CATL Q2 profit jumps, defying gloom among EV battery rivals

Contemporary Amperex Technology Co., the world’s biggest maker of electric-vehicle batteries, reported a rise in second-quarter net income, bucking the weaker-than-expected performance from top rival LG Energy Solution.

For the three months ended June, profit rose 13 percent to 12.35 billion yuan ($1.7 billion), according to Bloomberg News calculations, beating analyst estimates. Net income for the first half increased 10 percent to 22.9 billion yuan, according to a Shenzhen stock exchange filing Friday.

A key Tesla Inc. supplier, CATL maintains a clear lead in battery-making globally. Its market share rose to 37.5 percent in May, 2.3 percentage points higher year-on-year, according to SNE Research data. Within China, the biggest EV market in the world, CATL’s share stands at 45 percent, China Automotive Battery Innovation Alliance data show.

The Ningde, Fujian-based company’s shares closed 0.9% higher in Shenzhen on July 26, pushing gains to 16 percent this year. The Bloomberg Electric Vehicle Price Return Index, which includes EV makers, battery manufacturers and other parts suppliers, is down 25 percent over the same period.

Tumbling costs of the raw materials that go into batteries have pushed cell prices lower, sparking a new price war among industry players. CATL revenue in the second quarter fell 13 percent to 87 billion yuan. First-half revenue posted a 12 percent fall to 166.8 billion yuan.

CATL’s scale and vertical integration have put it in a better position to compete on cost and cut battery prices.

While its business growth and performance remains robust, No. 3 player LG Energy has struggled, on July 24 slashing its annual sales target. The South Korean battery maker posted a 23.7 billion won ($17 million) second quarter net loss, compared to analyst estimates of a 13 billion won profit.

Demand for EVs is slowing globally, but particularly in the U.S. and Europe, hurting legacy automakers like Volkswagen Group, Mercedes-Benz Group and General Motors Co., which CATL counts as big customers.

Porsche became one of the latest brands to abandon its EV sales targets, while Ford Motor Co. has redirected EV investments into bolstering its profitable combustion engine pickup truck.

Ford has a licensing agreement with CATL to make low-cost lithium ion batteries by 2026 at its plant in Michigan using CATL technology, although there have been some geopolitical concerns over that relationship.