In just four days after China’s Spring Festival, CATL, the world’s biggest battery maker, had a rough start: about 15% of its shares value was shaved off. On February 10, its stock price even fell below 500 yuan before ending at 518.1 yuan, closing down 5.32%. This round of consecutive drop happened only days after this battery giant reported a net profit of at least 14 billion yuan in 2021.
Why it matters
The SNE Research showed that CATL is once again the largest battery manufacturer in the world with an installed capacity of 96.7 GWh, securing 32.6% of global market share. CATL has also made headway in winning overseas partners. It supplies the lithium-ion battery for Tesla, the world’s largest EV maker and signed deals with some other EV companies, including Fisker and ELMS, from the U.S. But until now, such good news has brought good results for its stock price.
What caused the turbulence? Analysts believed the decline of EVs deliveries in January had something to do with it. But more deeply, the EV stock bubble is big and there is still room for the price to fall.
“The soaring demand led to the surging prices of raw materials, which in turn drove up costs,” Wu Hui, the director of China YiWei Institute of Economics, said. “As the battery technology is not mature, it is hard to tell who would have the last laugh in the battery industry.”
CATL has many challenges ahead. Recently, LG Energy Solution raised $10.8 billion in its initial public offering (IPO), giving it more capital for R&D and capacity expansion. LG also announced the cooperation with GM and the plan to build four battery plants to shore up the capacity.
Other domestic competitors are also snatching the market share. BYD and Faw Group have established a joint venture to build a production facility for EV batteries with an annual capacity of 45 GWh; Guoxuan High-Tech plans to double its capacity of 50GWh to 100 GWh in 2022; CALB was reported to get battery orders from CATL’s partners.
Though CATL still dominates the battery market, it faces strong competition in terms of technology and capacity expansion from its rivals. The consecutive fall of the stock price rings the alarm for this battery giant.