- CATL’s Hong Kong shares slid to HK$546.5 on Sept. 8, marking a six‑month low as automakers accelerate insourcing of battery development to cut costs and diversify suppliers.
- Li Auto will roll out self‑developed 5C ternary batteries across its lineup from H2 2026 after initial use in MEGA and i9, while Xiaomi formed a joint Longjia Battery project with CALB and Sunwoda.
- Direct competition now targets passenger EV manufacturers like Li Auto and Xiaomi, with execution risks in timing of in‑house production, supply integration, and margin erosion from prolonged price cuts.
September 8, shares of CATL listed in Hong Kong fell more than 4% intraday, hitting a low of HK$546.5 and marking the stock’s lowest level since March.
The market has been watching the decline closely. Beyond broader sentiment, the move also reflects growing concerns over major automakers accelerating in-house battery development and reducing their reliance on CATL.
On September 7, Li Auto announced its latest self-developed battery plan, saying its own batteries will gradually roll out across its entire lineup from the second half of 2026. The technology has already entered the Li L8, Li L6 and Li i8 models.
The upcoming MEGA and i9 will initially use CATL’s 5C ternary lithium batteries. Once Li Auto’s own battery production is ready, these models will fully switch to Li Auto’s self-developed 5C ternary lithium battery system.
Meanwhile, Xiaomi Auto is also expanding its battery supply chain. On September 4, the company announced a strategic partnership with CALB and Sunwoda for the “Xiaomi Longjia Battery” project.
Under the agreement, Xiaomi Auto will define the Longjia Battery’s product specifications, lead battery pack design and development, participate in cell design, and oversee quality management across raw materials, cell production and pack integration.
Previously, Xiaomi SU7 and YU7 models mainly relied on battery suppliers including CATL. Bringing in additional suppliers not only diversifies Xiaomi’s battery sources but also highlights its efforts to lower costs through a more flexible supply chain.
The push to reduce dependence on CATL comes as competition in China’s auto market intensifies. Prolonged price cuts have significantly squeezed automakers’ profit margins.
From January to July 2026, China’s auto industry generated RMB 6.08 trillion ($906.0 billion) in revenue, up 2.7% YoY. However, total profit fell 20% YoY to RMB 216.2 billion ($32.2 billion), with the industry’s profit margin dropping to 3.6%, well below the 6.5% average for downstream industrial companies.
By comparison, CATL ranked first among China’s vehicle and auto parts companies on the 2026 Fortune Global 500 list with a 17.0% profit margin. Most automakers posted margins below 5% during the same period. FAW, SAIC, Dongfeng and BAIC all reported margins below 2%, while Geely and GAC recorded margins of -1.0% and -1.3%, respectively.
Power batteries account for 30% to 40% of the total cost of a battery electric vehicle, making them the largest single cost component. As automaker margins fall into the single digits, battery costs have become a key area where manufacturers are seeking savings.
As a result, more automakers are moving into battery manufacturing through in-house development or joint ventures. Besides Xiaomi Auto and Li Auto, companies including FAW, GAC, Chery and Geely have all invested in battery projects, with some already reaching mass production.
For CATL, automakers’ push into battery development is unlikely to change its leading position in the industry. However, it signals that competition in the power battery sector is shifting from pure capacity expansion toward a broader contest over cost control, technology and supply chain management.
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