CATL's shares have experienced a notable decline, with its Hong Kong-listed stock falling as much as 4% intraday to HK$546.5 on September 8th, marking a six-month low. This drop reflects growing concerns among investors as major automakers like Li Auto and Xiaomi accelerate their in-house battery development and expand partnerships with other battery suppliers, aiming to reduce their reliance on CATL and control costs in a competitive auto market. Li Auto, for instance, announced its self-developed batteries would gradually roll out across its entire lineup from the second half of 2026, impacting models like the Li L8, L6, and i8, and eventually replacing CATL's batteries in the MEGA and i9.
Adding to the downward pressure, mainland media reported a tightening in regulatory approvals for new power battery and energy storage battery capacity projects since the second half of the year. This effectively pauses new capacity applications, as industry estimates show planned energy storage cell expansion has already exceeded 800GWh, with total planned capacity approaching 2TWh, far exceeding global demand. This regulatory shift, aimed at preventing overcapacity, is seen as leading to consolidation, as evidenced by CATL's approved acquisition of equity in Chongqing Yaoning New Energy, a firm linked to Geely Automobile Holdings Ltd.
Economic headwinds weighing on China's shares also contributed to CATL's poor performance, with the stock falling 5% to HK$521.5 on September 15th and 6% by September 15th, according to different reports. The broader Chinese auto industry is facing significant profit pressure, with an industry profit margin of only 3.6% from January to July 2026, compared to CATL's 17.0% profit margin. Automakers view battery costs, which constitute 30% to 40% of an EV's total cost, as a crucial area for savings, further fueling their push into in-house battery production.
Investors are also concerned about CATL's unfulfilled share repurchase plan. Despite announcing a substantial repurchase plan of 200 billion to 400 billion yuan with a maximum price of 573 yuan per share in July, the company had not implemented any repurchases by the end of August. This delay has been interpreted by some investors as a lack of confidence, exacerbating the emotional sell-off. While CATL maintains a leading global market share of 39.9% in power battery installations as of the first half of 2026, its power battery and energy storage battery system businesses are facing thinning profit margins despite increased revenue.
