Tesla, BMW EV battery supplier CATL continues to expand its businesses globally. There is robust growth in Q2 2022 earnings, doubling its profits. The momentum gained increases the company’s need to lock up EV battery materials in the coming years.
Automakers are scrambling to lock up deals with EV battery makers to ensure they have the raw materials to ramp production and hit their electric vehicle targets. For example, Volkswagen and Mercedes-Benz yesterday announced deals to source minerals from Canada. Meanwhile, CATL is a critical supplier for leading EV makers like Tesla, BMW, and Volkswagen, to name a few. The battery supplier has now ranked number 1 in EV battery usage for the fifth straight year.
Despite concerns over economic growth in China, CATL’s earnings continue surging. Lockdowns in China due to Covid caused significant supply chain issues as factories and plants were shut down. EV makers in China are feeling the pressure this year as a result. For example, XPeng, a leading EV producer in China, reported 7,000 fewer deliveries in the second quarter than its peak of 41,751 in Q4 2021.
Growth
The success is fueling CATL’s growth outside of China. The company first announced a $1.96 billion battery factory in Germany (to support german automakers ramping EV production), with an 8 GWh battery capacity annually. Then, earlier this month, the battery giant said it would invest $7.4 billion into a 100 GWh battery plant in Hungary, Europe’s largest. The new investments may seem extreme, but as you will see from CATL’s Q2 earnings, the company is growing rapidly. Furthermore, more battery capacity will be needed to support the soaring demand for EVs.
Even though global economic conditions are crumbling due to soaring inflation and geopolitical tension, EV sales continue picking up.
In China, EV sales rose 120% in the first half of 2022, according to the China Association of Automobile Manufacturers. In fact, most automakers are seeing an uptick in EV sales this year. That being said, CATL continues controlling the EV battery market with 34.8% of the share in the first half of 2022, up from 28.6% last year. South Korean LG Energy Solution, which also supplies major EV makers like Tesla, GM, and Ford, earned second. However, CATL seems to be weathering the storm better than its counterpart. For one thing, CATL’s revenue rose a massive 158% in Q2 from last year, reaching 64.29 billion yuan (about $9.36 billion). CATL did feel some pressure on margins as battery metal prices remain elevated. Lithium prices are up 343% in the past year and look to be approaching record highs. Despite this, CATL’s net profit grew 164%, reaching over $974 million in its Q2 earnings.
