CATL Profit Rises, Defying Gloom Among Rival EV Battery Makers

(Bloomberg) -- 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 Ltd.

For the three months ended June, profit rose 13.4% to 12.35 billion yuan ($1.7 billion), according to Bloomberg News calculations, beating analyst estimates. Net income for the first half increased 10.4% 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% 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%, China Automotive Battery Innovation Alliance data show.

The Ningde, Fujian-based company’s shares closed 0.9% higher in Shenzhen on Friday, taking gains to 16% this year. The Bloomberg Electric Vehicle Price Return Index, which includes EV makers, battery manufacturers and other parts suppliers, is down 25.3% 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 13.2% to 87 billion yuan. The first half performance posted a 12% 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 performance remains robust, No. 3 player LG Energy has struggled, on Wednesday 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 US the Europe, hurting legacy automakers like Volkswagen AG, Mercedes-Benz Group AG and General Motors Co., which CATL counts as big customers.

Porsche AG became one of the latest auto brands to abandon its EV sales targets, while Ford Motor Co. has redirected EV investments into bolstering its profitable combustion engine pick-up 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.

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