Shares of Chinese battery giant CATL plunged on Oct. 21 after the world’s largest electric-vehicle battery maker reported that profit growth had slowed sharply despite a surge in revenue.
CATL’s Hong Kong-listed shares closed at HK$364.80 (about $47), down 11.4 percent following a 6.6 percent decline the previous trading day. Its Shenzhen-listed shares fell 12 percent to 227.90 yuan (about $34).
Third-quarter revenue rose 58.6 percent from a year earlier to 165.2 billion yuan (about $22.8 billion), while net profit attributable to shareholders increased 14.5 percent to 21.25 billion yuan (about $3.2 billion). Profit growth had reached 36.5 percent in the preceding quarter.
CATL’s performance matters beyond China. The company is expanding its global manufacturing business, and its technology is used at a Ford-owned battery factory in Michigan—an arrangement that has drawn national security objections from the U.S. transportation secretary.
Rising Costs and New Taxes
CATL’s costs have risen faster than its revenue. During the first nine months of 2026, its cost of sales increased 61.6 percent, compared with revenue growth of 56.2 percent.
After direct production costs, CATL retained 22.7 percent of revenue as gross profit, down from 25.3 percent a year earlier. The figures do not establish how much of the decline resulted from battery prices, product mix, or other costs.
Management told investors on Oct. 20 that changes in profitability per battery unit partly reflected its product mix and two Chinese tax measures. The company said it was discussing with customers how to share the additional costs.
China resumed collecting a consumption tax on specified batteries in September at a rate of 2 percent, scheduled to rise to 4 percent in September 2027.
Beijing also reduced a tax rebate available on certain battery exports from 9 percent to 6 percent in April. The remaining rebate is scheduled to end in January 2027. Qualifying exports retain separate consumption-tax relief.
Rivals Gain Ground in China
CATL remains China’s largest EV battery supplier, but competitors have narrowed the gap in recent months.
Its share of China’s monthly installed vehicle-battery capacity fell from 49.8 percent in January to 40.9 percent in September, according to figures from the China Automotive Battery Innovation Alliance. BYD’s monthly share increased from 17.4 percent to 21.1 percent.
Automakers are also developing alternatives. Li Auto, a prominent Chinese electric vehicle manufacturer, announced in September that new orders for its MEGA electric minivan would switch from CATL battery cells to internally developed cells, with deliveries expected to begin in November. The announcement did not amount to a complete break with CATL.
Global Expansion Continues
Outside China, CATL’s position has strengthened.
Its share of installed EV battery capacity in markets outside China rose from 29 percent to 33.7 percent during the first eight months of 2026, according to South Korea-based SNE Research. Its worldwide share, including China, increased from 37.7 percent to 39.4 percent.
Overseas sales accounted for 31.5 percent of CATL’s total revenue in the first half of 2026, generating 87.1 billion yuan (about $13 billion), according to its half-year report. The gross profit margin on overseas sales was 30 percent, compared with 21.2 percent on domestic sales. The figures include exports from China, not just production at overseas factories.
CATL is expanding through different manufacturing and commercial arrangements.
In Hungary, it began trial battery-cell production in September at its Debrecen plant. In Spain, CATL and Stellantis—the company behind Chrysler, Jeep, Fiat, and Peugeot—are constructing a jointly owned battery factory backed by planned investment of up to 4.1 billion euros (about $4.8 billion).
Its U.S. relationship with Ford is different. Ford owns and operates BlueOval Battery Park Michigan in Marshall, using licensed CATL technology to produce lithium-iron-phosphate batteries.
Ford said in June that employees were assembling cells ahead of commercial shipments. In September, the automaker described the facility as producing batteries with American workers.
US Security Concerns
The Pentagon placed CATL on its Section 1260H list of Chinese military companies in January 2025 and retained the company on its updated list published in June 2026.
CATL disputes the designation and denies military-related business. The listing restricts certain Defense Department contracts but does not impose a blanket ban on private commercial transactions.
On Sept. 8, Transportation Secretary Sean Duffy urged Ford to cut ties with major Chinese companies, specifically criticizing its use of CATL technology at the Michigan factory.
Duffy said that dependence on such technology raised concerns about national security, supply chain independence, and U.S. manufacturing.
Ford rejected the criticism that day, emphasizing that CATL neither owns nor jointly operates the factory.
“The CATL arrangement is a limited technology-licensing and services agreement, not a joint venture or foreign-owned manufacturing operation,” Ford said.
The automaker added: “Ford owns the plant, controls the operation and employs the workforce.”
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