[HONG KONG] Chinese battery making giant Contemporary Amperex Technology Co Limited (CATL) reported a 33 per cent jump in first-quarter earnings, defying a slowdown in demand for electric vehicles (EVs) and a drop in the prices of the cells that power them.
Net income came in at 14 billion yuan (S$2.5 billion), versus estimates of 13.8 billion yuan, CATL said in an exchange filing on Monday (Apr 14). Revenue grew just over 6 per cent year on year to 84.7 billion yuan, slightly less than what the market was looking for. CATL’s scale means it’s often able to spread costs out and deliver greater efficiencies.
While CATL’s statement did not address the company’s immediate outlook, as a top supplier to Tesla and many other large automakers, the world’s No 1 maker of EV batteries risks being caught in the cross-hairs of geopolitics.
US President Donald Trump wants to keep Chinese-made products out of the US, and as a strategic response, CATL has been trying to insulate itself by licensing its technology, increasing research and development, abroad and sourcing materials from more neutral regions. R&D expenses for the period increased 11 per cent to 4.8 billion yuan.
CATL is also investing in overseas production facilities in places such as Germany and Hungary to localise manufacturing even though demand for EVs outside of China has softened.
With Washington now charging tariffs of 145 per cent on goods from China, CATL’s market-leading position is further threatened, beyond pressures from the Inflation Reduction Act, which was enacted under president Biden and which aims to reduce reliance on foreign entities deemed a national security risk.
Regardless, Ningde, Fujian-based CATL is pressing ahead with a secondary listing in Hong Kong and its mooted US$5 billion-plus offering may become the largest globally this year.
And despite the challenging outlook, CATL remains in a comfortable position, with a global market share of around 38.2 per cent based on data for the first two months of the year, according to SNE Research. Its nearest competitor is fellow Chinese company BYD, at 16.9 per cent.
CATL shares closed little changed in Shenzhen on Monday. The stock is down around 15 per cent this year. BLOOMBERG
