Ningbo CATL's Stock Plunge: A Reverse Struggle for Pricing Power
Hello everyone, I'm your financial journalist friend. Recently, there's been quite a stir in the A-share market: Ningbo CATL, once known as the "king of batteries," has seen its stock price plummet, causing concern among investors. In just one month, its value has dropped by 24%, resulting in a market capitalization loss of over 700 billion yuan.
Many people's first reaction was, "Is Ningbo CATL on the decline? Does no one want to buy its batteries anymore?"
On the contrary. Data shows that Ningbo CATL's global market share is still increasing, and its profits have reached new highs. So why has the stock price fallen?
It's like a giant that monopolized the city's bread supply suddenly finding that several large restaurants next door have started their own bakeries. Even though it still sells the most bread, people are wondering if it can continue to charge high prices in the future.
Today, we'll break down the logic behind this news in simple terms and explore what this competition—where car companies are moving into the battery business while Ningbo CATL is moving out of it—really means.
---
1. The Truth Behind the Stock Drop: It's Not About Poor Sales, but the Loss of Premiums
First, let's clear up a misconception: Ningbo CATL has not lost its market position; what it has lost is the expectation of having pricing power.
Look at the numbers: In the first half of this year, Ningbo CATL sold 242.7 GWh of batteries, holding a 39.9% global market share, still the highest in the world. Its profits also increased by 42%. With such strong performance, one would expect its stock price to rise, right?
However, the capital market is a market of expectations. Investors are concerned about the future, not the present.
In the past, car companies relied on Ningbo CATL for their batteries, as this was the most critical and complex component of electric vehicles. This created what could be called the "Ningbo CATL tax"—since it was the sole or main supplier, car companies had to accept its higher costs.
But now the situation has changed. Companies like Li Auto have announced that they will use their own batteries in models like the L8 and L6, and Xiaomi's new cars no longer use Ningbo CATL's cells, opting instead for suppliers like Zhongxin Innovation and Xinwangda.
It's like this: Before, if you wanted to eat at a restaurant, that restaurant was the only one serving rice, so the owner could set high prices. Now, the restaurant owner has learned to cook rice themselves and even found cheaper suppliers. Even though the restaurant is still there, the owner knows that customers might switch if they don't lower prices or offer better service.
The stock price drop reflects the market's concern about whether Ningbo CATL can continue to earn high profits as easily as it used to. When batteries become standard products that can be compared in price, the era of exorbitant profits may be coming to an end.
---
2. Car Companies' Growing Power: From Buying Components to Manufacturing the Core
Why are car companies suddenly moving away from relying solely on Ningbo CATL? There's one main reason: Batteries are no longer just simple components; they are the "soul" of the car's experience.
In the past, car companies saw batteries as nothing more than fuel tanks, and they would buy the largest capacity they could afford. But now it's different.
What consumers look for in electric cars are fast charging speeds (5C, 6C), stable performance in cold weather, accurate range, and safety. These factors directly affect sales.
If car companies rely entirely on battery suppliers, they are at the mercy of those suppliers. For example:
- Li Auto is developing its own battery systems and even plans to replace the batteries in its flagship L9 model.
- Xiaomi Auto has introduced the "Longjia Battery," with cells from second-tier suppliers, but it controls the battery pack design and management system (BMS).
What does this mean for car companies?
1. Cost Savings: They can avoid paying the "brand premium" to battery suppliers.
2. Control over the Core Experience: They can customize battery performance for their cars instead of accepting whatever the suppliers offer.
3. Supply Chain Security: They don't put all their eggs in one basket, reducing the risk of being controlled by a single supplier.
By moving into the battery business, car companies are essentially trying to regain control over product definition. They don't want to be mere assemblers; they want to become true technology brands.
---
3. Ningbo CATL's "Breakthrough": From Selling Batteries to Offering "Energy + Computing Power"
Does this mean Ningbo CATL is doomed with the shift in car company behavior? Not at all. It has made a smart move: Since the battery market might be shrinking, it's looking for opportunities in other areas.
This is what's referred to as Ningbo CATL "moving out of the battery business." Through its investment platforms (Puquan Capital, Wendeng Investment, etc.), it is aggressively expanding into sectors beyond batteries.
In which areas has it invested?
- AI Computing Infrastructure (Data Centers): This is its latest major investment. In April and May this year, Ningbo CATL invested over 10 billion yuan in companies like Zhongheng Electric (data center power supply equipment) and Shiji Hulian (data center operations).
- The logic? AI models consume a lot of power—60%-70% of their operating costs. Knowing about batteries, energy storage, and power management, Ningbo CATL aims to extend its role from supplying energy to vehicles to powering AI systems.
- AI Models (DeepSeek): It has also invested in DeepSeek, a popular AI model, although its shareholding is low (about 1.4%). This shows its commitment to the AI ecosystem.
- Robots and Chips: It has invested in companies like Yinhe General and Songyan Power (robots) and Silang Technology (chips).
- The logic? Robots and chips also require batteries and chips. Ningbo CATL wants to create an "energy + intelligence" ecosystem.
In summary, Ningbo CATL's strategy is: It wants to move from being a battery supplier, where profits were thin and easy to replace, to becoming an energy technology giant that earns from technology premiums and ecosystem synergies. It aims to combine batteries, energy storage, chips, and AI computing power into a competitive solution that others can't easily replicate.
---
4. The Core Battle: Who Holds the Higher Bargaining Power?
Behind this news is a reshuffle of value distribution in the supply chain.
In the past: Ningbo CATL controlled the core technology, and car companies relied on it, giving it significant pricing power. Now, car companies are reducing its monopoly by developing their own batteries or using alternative suppliers, making batteries more like standard components like tires or glass.
The question is: When batteries become as affordable as other manufactured products, what will sustain Ningbo CATL's high profits?
If it can't establish a similar technological monopoly or scale advantage in new areas (such as AI computing or robotics), its valuation will likely shift from a "high-tech growth stock" to a "traditional manufacturing stock."
This is why the capital market is divided: If batteries become ordinary manufactured goods, Ningbo CATL's high valuation will seem unreasonable, and its stock price will fall. If it can successfully transform into an "AI energy infrastructure giant," it will still have a compelling story and its stock price may hold its own.
For now, the market believes that the era of exorbitant battery profits has ended, but Ningbo CATL's transformation is just beginning.
---
5. A Lesson for Everyone: Understanding the Industry Logic
For the general public, this news highlights a few key points:
1. Don't just focus on who is selling; look at who is buying: Ningbo CATL is still selling, but the buyers (car companies) have changed. When customers gain the ability to replace suppliers, a company's competitive advantage weakens.
2. Standardization is a threat to profits: Once batteries become standard, price wars are inevitable. Ningbo CATL must continuously innovate with new technologies (like the Shengxing and Kirin batteries) to maintain differentiation.
3. Cross-industry investments are a defensive strategy: By investing in AI and chips, Ningbo CATL is securing its future. It recognizes that the future energy consumers will be data centers and robots, not just cars.
4. Stock prices reflect expectations: Good performance but a falling stock price indicates that market expectations for future growth are lower. This reminds us that investing should consider not only past financial reports but also changes in industry competition.
In conclusion: This "reverse breakthrough" is about car companies striving to regain control over their products, and Ningbo CATL seeking new sources of growth.
Ningbo CATL hasn't lost; it's just lost the ease of making money effortlessly. In the future, it must prove that it's more than just a battery manufacturer—it's a technology giant capable of meeting the energy needs of the AI era.
This battle is just beginning.