Tesla battery supplier CATL sees profits soar amid global EV boom, rival BYD collapses | Investor’s Business Daily

China’s CATL beat annual earnings expectations on the back of a strong fourth quarter. The company, a leading supplier of batteries to Tesla and others, cited global demand for electric vehicles.


Contemporary Amperex Technology, or CATL, revealed in a regulatory filing in China on Thursday that its net income rose 92.9% to 30.72 billion renminbi ($4.4 billion) in 2022. That beat analysts’ expectations of RMB 28.8 billion.

Full-year revenue rose 152% to a record RMB 328.6 billion ($47.3 billion), in line with estimates.

For the fourth quarter, CATL reported revenue of 118.25 billion RMB ($16.98 billion). That represented a 107.5% year-over-year increase and a 21.4% increase from the third quarter.

Net profit in the fourth quarter was RMB 13.14 billion, up 60.6% from a year ago and up 39.5% from the third quarter.

CATL’s gross margin improved to 22.6% in Q4 after declining in Q1 and Q3 due to the increase in battery raw material prices.

“The global market demand for new energy vehicles continues to grow rapidly leading to a rapid increase in the scale of the battery industry,” said CATL.

The world’s largest EV batter maker

The company also supplies various Western car manufacturers Tesla (TSLA), inclusive Mercedes-Benz (DAVIF), BMW (BMWYY) and Volkswagen (VWAGY).

In February, ford (F) announced it will license technology from CATL to make lithium iron phosphate (LFP) batteries at a $3.5 billion plant in Michigan.

CATL also supplies Chinese EV manufacturers, including the US-listed startups Nio (NIO), XPeng (XPEV) and li car (LI).

Based in Fujian province, the company is the world’s largest EV battery manufacturer, accounting for 37% of global sales in the first 11 months of 2022, according to South Korea’s SNE Research.

from China BYD (BYDFF) and South Korean LG Energy Solution shared second place with a share of 13.6% each.

Chinese EV stocks

Shares in CATL rose 2.2% on the Shenzhen stock exchange on Friday. Chinese EV stocks sold off en masse as a round of hefty price cuts fueled overcapacity fears.

CATL is a top holding company in the KraneShares Electric Vehicles & Future Mobility Index ETF (KARS).

BYD shares, which are traded over the counter in the US, plunged 5.4% to 25.82 on Friday.

US-listed shares of Li Auto rose higher on Friday. Nio and Xpeng each fell about 2%.

Tesla shares rose 0.8%, nearly 174, after a four-day decline.

On Friday, CATL confirmed it is negotiating new pricing with EV customers.

The company already owns some mineral resources. But it does not want to reap windfall profits, the management said, according to local media reports.

Previous reports suggested it is offering discounted battery prices to select customers including Nio, Li Auto and Huawei in a bid to fend off increasing competition, including from BYD.

Sales of so-called new energy vehicles (NEV), including all-electric, hybrid and hydrogen-powered vehicles, rebounded in February after a seasonally weak January due to the Chinese New Year holiday.

NEV sales in China will more than double by 2022.


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