Credit: CFP
AsianFin -- CATL, China's dominant electric vehicle battery maker, is navigating its toughest road in years. Once a symbol of unrelenting growth, the lithium battery giant has posted its first annual revenue drop since going public in 2018, even as global EV demand remains robust.
Wei Jianjun, Chairman of Great Wall Motors, recently likened the auto sector's current risks to the precarious buildup before China's Evergrande crisis—only this time, he warned, "the bubble hasn't burst yet."
While carmakers face thinning margins in an intensifying price war, CATL (Contemporary Amperex Technology Co. Limited) has maintained pole position in battery installations. According to KERUI data, CATL held a commanding 44.7% share of the Chinese market in April, followed by BYD's FinDreams at 23.3%. Together, the two players now control nearly 70% of the EV battery space.
Even Xiaomi Auto, a new entrant to the EV game, has tapped CATL as its largest battery supplier for the first time—surpassing legacy automakers Geely and Tesla.
Fresh off a rare dual listing in both the A-share and H-share markets, CATL's valuation has surged, eclipsing long-time rival BYD. Yet the numbers under the hood tell a more complex story.
CATL's revenue fell 9.7% in 2024 to 362 billion yuan ($50 billion), down from a record 400 billion yuan in 2023. That marks the company's first revenue decline since 2014, when it was still a niche player with under 1 billion yuan in annual sales.
The culprit? A brutal combination of intensifying price pressure and overcapacity.
While CATL shipped 475 GWh of batteries in 2024—up 22% from the prior year—falling battery prices dragged down topline growth. The average selling price for its power batteries plunged 25% year-on-year, from 888.6 yuan per kWh to just 664.2 yuan. Prices for energy storage batteries also slipped by 6%.
Industrywide overcapacity has only made things worse. China's lithium battery sector had a total capacity of over 2,000 GWh in 2024, but less than half was actually utilized, according to the Lithium Battery Association. That mismatch is forcing players to slash prices and fight for market share.
CATL's domestic market share is slipping under pressure. In the first four months of 2025, its share of China's battery installations dropped 4.77 percentage points to 42.9%, according to the China Automotive Power Battery Industry Innovation Alliance.
Despite that, its overseas business remains a bright spot. In 2024, CATL generated 110.3 billion yuan in overseas revenue with a gross margin of 29.5%, outpacing its domestic margin of 22%.
As EV adoption plateaus in China—where new energy vehicle penetration hit 48.9% in 2024—global markets are offering more headroom for growth. Europe and the U.S. are years behind, with penetration rates at 22.7% and 10%, respectively.
With a cooling domestic market and tighter margins, CATL is betting big on overseas expansion. Chairman Robin Zeng has emphasized the importance of Europe in recent interviews, outlining plans to scale up international production capacity.
The company now has four overseas bases in various stages of completion. Its German plant began production in 2022 with a planned capacity of 14GWh. A $7.34 billion Hungary plant—its largest overseas investment to date—is accelerating after overcoming environmental protests and regulatory delays.
By 2027–2028, CATL expects to bring nearly 200GWh of new overseas capacity online, which could push its international revenue share above 50%.
Europe's battery market opened up further after the collapse of Swedish battery firm Northvolt, which filed for bankruptcy in March after missing delivery deadlines and burning through $10 billion in investor funding.
Chinese firms have rushed to fill the gap. CALB has broken ground on a 15GWh plant in Portugal. Sunwoda plans to open a Hungary facility in 2026. Gotion High-Tech is partnering with Volkswagen on a 20GWh plant in Slovakia and expanding in Poland and Morocco, with a total pipeline exceeding 100GWh.
Gotion's 2024 overseas revenue rose 71% year-on-year to 11 billion yuan, accounting for over 31% of its total.
Despite its massive growth and global footprint, CATL is keeping a cautious financial posture. Its total assets reached 786.6 billion yuan by the end of 2024, with liabilities of 513.2 billion yuan. While its debt-to-asset ratio stands at a moderate 65%, most of it comes from non-interest-bearing payables to suppliers—common in a supply chain dominated by battery makers.
Excluding those items, CATL's interest-bearing debt ratio is just 17.3%. Proceeds from its recent Hong Kong IPO are expected to fund global expansion and help preserve liquidity.
Chairman Zeng, known for his dual embrace of discipline and risk-taking, once explained why one of his favorite calligraphy artworks reads "Strong Gambling Instinct" instead of "Strive to Win." His answer: "Striving is about effort—gambling is about intelligence."
With revenue growth slowing, competition rising, and overseas expansion accelerating, CATL's next move may require both.
