a new energy vehicle startup. Beyond pricing, automakers also need more accommodating suppliers. As industry competition intensifies and vehicle iterations accelerate, automakers demand customized battery packs to differentiate their models. However, some low-volume models struggle to convince CATL to dedicate a production line to them. Combined with scheduling mismatches, there have been instances where delayed CATL shipments slowed down new vehicle deliveries. Second and third-tier battery makers are far more eager to secure orders from leading automakers, making them more attractive partners for customization and flexibility.
While CATL's current profitability remains stellar, the growing "de-CATL" movement is reshaping market expectations for its future earnings, offering a clear explanation for the anomalous stock chart.
Can Automakers Truly Succeed in Battery Development?
When automakers collectively tout self-developed batteries and reducing reliance on CATL, can they actually produce quality batteries? At a recent CATL quality open house event, its Chief Manufacturing Officer addressed this directly, stating that knowing how to build cars does not automatically mean knowing how to build batteries, and that professional work is best left to professionals.
The consistency requirements between consumer electronics batteries and power batteries are vastly different. Power batteries typically consist of numerous small cells assembled together, creating a pronounced "wooden barrel effect" where a single defective cell can compromise the entire pack. For battery manufacturers, producing one good cell isn't the challenge; ensuring every single cell in mass production meets the same standard is. CATL's financial reports show R&D investment of 22.147 billion yuan in 2025, with cumulative R&D spending exceeding 90 billion yuan over the past decade. Public records indicate that when developing power batteries for Mercedes-Benz, CATL conducted testing over 1,700 days, longer than many new vehicle iteration cycles. These barriers built on capital, technology, and time cannot be crossed simply by declaring "self-development."
An industry insider with experience at a joint venture automaker noted that CATL's early start allowed it to patent-protect its technologies, effectively blocking competitors. For instance, CATL's Qilin battery features liquid cooling plates on all cell sides, with significantly more surface area than the industry average, reducing the risk of thermal runaway. Rivals, constrained by patents, can only place cooling plates above and below the cells, resulting in inferior performance. "Batteries also have a calendar life requiring real-world, long-term validation that laboratory testing cannot replicate. Brands that started earlier and have higher sales volumes have a distinct advantage here," the insider added.
Automakers have responded with a more pragmatic approach: they purchase the cells from battery manufacturers but assemble the modules and packs themselves or through joint ventures. While cells constitute the majority of a battery pack's cost, handling the remaining assembly steps allows automakers to secure a share of the profits and market their batteries as "self-developed."
But the question remains: is the quality of these "fast-track" self-developed batteries up to standard? A well-known automotive blogger once disassembled two identical vehicles from the same batch that were fitted with different battery packs. One, which had driven over 100,000 kilometers, exhibited severe swelling in its battery pack, with the casing buckling into a banana-like shape. The other vehicle, equipped with a CATL battery, showed no swelling, leakage, or corrosion, with the battery retaining 91% health. While this is a single blogger's anecdotal evidence from just two vehicles, it demonstrates that different battery packs from the same batch can age very differently in real-world conditions.
In recent years, there have been instances of vehicle fire incidents after a leading automaker switched battery suppliers. In July, GAC Aion's AION S required a recall due to batch quality issues with CALB batteries, and Volvo's EX30 was recalled over thermal runaway risks with Sunwoda batteries. So while switching away from CATL can cut costs, a single batch failure could easily wipe out those savings. So why pursue the "de-CATL" strategy now?
A battery industry professional explains that this shift correlates with the maturation of battery technology. A few years ago, a similarly sized battery pack from CATL could deliver 600-700 kilometers of range with 10-minute fast charging, while second and third-tier options offered 100+ kilometers less range and slower charging. This significant experience gap justified the premium price. Today, however, the performance gap in range and charging speed has narrowed considerably, making automakers more inclined to switch suppliers and cut costs. Although "self-developed" batteries often mean simply buying cells and assembling the pack in-house, the "de-CATL" movement is fundamentally about seizing supply chain control, and once started, it's hard to reverse.
Who Could Challenge CATL?
If the "de-CATL" movement represents softening demand, then battery makers like BYD represent a more formidable threat on the supply side. In August, a deputy general manager at FAW Fudi publicly confirmed that BYD's second-generation blade battery has been selected for a core project in FAW Hongqi's next-generation pure electric platform, with megawatt flash charging technology debuting on FAW models. This is particularly significant because FAW Hongqi has been one of CATL's key clients for years.
More revealing is that FAW Fudi is itself a joint venture between BYD, holding 51%, and FAW, holding 49%. When Hongqi adopts BYD batteries, it's less about poaching a CATL customer and more about realizing that the customer was already aligned with the competitor. Similar equity arrangements exist between Leapmotor and CALB, and Li Auto and Sunwoda.
Even more threatening than losing individual clients is the cost structure gap. BYD controls every core link from lithium mining and cell production to vehicle manufacturing, and its external supply of automotive parts gives it a broader cost advantage than a pure-play battery maker. When competitors can produce batteries that meet the same requirements at lower costs, CATL's technology premium faces market repricing. Consumer surveys suggest that in terms of brand recognition and perception, the gap between BYD and CATL is narrowing.
Technology leadership is also converging. In March, BYD launched its second-generation blade battery, claiming it can charge from 10% to 70% in just 5 minutes. On September 17, Sunwoda announced plans to build 10,000 megawatt flash charging stations by the end of 2027, enabling over 100 kilometers of range in 1 minute and charging from 10% to 97% in 9 minutes. Meanwhile, the much-anticipated next-generation solid-state batteries remain far from mass production, meaning the entire industry appears to be starting from a similar position. Without a breakthrough in new technologies, mature technology segments are inevitably facing more intense market competition.
CATL is already sensing the winds of change. Its 2026 semi-annual report shows increased marketing investment, with marketing expenses growing 33.44% year-on-year to 2.164 billion yuan, signaling a shift toward more consumer-facing engagement. In May, CATL launched a battery inquiry feature on its official channels, allowing users to search for their vehicle model and determine whether it uses exclusively CATL batteries or a mix of suppliers, subtly pressuring automakers to stick with its product. A recent global consumer research report indicates that in the international market, CATL, LG, and Panasonic form a top three, while in China, the battle is between CATL and BYD. Notably, 37.1% of Chinese consumers surveyed stated they would forgo purchasing a vehicle if it wasn't equipped with a CATL battery, demonstrating that dislodging the incumbent is no easy task.
CATL also retains its pricing leverage. In a June interview, CATL founder Robin Zeng remarked that his company was "holding the price line," adding that if CATL joined a price war, the entire industry's situation would be worse than the solar sector's overcapacity crisis. At the World Power Battery Conference in early September, he publicly criticized the industry's "speed, specifications, and price" mentality. However, even if CATL reduces prices, it won't fundamentally change the hyper-competitive landscape where automakers struggle to profit. As one industry insider put it, any price concession from battery makers is quickly funneled into the next round of vehicle price cuts. Industry-wide involution won't be resolved by a single round of discounts or price adjustments.
The "de-CATL" narrative has persisted for years without substantially undermining CATL's market share or industry position. Yet, the metrics by which the market evaluates the company are shifting. The real question for the battery king is this: as competitors produce batteries that are both cheaper and of acceptable quality, and automakers are willing to adopt them, how much unique value can CATL still offer that no one else can replicate?
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