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CATL’s EV battery dominance and the risk of thinner margins

One post argues that wider supplier choice could give automakers more bargaining power, leaving CATL earning less per kWh even if battery sales volumes stay high.

NT
1 Source, 15d ago, first seen 15d ago

TLDR

A post argues that CATL’s main risk is weaker pricing power rather than suddenly losing customers. It points to Xiaomi diversifying suppliers, Li Auto investing more in its own battery technology and competition pushing battery prices down. Still, the post says CATL’s global EV battery market share rose from 37.9% in 2024 to 39.2% in 2025, and argues that talk of the company’s decline is premature.

Combined views

930

1 Source, first seen 15d ago

6 likes1 saves1 reposts

Combined views

930

1 Source, first seen 15d ago

6 likes1 saves1 reposts

Sentiment

Positive——Negative

Summary

Not enough discussion yet.

No sentiment analysis available yet.

Sentiment

Positive——Negative

Summary

Not enough discussion yet.

No sentiment analysis available yet.

1 Source

@NioTodayCATL: Is the Market Looking in the Wrong Place? $3750.HK is the world’s largest battery manufacturer. The company supplies $TSLA , BMW, Volkswagen, Geely, $1810.HK , Li Auto, $NIO and many others. In EV batteries, its global market share is around 40%. And yet, the stock has fallen sharply in recent months. The reason is fairly simple: the market is starting to question whether CATL’s dominance in EV batteries is sustainable. Some Chinese automakers are trying to reduce their dependence on the company. Xiaomi is diversifying its suppliers, Li Auto is investing more in its own battery technology, and BYD already produces its own batteries. At the same time, competition between CATL, BYD, CALB, EVE, Sunwoda and others is pushing prices down. The real risk is probably not that CATL suddenly loses its customers. It’s that automakers get more options and gain bargaining power by playing battery suppliers against each other. CATL could therefore keep selling huge volumes of batteries, but make less money on each kWh. That’s the real threat. Still, talking about CATL’s decline seems premature. The company held 39.2% of the global EV battery market in 2025, up from 37.9% in 2024. For now, CATL is still gaining market share. And even if that share gradually falls toward 30–35%, CATL would remain one of the dominant players in an EV market that is itself still growing. But more importantly, focusing only on EVs misses a big part of the story. The Other Side of CATL CATL is also the world’s largest supplier of stationary energy storage batteries, or ESS (Energy Storage Systems). And this market is exploding. In the first half of 2026, CATL generated RMB 53.3 billion in energy storage revenue, up 87.5% year over year. ESS already represents a meaningful part of the business and is growing much faster than EV batteries. Why is it growing so quickly? Because the more we electrify the economy, the more we need to store electricity. Solar generates most of its power during the day. Wind generates power when the wind happens to blow. Electricity demand, however, doesn’t necessarily peak at the same time. So you need to be able to generate electricity at 2 p.m., store it in massive battery systems, and feed it back into the grid at 8 p.m. But the applications go much further than that: solar and wind farms, grid stabilization, industrial energy storage, microgrids, backup power, and increasingly data centers and AI infrastructure, whose electricity requirements are becoming enormous. CATL is already supplying projects ranging from hundreds of MWh to several GWh across China, Europe and Australia. And there is one particularly interesting detail for shareholders: Energy storage currently has better margins than EV batteries. In 2024, CATL generated roughly 23.9% gross margins on EV batteries versus 26.8% on stationary energy storage. So on one side, you have a massive EV business where margins could gradually come under pressure. On the other, you have an ESS business that is already meaningful, growing extremely fast and generating higher margins. Of course, 80–90% annual growth won’t last forever. Energy storage will attract more competition too, and prices will eventually come under pressure. But CATL doesn’t need that kind of growth to continue. Even if ESS growth gradually slows toward 25–30% a year, the business could become enormous over the next five years. That’s why I think the market’s current view of CATL may be a little too simplistic. The real question isn’t: “Can CATL maintain 40% of the EV battery market forever?” It probably won’t. It may lose a few points of market share. EV margins may come down as well. The more important question is: “Will that erosion happen faster than the energy storage business can grow?” Because CATL is currently the global leader in BOTH EV batteries and stationary energy storage. If EV batteries remain a huge cash-generating business while ESS gradually becomes the company’s second major growth engine, CATL can continue growing earnings for a long time even if it loses some ground in automotive batteries. And in my view, that’s what makes the current correction particularly interesting.
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    CATL

    1 Source

    @NioTodayCATL: Is the Market Looking in the Wrong Place? $3750.HK is the world’s largest battery manufacturer. The company supplies $TSLA , BMW, Volkswagen, Geely, $1810.HK , Li Auto, $NIO and many others. In EV batteries, its global market share is around 40%. And yet, the stock has fallen sharply in recent months. The reason is fairly simple: the market is starting to question whether CATL’s dominance in EV batteries is sustainable. Some Chinese automakers are trying to reduce their dependence on the company. Xiaomi is diversifying its suppliers, Li Auto is investing more in its own battery technology, and BYD already produces its own batteries. At the same time, competition between CATL, BYD, CALB, EVE, Sunwoda and others is pushing prices down. The real risk is probably not that CATL suddenly loses its customers. It’s that automakers get more options and gain bargaining power by playing battery suppliers against each other. CATL could therefore keep selling huge volumes of batteries, but make less money on each kWh. That’s the real threat. Still, talking about CATL’s decline seems premature. The company held 39.2% of the global EV battery market in 2025, up from 37.9% in 2024. For now, CATL is still gaining market share. And even if that share gradually falls toward 30–35%, CATL would remain one of the dominant players in an EV market that is itself still growing. But more importantly, focusing only on EVs misses a big part of the story. The Other Side of CATL CATL is also the world’s largest supplier of stationary energy storage batteries, or ESS (Energy Storage Systems). And this market is exploding. In the first half of 2026, CATL generated RMB 53.3 billion in energy storage revenue, up 87.5% year over year. ESS already represents a meaningful part of the business and is growing much faster than EV batteries. Why is it growing so quickly? Because the more we electrify the economy, the more we need to store electricity. Solar generates most of its power during the day. Wind generates power when the wind happens to blow. Electricity demand, however, doesn’t necessarily peak at the same time. So you need to be able to generate electricity at 2 p.m., store it in massive battery systems, and feed it back into the grid at 8 p.m. But the applications go much further than that: solar and wind farms, grid stabilization, industrial energy storage, microgrids, backup power, and increasingly data centers and AI infrastructure, whose electricity requirements are becoming enormous. CATL is already supplying projects ranging from hundreds of MWh to several GWh across China, Europe and Australia. And there is one particularly interesting detail for shareholders: Energy storage currently has better margins than EV batteries. In 2024, CATL generated roughly 23.9% gross margins on EV batteries versus 26.8% on stationary energy storage. So on one side, you have a massive EV business where margins could gradually come under pressure. On the other, you have an ESS business that is already meaningful, growing extremely fast and generating higher margins. Of course, 80–90% annual growth won’t last forever. Energy storage will attract more competition too, and prices will eventually come under pressure. But CATL doesn’t need that kind of growth to continue. Even if ESS growth gradually slows toward 25–30% a year, the business could become enormous over the next five years. That’s why I think the market’s current view of CATL may be a little too simplistic. The real question isn’t: “Can CATL maintain 40% of the EV battery market forever?” It probably won’t. It may lose a few points of market share. EV margins may come down as well. The more important question is: “Will that erosion happen faster than the energy storage business can grow?” Because CATL is currently the global leader in BOTH EV batteries and stationary energy storage. If EV batteries remain a huge cash-generating business while ESS gradually becomes the company’s second major growth engine, CATL can continue growing earnings for a long time even if it loses some ground in automotive batteries. And in my view, that’s what makes the current correction particularly interesting.
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