CATL poised to boost lead over rivals in global battery race

The maiden annual earnings report from the world’s top EV battery maker since its Hong Kong IPO last year showed its profit significantly beat investor expectations

Key Takeaways:

• CATL reported its revenue rose 17% last year to 423.7 billion yuan
• The leading electric vehicle battery maker’s profit for the year surged 42% to 72.2 billion yuan

By Lau Chi Hang

Irrational competition in China’s domestic car sector has turned a former blue-ocean electric vehicle (EV) market into a bloody sea of red ink. But while automakers lick their wounds and struggle to stay in business, one of their key suppliers, leading EV battery maker Contemporary Amperex Technology Co. Ltd. (3750.HK; 300750.SH), or CATL, delivered an outstanding financial report this month, including fast-rising profits that easily beat market expectations.

The annual report, the first since CATL’s $4.6 billion Hong Kong listing last year, lit a fire under the company’s stock, sending it 23% higher over four trading sessions to pass the HK$600 mark. That lifted its market capitalization by nearly HK$540 billion ($69 billion) to over HK$2.8 trillion, overtaking Alibaba and HSBC to become China’s second-largest publicly traded company by market value, trailing only Tencent.

Cost controls, efficiency enhancements

So, how exactly did CATL pull off such an upside surprise? The report shows its revenue rose 17% last year to 423.7 billion yuan, while its profit grew at more than double that rate to 72.2 billion yuan, up 42% from 2024. Investors were particularly encouraged by CATL’s fourth-quarter performance, including 37% year-on-year revenue growth to 141 billion yuan ($20.4 billion). Its profit growth continued to outpace revenue gains for that period, up 57% year-on-year to 23.17 billion yuan.

Notably, the company’s selling expenses increased by only 4.84% year-on-year to 3.74 billion yuan in 2025, substantially below the revenue growth rate, reflecting CATL’s cost discipline.

Concurrently, the company also boosted its efficiency with better utilization of its capacity. Of its 772 GWh in total capacity last year, CATL’s actual output reached 748 GWh, translating to a utilization rate of 96.9%. That represented a 20-percentage-point improvement from 76.3% in 2024, showing the company’s operational efficiency was improving as it boosted its market share and gained from growing global demand.

Unstoppable battery demand

Having thrived last year when many EV makers were struggling, a big question now is whether CATL can sustain its momentum. We’ll examine that more closely by first examining the macro environment. Demand for EVs is likely to remain strong this year, driven by a global megatrend for reduced carbon emissions. Adding to that, recent U.S. and Israeli attacks on Iran have pushed oil prices to new recent highs, drawing even more attention to electric-powered vehicles and need for energy storage at solar and wind farms. As the leading maker of both power and energy storage batteries, CATL looks well positioned to benefit from rising demand for electric power both at the vehicle- and power station-levels.

In the power battery space, the adoption of new energy vehicles (NEVs) is showing no signs of slowing. Global NEV sales grew 21.5% to 21.47 million units last year, according to SNE Research, with China sales up 17.7% year-on-year to 13.88 million units, according to the China Association of Automobile Manufacturers. These figures show how NEVs continue to take demand from traditional gas-powered cars, which should sustain demand for power batteries this year.

Concurrently, a recent trend towards pure EVs featuring standard long-range configurations is also driving up demand with requirements for more battery capacity per vehicle. Last but not least, the adoption of new energy commercial vehicles is also rising steadily, with sales surging 63.7% year-on-year last year and penetration reaching 26.9%. Higher energy capacity batteries required for these commercial vehicles also plays to CATL’s strengths.

In the energy storage battery arena, newly grid-connected wind and photovoltaic (PV) installed capacity in China reached 438 GW in 2025, up 22.3% year-on-year. That boosted cumulative installed capacity for PV and wind power past coal-fired power capacity for the first time, raising demand for energy storage batteries as well. The ongoing rise of AI, with its big appetite for power, often produced and stored locally for use in data centers, will also play to CATL’s strong position in energy storage batteries.

The company’s overseas expansion is also forming another distinctive growth curve. CATL’s overseas revenue grew 17.5% last year to 129.6 billion yuan, lifting its contribution from 17.5% of total revenue in 2024 to 30.6% last year. Its gross profit from overseas operations rose 25% year-on-year to 40.76 billion yuan, raising the gross margin for CATL’s overseas business to 31.44% –much higher than the domestic gross margin of 24%.

Undeterred by lithium price volatility

A significant challenge for CATL right now is lithium carbonate, a key battery component whose price has been anything but stable over the last three years. After plummeting to around 40,000 yuan per metric ton in 2023, prices gradually rebounded, and surged as high as 180,000 yuan at the start of this year. Prices have fallen since then to around 150,000 yuan, but that still represents a substantial increase in raw material costs for battery manufacturers.

Despite that, CATL has managed to control cost pressures relatively well thus far. Beyond possessing significant pricing power that allows it to pass on costs to customers, the company, drawing on past experience with volatile prices, has become better at upstream resource integration and hedging to lower the risks of price volatility. It also expedited the approval process for resuming production at its Yichun lithium mine in China. Such measures have helped to mitigate cost pressures.

The company has also begun exploring contingencies by developing sodium-ion batteries, which are far cheaper to make and provide superior low-temperature performance, and don’t require lithium. In that direction, it has begun working with Changan Automobile to introduce vehicles powered by sodium-ion batteries. But sodium technology is still in an early phase, and will require more time to reach large-scale commercialization. CATL emphasizes that application scenarios and market penetration for sodium-ion batteries could get a rapid boost if lithium carbonate prices continue to rise and stay high.

CATL is fond of saying: “It’s one thing to make a battery, but quite another to make a good one,” reflecting confidence stemming from its position as a global leader in the space. That said, while we harbor no immediate concerns about the company over the next year or two, the never-ending pace of change and renewal in the tech world means that no fortress is impregnable for long.

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