On Tuesday evening, the Chinese lithium battery giant CATL announced its 2024 performance forecast, causing a decline in the company’s stock price on Wednesday. Data shows that this is the first revenue decline for the company since 2015, and it’s also the slowest profit growth year since 2019. Industry insiders believe that CATL’s slowing growth is inevitable as competition intensifies.
On Tuesday evening, CATL disclosed its 2024 annual performance forecast, expecting to achieve operating income of 356-366 billion yuan in 2024, a year-on-year decrease of 11.2% to 8.71%. The net profit attributable to shareholders of the listed company is projected to be 49-53 billion yuan, an increase of 11.1% to 20.1% compared to the previous year.
According to Reuters, this is the first time CATL has reported a yearly decline in revenue since it started releasing operational data in 2015, and it’s also the slowest profit growth year since 2019.
The stock market also reacted negatively to CATL’s performance forecast. On Wednesday morning, its stock price fell by 3.8%, marking the largest intraday decline since October 11, 2024. It closed at 258.0, down 2.34% in the afternoon.
CATL’s financial data for the past four years show that both revenue and profit growth rates have been declining. The operating income for each quarter of 2024 has been consistently decreasing, with a decline of 10.41%, 11.68%, and 12.48% in the first, second, and third quarters respectively, showing an expanding trend of decrease.
Automotive industry analyst Cui Yan told Huaxia Times recently that battery technology has reached a certain stage where technological iterations and advancements are not as rapid. In the face of intensifying competition, maintaining a leading position in the industry is becoming less realistic for CATL.
According to the latest data released by the China Automotive Power Battery Industry Innovation Alliance, CATL’s market share of power batteries in November 2024 reached 42.71%, but the month-on-month market share has been declining for the fourth consecutive month.
What’s more concerning is that more and more automakers are starting to develop their own power batteries, trying to gain more autonomy in the industry chain. This trend not only intensifies market competition but also weakens CATL’s bargaining power within the industry chain.
A report by Vision Auto stated that car manufacturers are not willing to leave their autonomy in the hands of CATL for long. Companies like BYD, Great Wall, NIO, Geely, BAIC, SAIC, and Changan have already begun strategizing in the power battery sector. BYD’s Blade Battery and Great Wall’s Honeycomb Energy not only serve their own needs but also offer supplies to other automakers.
Data provided by investment research platform Yiniu Net shows that CATL’s operating income and profit growth reached a peak in 2021, but the growth rate began to rapidly decline thereafter. Operating income and profit plummeted from the peak values of 159.06% and 185.34% in 2021 to -12.09% and 15.59% in the first three quarters of 2024.
On January 6th, the U.S. Department of Defense announced several Chinese tech giants, including Tencent Holdings and CATL, have been blacklisted on allegations of collaborating with the Chinese military. Following the announcement, CATL’s stock price in Shenzhen dropped by 2.8%, resulting in a market value loss of around 32.2 billion yuan ($4.4 billion).
BBC Chinese analyzed that while being on the list won’t immediately trigger U.S. sanctions, usually, major investors are asked to withdraw their investments. To attract investors, CATL is preparing to list on the Hong Kong stock exchange.