In Depth: Can CATL Stay Ahead?

CATL, the world’s largest electric-vehicle (EV) battery maker, is looking for new growth drivers to stay ahead of competitors and address challenges posed by automakers making their own batteries, lack of product differentiation, price wars, and emerging technologies like solid-state batteries [para. 1],[para. 2].

Despite potential obstacles, CATL increased its global battery market share by 2.1 percentage points to 37.8% in the first half of the year, as per SNE Research. Domestically, its market share grew nearly 3 percentage points to 46.4%, according to the China Automotive Battery Innovation Alliance (CABIA) [para. 3]. However, the growing competition from second- and third-tier manufacturers is starting to impact CATL’s capacity utilization rate [para. 4].

CATL is diversifying by launching new products like its superfast-charging Shenxing battery and expanding into new areas such as battery swapping, electric ships, and planes. The firm aims to raise its profile among consumers through "CATL Inside" stickers, outdoor advertising, UEFA European Championship sponsorship, and an experience store in Chengdu [para. 6][para. 7][para. 8]. The strategy is similar to Intel Corp.'s “Intel Inside” campaign, aimed at making CATL a household name [para. 9].

Last year, a major price war began in the EV sector. CATL was initially able to use its market position to resist price cuts, but as competition increased, its capacity utilization rate fell to 70.5% in 2023 and further to 65.3% in the first half of this year [para. 11]. Vehicle manufacturers like Zhejiang Geely Holding and BYD are also developing advanced batteries, increasing competition [para. 13][para. 14].

The rise of plug-in hybrids, which surged 85.2% in sales in the first half of 2024 compared to an 11.6% increase in pure EVs, further pressures CATL. Plug-in hybrids require only 44% of the battery capacity needed by pure EVs, which affects demand [para. 17][para. 18]. New technologies like Tesla's and LG Energy Solution's dry electrode manufacturing process may disrupt the market by reducing costs and increasing energy density [para. 20].

There are also significant governmental and investor interests in solid-state batteries, with China offering substantial subsidies to develop the technology. CATL plans to start small-scale production of solid-state batteries in 2027 [para. 21][para. 22].

In the quest for growth, CATL has prioritized battery swapping, launching Evogo in early 2022 in collaboration with companies like BAIC Motor, Didi Global, and GAC Aion New Energy Automobile [para. 29]. The firm is also focusing on the development of skateboard chassis, a technology that integrates batteries into vehicle chassis, streamlining the manufacturing process [para. 34],[para. 35]. The first vehicle featuring CATL's skateboard chassis technology is expected to be released by the end of the year [para. 37].

Expanding its scope, CATL is also innovating in electric boats and aircraft through subsidiaries established in 2022 and 2023, respectively [para. 43]. Additionally, escalating U.S. tariffs have prompted CATL to adopt a technology licensing model for its global expansion, with less intense regulatory pressures in Europe. CATL's market share in Europe reached 35%, but competition from South Korean firms like LG Energy Solution poses a challenge [para. 46].

In summary, while CATL maintains a strong market position, it faces increasing competition, evolving technologies, and regulatory challenges. The company's diversification and strategic initiatives in new markets and technologies aim to consolidate its lead in the global EV battery market [para. 49].