Over just four months, battery titan Contemporary Amperex Technology Co., Limited (CATL), often dubbed the "King of Batteries," has seen its share price retreat by roughly one-third. On September 9th, CATL's stock closed at 336.84 yuan per share, bringing its total market capitalization to approximately 1.56 trillion yuan. The previous trading day, the company's share price even dipped to 326 yuan per share, marking a new annual low.

Benefiting from sustained growth in demand for power batteries and energy storage, CATL's share price climbed steadily at the start of the year, hitting an all-time high of 467.06 yuan per share in May, which also pushed its total market value past the 2-trillion-yuan mark. Compared to that peak, the stock has currently fallen nearly 30%, and the company's market capitalization has evaporated by around 500 billion yuan.

Behind this price correction, the new energy vehicle (NEV) makers, once joked to be "working for CATL," are actively reducing their dependence on the battery supplier. Several automakers, including Li Auto and Xiaomi, are bringing in new power battery suppliers. Meanwhile, CATL's lack of substantial action on its officially announced share buyback, coupled with the stock's decline in recent months, has intensified investor disappointment.

In July, CATL announced an ambitious buyback plan, intending to repurchase between no less than 20 billion yuan and no more than 40 billion yuan of its A-shares, with the aim of cancelling these shares to reduce its total share capital. This news initially sparked excitement among retail investors, with many praising CATL on platforms like Guba and Xueqiu for being "responsible." However, as of August 31st, over a month after the announcement, CATL had still not initiated the buyback, leading to growing complaints from investors on communication platforms.

It's worth noting that CATL's previous round of buyback also stirred controversy among its investor base. In April 2025, CATL announced plans to spend between 4 billion and 8 billion yuan to repurchase its shares. By April of this year, when that repurchase period ended, CATL's final buyback amount was 4.386 billion yuan, only slightly above the lower limit. Furthermore, those shares were designated for employee stock incentives rather than cancellation, thus not reducing the company's total share capital.

With downstream automakers actively seeking alternatives and investor sentiment reaching a boiling point, is it time to re-evaluate the "King of Batteries" valuation?

Automakers "Abandoning" CATL

On the evening of September 8th, Li Auto published an update on its official WeChat account regarding the progress of its self-developed batteries across its vehicle lineup. Li Auto stated that its self-developed batteries are now installed in models like the Li L8, Li L6, and Li i8. The new-generation Li MEGA and Li i9 will initially use a 5C ternary lithium battery from CATL but will later switch to Li Auto's own 5C ternary lithium battery. The 2026 Li i6, slated for launch in Q4 of this year, will not only feature Li Auto's self-developed 5C battery but also the company's proprietary Mach chip.

According to the latest announcement from the Ministry of Industry and Information Technology, the cell manufacturers for the 2026 Li i6 are Sunwoda Power and CALB Group, while the battery pack assembly is handled by Shandong Li Auto Battery Co., Ltd., a joint venture between Li Auto and Sunwoda Power. Li Auto has further strengthened its ties with Sunwoda Power through investment. On September 4th, Li Auto invested a substantial 2.65 billion yuan in Sunwoda Power, becoming its second-largest shareholder with an 11.17% stake.

Xiaomi is also enhancing the autonomy of its power battery supply chain. On September 4th, Xiaomi, together with CALB Group and Sunwoda Power, officially announced a strategic cooperation and unveiled Xiaomi's "Longjia" battery. Xiaomi stated that its upcoming model, Xiaomi Pengcheng, will be exclusively equipped with the Xiaomi Longjia battery. According to media reports, CATL previously supplied over 80% of batteries for Xiaomi's delivered vehicles.

These developments undoubtedly signal that some NEV makers are progressively distancing themselves from their former core supplier, CATL. Li Auto's relationship with CATL dates back to its founding in 2015. From the Li ONE to the L-series flagship SUVs and the all-electric MPV Li MEGA, CATL has consistently provided support for Li Auto's vehicles. As recently as September 2025, the two companies signed a comprehensive five-year strategic cooperation agreement covering areas like battery safety and ultra-fast charging technology.

However, for Li Auto, which is grappling with performance headwinds, ensuring supply chain security and achieving cost reduction and efficiency gains appear to be its most pressing current needs. In 2024, Li Auto launched its first all-electric model, the Li MEGA. Due to controversies surrounding its design, the MEGA failed to gain significant consumer traction, which also delayed the launch schedule for other planned EV models that year. In the second half of 2025, Li Auto rolled out two new EVs, the i8 and i6. The more affordably priced i6 is considered a crucial model for bolstering the company's financial performance.

However, also in the second half of 2025, a surge in demand and rising raw material costs led to a tight power battery supply, and CATL's deliveries reportedly lagged behind Li Auto's needs. A Li Auto representative told the media that the delivery of the i6 had indeed been slowed due to battery supply issues. To address this, Li Auto brought in Sunwoda as a second supplier for the i6. While this move drew some consumer skepticism, it enabled the successful ramp-up of i6 production.

From a supply chain profit distribution perspective, automakers collectively seeking second, third, or even fourth suppliers is also a strategy to boost their own profitability. In recent years, the domestic NEV industry has grown rapidly, but automakers are locked in intense "involutionary" competition, with profitability proving elusive. In the first half of this year, among the four major new forces (NIO, Xpeng, Li Auto, and Leapmotor), only Leapmotor achieved profitability. NIO and Xpeng continued their loss-making trends, while Li Auto swung from profit to a loss.

In contrast, CATL's growth accelerated in H1, with revenue increasing 54.80% year-on-year to 276.917 billion yuan and net profit attributable to shareholders rising 41.98% to 43.284 billion yuan. The hashtag "The profits of 15 listed carmakers are less than half of CATL's" even trended on social media. Looking at gross margins in H1, CATL's power battery business boasted a 20.63% gross margin, whereas the gross margins for Li Auto, NIO, Xpeng, and Leapmotor were 18.7%, 20.6%, 9.5%, and 11.7% respectively, with Xpeng's automotive business margin at 12.1%. CATL's profitability significantly outstrips that of its downstream customers.

Given that power battery systems constitute a significant portion of total vehicle costs, automakers seeking to improve profitability are almost compelled to find alternative suppliers as a cost-cutting measure, even if it means moving away from CATL.

How Will CATL Navigate the Challenge?

Despite automakers searching for new suppliers, CATL's growth momentum hasn't slowed. In H1 of this year, its revenue and net profit growth rates both exceeded those of the same periods in 2023 and 2024. Yet, danger signals are emerging. As of the end of June, CATL's contract liabilities stood at 36.483 billion yuan, a drop of about a quarter from the 49.233 billion yuan at the end of 2025. This also marks the first year-on-year decline in its mid-year contract liabilities since 2020.

Simultaneously, CATL's inventory levels have risen. At the end of June, its book inventory balance was 130.819 billion yuan, a significant 38.4% increase from 94.526 billion yuan at the end of last year. Within this, the book balance for finished goods inventory jumped to 47.639 billion yuan, a 110.7% surge from the end of the previous year. With contract liabilities slipping and finished goods inventory rising, CATL's future performance growth could face considerable pressure.

Facing this situation, CATL is actively seeking solutions. Besides its power battery business, CATL has deep roots in energy storage, and this segment's growth rate has now far exceeded that of its power battery business. In H1 of this year, revenue from its energy storage battery business reached 53.261 billion yuan, an impressive 87.54% increase year-on-year, compared to a 46.02% growth rate for its power battery segment.

Additionally, CATL is strengthening its bonds with automakers through strategic investments. In 2025, CATL invested 2.5 billion yuan in NIO's energy subsidiary to alleviate financial pressure on NIO's battery-swapping operations. Subsequently, media reports suggested that NIO and CATL have deepened their cooperation, with CATL set to become a primary battery supplier for some of NIO's models.

Beyond betting on automakers, CATL has also invested in the red-hot embodied intelligence sector. In June of last year, CATL participated in an investment in the embodied intelligence company Galaxy General. This year, the two sides further signed a global strategic cooperation agreement to promote the global expansion and large-scale application of embodied intelligent robots. Currently, a heavy-load humanoid robot powered by CATL batteries has already begun working on CATL's own production lines. As the embodied intelligence sector expands, CATL may well cultivate a new growth curve in this domain.