Type to search

Xi’s Remarks on CATL ‘a Warning to Chinese EV Battery Makers’

Xi Jinping’s comment that he was “both pleased and concerned” about CATL’s EV battery market dominance has prompted industry executives to brace for government scrutiny

The logo of Chinese battery maker CATL is seen among a display of batteries at an exhibition in Beijing, China
Since last year, CATL's customers have complained about its market position. Photo: Reuters


Xi Jinping’s remark this week that he was “both pleased and concerned” about CATL’s market dominance have put Chinese electric vehicle (EV) battery makers on notice.

Three battery industry executives – including two at CATL – and two people close to regulators working with the industry said they understood Xi’s remarks as a warning to both the company and the wider battery industry.

They said it was a caution to be ready to throttle back expansion to keep the current boom from collapsing in a bust of overcapacity.


Also on AF: China’s Xi Admits Mixed Feelings on CATL’s EV Battery Success


“Pressure is being imposed on all parties,” one of the sources said, adding that “even if the government steps on the brake, CATL’s position within the industry won’t be shaken”.

Xi was quoted by Xinhua as saying regulation had a place to ensure that emerging industries like battery production developed in a “steady and prudent manner” to avoid “a boom and a headlong rush that would dissipate in the end”.

The Chinese president has in recent months voiced support for private businesses to drive growth. But executives in a range of sectors have been watching how and whether those comments will translate into action after a two-year crackdown on industries from education to technology.


Pushback against CATL’s pricing

While there has been no indication CATL is being targeted by regulators, it has faced pushback from Chinese automakers who have complained about its pricing power in the world’s largest EV market.

In July, at a session attended by hundreds, including industry and local government officials, the chairman of state-owned Guangzhou Automobile Group Zeng Qinghong shocked the crowd by taking a shot at CATL’s pricing.

“With batteries now taking up 60% of the cost of each vehicle, how am I not actually working for CATL?” he asked.

Some Chinese EV battery makers like Xpeng and Nio, are even finding alternatives to CATL.

Privately, some auto executives, who ask not to be named because of ongoing ties to CATL, have echoed the criticism made by GAC’s Zeng.

CATL’s deal to license its battery technology for production at a plant run by Ford in the US also faces potential scrutiny and pushback in the United States and China as EV industry competition between the two nations intensifies.


Excess capacity warning

Xi’s remarks, made in response to a presentation by CATL’s chairman Robin Zeng on the sidelines of China’s annual parliament on Monday, showed CATL has drawn the attention of top Chinese officials.

Since last year, CATL’s customers have complained about its market position and the company itself has warned about the risks of the industry expanding too quickly.

Zeng told investors in May that the recent wave of investment worth billions of dollars in battery production could leave excess capacity as technology evolves. The company, citing supply deals with BMW, Daimler, VW, Ford and Hyundai, told analysts and investors this week that it had been cautious.

“We will adjust capacity construction according to timely evaluations of the market demand,” the company’s executives told analysts after it released its annual earnings on Thursday.


Speedbump for EV battery sector

Government scrutiny of CATL and its smaller rivals, which represent 60% of global battery supply, would mark a speedbump for an industry that has been more accustomed to benefitting from subsidies.

Ningde, Fujian-based CATL, which is expanding in Germany and the United States, controls 37% of the global battery market alone, more than the next three suppliers combined. Its cell-to-pack technology has provided automakers like Tesla with less-expensive iron phosphate lithium-ion batteries.

Consultant Rystad Energy estimates that battery production capacity in China will reach 1,338 gigawatt hours (GWh) by year end, up 23%. CATL alone has 542 GWh of capacity online or under construction, enough to power the equivalent of more than 7 million Model Ys.

But EV sales in China have started to slow, prompting CATL to offer discounts to smaller EV makers in China in February in exchange for locking in future orders.


  • Reuters, with additional editing by Vishakha Saxena


Also read:

China Battery Firm CATL Seen Eyeing $5bn Swiss Listing Boost

US Senator Wants Review of Ford Deal With China’s CATL

China’s CATL to Help Tap Into Bolivia’s Lithium Riches

China’s Mining Probe Set to Cut World Lithium Supply by 13%

CATL Developing Condensed Matter EV Batteries – Pandaily



Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]


AF China Bond