China’s CATL has unveiled a big increase in annual profits to cement its position as the world’s largest maker of electric car batteries, just days after a warning from the country’s leader Xi Jinping of the risks of success as geopolitical rifts with the west deepen.
Xi, who on Friday started a third term as China’s president, said this week that he was both “happy and worried” by CATL’s market leadership, according to the Xinhua News Agency.
“Nascent industries should . . . figure out where the risks are and avoid penetrating deep into enemy territory alone, only to be caught by others and get wiped out,” Xi said in a rare intervention.
This was interpreted as a warning that the group could be vulnerable to a reliance on raw materials from overseas at a time when tension between the US and China is interrupting global supply chains.
CATL also faces mounting competition from local rivals such as BYD as demands for greener transport grow, just as the US and EU try to promote their domestic battery industries.
Beijing phased out a long-running national subsidy for EV purchases at the beginning of this year, which has weakened demand.
In an attempt to fend off rivals, CATL has reportedly offered discounts to clients including Nio, Li Auto and Huawei in exchange for commitments the carmakers will commission the company for their battery needs.
Xi was speaking after meeting CATL chair Zeng Yuqun on the sidelines of Beijing’s annual parliamentary gathering.
CATL said in a regulatory filing on Thursday that annual net income rose 92.9 per cent to Rmb30.7bn in 2022, beating analysts’ expectations of Rmb28.8bn. Its full-year revenue surged 152 per cent to a record of Rmb328.6bn.
The company, based in the province of Fujian, in south-east China, has a wide range of western customers, including Tesla, Daimler, BMW and Volkswagen.
Ford last month said it would license technology from CATL to make lithium iron phosphate batteries at a $3.5bn plant in Michigan.
CATL also supplies Chinese EV makers including Nio, XPeng and Li Auto. It accounted for 37 per cent of global EV battery sales in the first 11 months of 2022, according to data from South Korea’s SNE Research.
Its Shenzhen-listed shares were steady on Thursday ahead of the results.
China’s sales of new energy vehicles, which include plug-in hybrids, pure battery and hydrogen-powered cars, jumped 61 per cent from a year earlier in February after a 6.3 per cent decline in January, data from the China Passenger Car Association showed.
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