Hello! I'm your financial analysis assistant. This article from "Jinduan" tells a very interesting and ongoing business story: In the midst of increasing competition and shrinking profits in the new energy vehicle industry, the once-dominant battery giant CATL (often referred to as "King Ning") is facing a "counterattack" from second-tier battery manufacturers and car companies working together.
To help you easily understand this situation, I'll first summarize the key points and then break down the logic into five parts in plain language.
📝 Key Points Summary
In the power battery industry of 2026, the balance of power is shifting subtly. Although CATL still holds a dominant position, second-tier battery manufacturers (such as Zhongxin Innovation Aviation, Guoxuan High-Tech, EVE Energy, and Xinwangda) are no longer at a disadvantage.
The main logic is:
1. CATL is sacrificing profits to maintain market share: To maintain its dominance, CATL is lowering prices, which has led to a decrease in its gross profit margin and a reduction in its profit margin.
2. Second-tier manufacturers are taking advantage of the situation: These manufacturers have seized the benefits of the industry's overall growth, along with the market gaps created by CATL's limited production capacity or intentional inventory control, and have secured many orders.
3. Car companies are finding new ways: To save money, reduce their dependence on a single battery supplier, and gain more control over their brand image, car companies have started adopting a new model where they purchase battery cells from second-tier manufacturers and assemble the battery packs themselves.
4. The result: This new model saves car companies money and allows second-tier manufacturers to gain more orders, while challenging CATL's brand premium and monopoly position.
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🔍 In-Depth Analysis: Five Parts Explained in Plain Language
1. Who is really making the money, and who is just benefiting from the growth? – The truth behind the numbers
The article starts with a striking fact: CATL earns more money than 15 listed car companies in the A-share market combined. This reminds us of Zeng Qinghong, the chairman of GAC, who once said that car companies work hard to build cars, but the profits end up in the hands of battery manufacturers.
However, if we look at the data from the first half of 2026, the impression that "second-tier battery manufacturers are being overwhelmed by CATL" is somewhat one-sided.
- On the surface: The revenue of the four major second-tier manufacturers (Zhongxin Innovation Aviation, Guoxuan, EVE Energy, and Xinwangda) increased by 47.8 billion yuan, which seems impressive.
- But the reality is: Half of this increase (about 25.3 billion yuan) came from energy storage (e.g., for power grids and base stations) and consumer batteries (e.g., for smartphones and laptops), not from car batteries.
- Compared to CATL: CATL's revenue from its power battery business alone increased by 60.5 billion yuan. This means that the combined growth of the four second-tier manufacturers in the power battery sector is only 41.9% of CATL's.
💡 Plain Language: It's like a class exam where the top student (CATL) scored 95 points, an improvement of 10 points, while the second to fifth students (second-tier manufacturers) also improved, but half of their improvement came from taking extra courses in energy storage, not from doing better in their main subject (car batteries). So, second-tier manufacturers haven't really taken much of CATL's business; they've just benefited from the overall industry growth.
2. CATL's strategy: Why choose to earn less when it could earn more?
CATL has a cost advantage (it mines its own lithium) and a brand advantage (everyone recognizes its products). It could easily charge higher prices and make more money. But why has it lowered its gross profit margin by 321 basis points (about 3.2%)?
The article explains that CATL's top priority is to maintain its market share, not to maximize profits.
- Cost advantage: CATL controls a large portion of its lithium resources, with a self-sufficiency rate of 35%. When raw material prices rise, its costs increase less, giving it the leverage to lower prices and gain market share.
- Brand advantage: In consumers' minds, there are only two major battery brands: CATL and others. CATL invests heavily in advertising to maintain this perception.
- Strategy: CATL intentionally lowers its prices. Although it earns less per battery, it sells more, thus stabilizing its overall market share. This is a "trade-off of price for volume" strategy to prevent second-tier manufacturers from gaining a foothold.
💡 Plain Language: It's like a monopolistic fast-food chain that, despite having cheaper ingredients and a strong brand, lowers hamburger prices to prevent smaller competitors from growing. By selling more at lower profits, it keeps the competition at bay.
3. Where is the missing profit going? CATL's production capacity bottleneck creates opportunities for others
Even though CATL is lowering prices, its production capacity is not unlimited. The article mentions that CATL's capacity utilization rate is 94.86%, close to full capacity, while second-tier manufacturers' rates are only 65%-86%.
- CATL is controlling shipments: It may be deliberately limiting production to prevent rapid market share growth, which could lead to anti-monopoly investigations or offend car companies.
- Demand surge: Although sales of new energy vehicles have slowed down in 2026, the batteries in each vehicle are larger (for longer range). The total demand is still increasing, and CATL can't meet it all. The surplus demand is taken by second-tier manufacturers.
💡 Plain Language: Imagine CATL as a chef who can make 1000 meals a day. If the number of customers (car companies) doesn't increase much, but each customer needs more food (larger batteries), the remaining 200 meals go to smaller restaurants (second-tier manufacturers).
4. Car companies' new strategy: Direct cell supply – how they challenge CATL
This is the most interesting part of the article. Car companies have realized that buying finished battery packs from CATL is expensive and puts them at CATL's mercy. So, they've developed a new approach: purchasing battery cells directly from second-tier manufacturers and assembling the battery packs themselves.
- How it works: Car companies buy battery cells from second-tier manufacturers and assemble them into their own battery packs.
- Benefits for car companies:
- Cost savings: Battery cells account for 80% of the cost of a battery pack, and assembly accounts for 20%. Previously, car companies lost this 20% in profit and brand premium to battery manufacturers. Now, by assembling the packs themselves, they keep this profit.
- Reduced dependence: Buying cells from second-tier manufacturers eliminates the 17-week waiting time for battery delivery.
- Brand enhancement: Car companies can claim they use high-quality cells while still using CATL's technology, enhancing their brand image and safety.
💡 Plain Language: It's like buying fabric and cutting it into suits; it's more expensive and less flexible, but it saves money and allows for customization. For car companies, this means they can control the quality and cost of their batteries, which is a significant blow to CATL, as most of its profits come from the finished battery packs.
5. The future: Technology remains the same, but the landscape is changing
The article points out that there's no major breakthrough in battery technology before solid-state batteries become widespread. This means the performance difference between different battery brands is not significant.
- Past logic: CATL was unbeatable due to its technology and scale.
- Current logic: CATL is not afraid of competition from other manufacturers but is concerned about car companies manufacturing their own batteries or using direct cell supply to do so.
- Risk: If solid-state batteries or other new technologies emerge and become widely adopted, and CATL can't quickly adapt and mass-produce them, its advantage could vanish if other companies collaborate to develop these technologies.
💡 Plain Language: It's similar to the smartphone industry, where Apple (CATL) used to rely on its brand and ecosystem for profits. But now, companies like Xiaomi and Huawei (car companies) are designing and assembling their own chips, reducing Apple's profit margin and brand value.
In summary, this competition is about the reallocation of profits within the industry chain, shifting from battery manufacturers to car companies. For investors and industry insiders, understanding this logic is crucial to predicting the industry's direction after 2026.