Chinese EV Battery Manufacturer CATL Foresees up to 48% Profit Surge in 2023 While Sustaining Its Substantial Lead Over Competitors

Chinese EV Battery Maker’s Profit Expectations for 2023

The company, based in Ningde in southeastern Fujian province, said in a filing to the Shenzhen Stock Exchange on Tuesday evening that earnings for last year would reach 42.5 billion yuan (US$6 billion) to 45.5 billion yuan, up by between 38.3 per cent and 48.1 per cent.

Fourth-Quarter Profit Growth Details

Its fourth-quarter profit, which is derived by comparing the full-year earnings estimate and its nine-month results published in October, would be 11.35 billion yuan to 14.35 billion yuan, an increase of 8.9 per cent to 37.6 per cent from the previous three months.

Factors Contributing to Profitability

“Rising sales volume in tandem with lower production costs boosted its profitability in the fourth quarter,” Soochow Securities said in a research note on Wednesday. “CATL has maintained its advantage over smaller domestic rivals.”

Challenges from Currency Volatility

The EV battery maker reported an unexpected quarter-on-quarter profit drop of 4.3 per cent in the three months ending September 30, owing to a currency exchange loss caused by a volatile Chinese yuan.

Global Market Share and International Sales

CATL, which had a 37.4 per cent share of the global market with an output of 233.4 gigawatt-hours (GWh) of batteries in the first 11 months of 2023, sold 40 per cent of its products outside mainland China.

Global Market Rivalry and Electric Vehicle Battery Capacity

Technically, 1GWh of batteries is enough to power about 13,000 electric cars with a driving range of 500 kilometres.

Competition Among Global EV Battery Manufacturers

According to Seoul-based SNE Research, BYD, the world’s largest electric car builder, was the nearest rival to CATL, with a share of 15.7 per cent of the global market between January and November last year.

The Prevalence of Electric Vehicles and Future Growth Projections

In the world’s largest EV market, about two out of every five new cars taking to the streets are powered by battery. However, the sales momentum of battery-powered vehicles in mainland China will slow to 20 per cent this year, compared with 37 per cent growth recorded in 2023, according to a forecast by Fitch Ratings in November. Deliveries of electric cars in the mainland account for about 60 per cent of the global total.

Innovation and Development of Fast-Charging Batteries

CATL aims to start delivering the world’s fastest-charging electric-car battery before the end of the first quarter, a technological breakthrough that is likely to accelerate the uptake of battery-powered cars. The Shenxing battery can offer a 400km driving range after just 10 minutes of charging and reach 100 per cent capacity in just 15 minutes as a result of its so-called 4C charging capabilities.

Strategic Partnerships in the EV Industry

Last week, CATL announced it had formed a joint venture with ride-hailing powerhouse Didi to focus on battery-swapping technology, which allows EV owners to quickly exchange a spent battery pack for a fully charged one.