Chinese battery giant CATL posts solid second-quarter profit on strong electric vehicle sales

People walk past the R&D center of Contemporary Amperex Technology Ltd (CATL) in Ningde, Fujian province, China December 16, 2016. REUTERS/Jake Spring

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SHANGHAI, Aug 24 (Reuters) – CATL (300750.SZ), the world’s largest maker of electric vehicle (EV) batteries, more than doubled its profit in the second quarter as Chinese authorities rolled out incentives to boost EV sales to cushion the impact of lockdowns during the period.

CATL, whose customers include Tesla (TSLA.O), Volkswagen and BMW (BMWG.DE), posted a net profit of 6.68 billion yuan ($974.61 million) from April to June, according to the Reuters calculations based on company filings, up 164% from a year ago.

Revenue also jumped to 64.29 billion yuan in the three-month period from 24.91 billion yuan a year ago, according to Reuters calculations.

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The company said a COVID outbreak during the period, which included shutdowns in several cities including Shanghai, had some impact on its domestic market. However, demand remained strong as local authorities introduced incentives to promote electric vehicle sales and companies launched new models.

Growth in electric vehicle sales bucked a general trend of weaker auto sales in key markets of China, Europe and the United States, which have been hit by COVID and the issues. supply chain, CATL said.

In China, sales of electric vehicles jumped 120% in the first half, while overall vehicle sales fell 6.6%, according to the China Association of Automobile Manufacturers.

Rising metal prices, particularly lithium, however, weighed on CATL’s profit margin on batteries for electric vehicles, which fell to 15.04% from 22% at the end of 2021.

CATL said it has taken steps including signing long-term contracts with suppliers, recycling materials and negotiating a dynamic battery pricing system with automakers to ease rising cost pressure.

The company is also accelerating its expansion into overseas markets with contracts to supply batteries to customers including Mercedes-Benz and BMW in Europe and Ford (FN) in the United States, where government incentives are driving demand for electric vehicles.

It announced earlier this month that it would build a $7.6 billion battery factory in Hungary, the largest in Europe to date. Read more

CATL’s market share in the global electric vehicle battery market reached 34.8% in the first half, extending its lead with an increase of 6.2 percentage points from a year ago, according to the data. from SNE Research.

South Korea’s LG Energy Solution (373220.KS), which saw a 73% drop in second-quarter profits, followed CATL with a 14.4% share. Read more

($1 = 6.8540 Chinese yuan renminbi)

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Reporting by Zhang Yan and Brenda Goh; Editing by Jamie Freed

Our standards: The Thomson Reuters Trust Principles.

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