Contemporary Amperex Technology Co. Ltd. (CATL) has seen its market value drop by $100 billion in just four months, with its Shenzhen-listed shares sliding 34% from their record high in May. This rout follows broader weakness in the electric vehicle and battery sectors, driven by investor concerns over profitability and demand. The selloff intensified this week due to worries about CATL's outlook amid excess capacity and fierce competition in the domestic market.
Despite the significant market decline, CATL bulls are undeterred, emphasizing the company's strong technological position. They argue that this technological "moat" makes CATL a clear long-term winner in the ongoing global energy transition, dismissing fears of "De-CATLization." This sentiment suggests that the current market volatility is a short-term issue, and the company's fundamental strengths will ultimately prevail.
The decline in CATL's share price was further exacerbated by speculation about potential production cuts in September and a possible reduction in third-quarter unit net profit. Additionally, concerns are mounting that automakers are diversifying their battery suppliers, moving away from relying solely on CATL. This trend is evident with companies like Li Auto and Xiaomi, which are increasingly spreading their battery orders among rivals such as Sunwoda and CALB. However, CATL still held a dominant 41.45% share of China's power battery installations in August, despite a slight dip from July.
