Behind the Sharp Drop in CATL's Stock Price: Are Automakers No Longer Wanting to Be "Employees"?
Hello everyone, I'm your financial journalist. Recently, there's been big news in the A-share and Hong Kong stock markets: the stock price of CATL (300750.SZ, 03750.HK), often referred to as the "King of Batteries," has taken a significant dive.
On September 16th, CATL's A-share price fell by 5.49% during trading, reaching a 52-week low of 299 yuan. From its peak of 468.75 yuan in May, this represents a decline of over 36%. The situation is even more dramatic for its H-share, which dropped from a high of 794.5 Hong Kong dollars in June to 486.4 Hong Kong dollars, a decrease of nearly 39%. By the end of the day, the A-share price was at 305.48 yuan, a 23.63% drop in one month, resulting in a market value reduction of 437.1 billion yuan, bringing its total market value down to approximately 1.41 trillion yuan.
Many investors might be wondering, "Isn't CATL still making money? Why has its stock price plummeted?"
The core reason for this decline isn't that CATL has stopped making profits, but rather that its customers—automakers—are starting to turn against it. It used to be that automakers couldn't do without CATL's batteries, but now they are developing their own battery technologies and looking for other suppliers to reduce their dependence on a single company.
Let me break down this situation into five key points to help you understand the underlying reasons:
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1. The Core Conflict: Automakers No Longer Want to Be Dependent on CATL
Previously, CATL was seen as the dominant player in the battery industry, with automakers eagerly seeking its products. However, the situation has changed. Automakers are now moving towards "de-CATLization"—that is, reducing their reliance on CATL.
Why are they doing this?
- High Costs: Batteries account for 30%-40% of the cost of a new electric vehicle, and this proportion is even higher for high-end, long-range models.
- Thin Profits: In the first half of 2026, the combined net profit of 15 major listed automakers was only 21.048 billion yuan, while CATL alone earned 43.284 billion yuan.
- Financial Strains: The money automakers earn from selling cars is not even enough to cover the costs of purchasing batteries. As early as 2022, some automakers complained, "Aren't we essentially working for CATL?"
To protect their profits, automakers need to find ways to reduce their dependence on CATL and take control of this major cost factor.
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2. Typical Examples: Li Auto and Xiaomi's Efforts to Reduce Dependence on CATL
Li Auto and Xiaomi are prime examples of this trend.
Li Auto: From Major Client to Self-Reliant Manufacturer
- Past: Li Auto was a major customer of CATL, using its batteries in models like the Li ONE, L Series, and MEGA. By June 2025, nearly one million Li Auto vehicles were equipped with CATL batteries, and there were no incidents of battery fires. In February this year, Li Auto was CATL's largest customer for the month.
- Current: Li Auto is taking more control:
- Joint Venture: Li Auto and Xinxingda have each invested 50% to establish a joint battery company.
- Investment: Li Auto invested 2.65 billion yuan to become the second-largest shareholder in Xinxingda Power (holding 11.17% of the shares).
- Self-Developed Batteries: The new Li L8 model now uses Xinxingda's batteries, and the high-end MEGA model will also switch to Li Auto's own 5C batteries, with deliveries expected in November.
- Result: Li Auto has moved from being CATL's top customer to an independent player with multiple suppliers.
Xiaomi Auto: Full Control over Its Own Batteries
- Past: Xiaomi's SU7 and YU7 models mainly used CATL batteries.
- Current: The newly launched PENGCHENG N70 and N90 models use Xiaomi's "Longjia" batteries.
- Key Points: Xiaomi is in charge of the product definition, quality control, battery pack design, and even the design of the battery cells, no longer relying solely on CATL.
Other Automakers Are Also Taking Action:
- Xpeng: Has introduced batteries from Zhongxin Innovation and EVE Energy.
- NIO: Brands like Lido and Firefly have started using batteries from Zhongxin Innovation, BYD Fudi, and Xinxingda.
- Huawei's Sub-brands (Ask界, Zhi界): While previously relying mainly on CATL, they have also started using batteries from Zhongxin Innovation, Guoxuan High-Tech, and Xinxingda.
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3. CATL's Solid Foundation: Strong Performance and Stable Position
Despite automakers' efforts to reduce their dependence on CATL, we shouldn't assume that CATL is in trouble. The numbers show that it remains a powerhouse:
- Strong Profitability: In the first half of 2026:
- Revenue: 276.917 billion yuan, a year-on-year increase of 54.80%.
- Net profit attributable to the parent company: 43.284 billion yuan, a year-on-year increase of 41.98%.
- Daily Profit: Approximately 239 million yuan—more than many automakers earn in a year.
- Business Structure:
- Revenue from power batteries: 192.125 billion yuan, a 46.02% increase.
- Revenue from energy storage batteries: 53.261 billion yuan, a 87.54% increase (the energy storage business is growing rapidly).
- Market Share: CATL still holds the global market share with 39.9% in the first half of 2026, leading for the ninth consecutive year.
- Domestic Market: Its share of passenger vehicle battery installations was 46.7%, up 5.6 percentage points year-on-year.
- Technological Barrier: CATL has a significant advantage in high-end electric vehicles, ultra-fast charging technologies (such as 5C and 4C batteries), and overseas markets, making it difficult for competitors to catch up in the short term.
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4. Emerging Concerns: Changes in Customer Structure and Profit Pressure
Although CATL's overall position is strong, there are some structural challenges:
- Declining Dependency on Major Customers: Li Auto's share of purchases dropped from 12.6% in February to 6.8% in June, with Geely becoming the largest customer.
- Pressure on Gross Profit Margin: Domestic market competition is fierce, and domestic automakers are pressing down on prices. Second-tier battery manufacturers like Zhongxin Innovation and Guoxuan High-Tech offer better prices, squeezing CATL's profit margins.
- Global Market Focus: CATL's future growth may rely more on expanding overseas markets rather than relying on the domestic market.
- Battle for Control in the Supply Chain: Automakers are developing their own battery technologies to gain more control over the supply chain. In the past, automakers had control over core components like engines and transmissions; now, they want to take control of batteries as well.
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5. Summary and Outlook: The Stock Price Drop is a Repricing Exercise
The drop in CATL's stock price doesn't indicate a fundamental problem with the company's performance. Instead, it reflects a shift in market expectations. The traditional monopoly is breaking down as automakers seek diversification to reduce costs and gain more bargaining power. The industry is moving towards greater competition and more dispersed profits.
Short-term Challenges: CATL may face a decline in domestic market share and pressure on gross profit margins, leading to stock price volatility. However, its strengths in ultra-fast charging, high-end batteries, and overseas markets will help it maintain its leading position.
Advice for Investors:
- Don't panic or rush to buy low.
- Pay attention to CATL's growth in overseas markets and changes in its gross profit margins.
- Monitor the progress of automakers like Li Auto and Xiaomi in developing their own battery technologies and whether they can truly replace CATL on a large scale.
- Understand that the trend of de-CATLization is a long-term shift, and CATL is transitioning from a monopoly to a leader, which may involve some challenges.
In summary, CATL is not "dead," but its era of high profits may be coming to an end. Automakers are seeking independence, and CATL needs to adapt to a new, more competitive landscape.