CATL's Market Share Falls Below 40%

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In the fast-evolving landscape of the electric vehicle (EV) market, CATL (Contemporary Amperex Technology Co., Limited) continues to hold its ground as the leading player in the power battery industryDespite maintaining its top position in battery installation volumes and market share, recent data reveals a notable decline in these key performance indicators, prompting a deeper examination of the forces at play.

A recent report from the China Automotive Power Battery Industry Innovation Alliance disclosed the state of the battery market for September, marking a period typically characterized by significant sales due to the "golden September and silver October" phenomenon in the automotive industry

This period historically sees a spike in vehicle purchases as consumers prepare for the autumn months, and the figures for battery installations aligned with this trend, reflecting a total of 36.4 GWh in installations—an increase both year-on-year and month-on-month.

However, amidst this positive backdrop, CATL experienced a setbackThe company installed 14.35 GWh of batteries in September, down from 15.12 GWh during the same month last year, representing a 5% declineThis downturn positions CATL as the only major battery manufacturer to see a decrease, while rivals like BYD, Ceno Energy, EVE Energy, and Guoxuan High-Tech have all recorded growth to varying degrees.

Furthermore, CATL's market share dipped to 39.41%, slipping more than 8 percentage points compared to the previous year

This is also the first instance in 2023 that CATL's market share has fallen below the crucial 40% threshold.

Industry experts suggest that this decline in market share may correlate with the decreasing sales figures from CATL's largest client, TeslaIn September, Tesla's retail sales in China fell dramatically by 43.9% year-on-year, with only 43,507 units soldThis was also a 32.7% drop compared to August's sales figures, marking Tesla as the brand with the most significant decline among the top ten new energy vehicle manufacturers for that month.

From January to September, Tesla's total sales stood at 433,700 vehicles, up by 36.4% year-on-year, although this growth rate has shown signs of slowing

Consequently, throughout the same period, CATL's share of the power battery market also decreased to 42.75%. Nonetheless, some analysts remain optimistic, predicting that as the sales of the newly updated Model 3 ramp up, CATL may see a corresponding increase in battery installations.

Interestingly, CATL is not overly reliant on its largest clientsReports over the past two years indicate that the revenue from its top three clients accounts for less than 50% of its total earningsIn contrast to BYD, which can utilize its battery production for its own vehicles, CATL must rely on orders from various automotive manufacturers to sustain its growth in installations.

The significant decline in production capacity utilization also raises concerns for CATL

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The company reported a capacity utilization rate of only 60.5% in the first half of 2023, down from 81.25% during the same period last year, and significantly below the peak utilization of 95% they achieved in 2021. This underutilization highlights a broader issue facing the Chinese power battery industry: oversupply.

According to the Battery Alliance's data on production, sales, and installation volumes, from January to September, China's total output of power and energy storage batteries reached 533.7 GWh, with power batteries comprising approximately 92.1% of this figure (around 491.5 GWh). Notably, sales reached 425 GWh, resulting in a production-to-sales ratio of approximately 1.16. However, only 255.7 GWh (52% of production) was installed during the same period, demonstrating a gap between production capacity and actual market demand.

Despite these challenges, CATL remains committed to expanding its production capacity