[Edaily Reporter Bang Sung Hoon ] China’s CATL, the world’s largest electric vehicle battery manufacturer, reported third-quarter (July–September) earnings that fell short of market expectations. Concerns about the company’s long-term growth prospects are mounting amid intense domestic competition in China and a trend among automakers to shift away from CATL.

According to Bloomberg on the 20th (local time), CATL announced that its third-quarter net profit was 21.25 billion yuan (4.2245 trillion won), a 15% increase from a year ago. This fell significantly short of the average market forecast of 26 billion yuan (5.1688 trillion won) compiled by Bloomberg. Revenue rose 59% to 165 billion yuan (32.802 trillion won), but this figure also fell short of expectations.

CATL has long been a leader in the battery industry but is currently facing difficulties as competition in the Chinese market has intensified recently. This is due to a combination of overcapacity, policy changes, and slowing demand for automobiles. Its overseas operations also face uncertainty due to geopolitical risks with the U.S. and Europe.

CATL’s stock price on the Shenzhen Stock Exchange has plummeted by about 40% from its peak in May. Selling pressure intensified last month amid growing concerns that the so-called “de-CATLization” trend—in which some automakers are diversifying their battery suppliers—could impact the company’s earnings and production.

In fact, Xiaomi—which has traditionally used batteries from CATL and BYD—unveiled a new battery platform last month designed in collaboration with small-to-medium-sized manufacturers CALB and Xinwangda. Li Auto plans to gradually install its own in-house developed batteries in all its vehicle models.

Although China’s battery industry has grown rapidly over the past few years, authorities recently issued a warning against indiscriminate capacity expansion and excessive competition. As the growth in electric vehicle demand slows and policy support diminishes, automakers are paying closer attention to battery supplier selection and cost management.

In a report released prior to the earnings announcement, Bernstein analysts stated, “Investors will focus on revenue growth rates and profit margins per unit.” They added that the market is concerned about a slowdown in the energy storage system (ESS) sector next year and intensifying competition with small and medium-sized battery manufacturers.

CATL has previously noted that domestic orders have been fluctuating due to the battery consumption tax implemented last month. However, an executive in charge of CATL’s domestic ESS business in China explained that while some order volumes declined last month, the overall impact is expected to be limited.

CATL unveiled a new battery product for electric trucks—a growing market—and announced plans to expand its network of battery swap stations.