Four years ago, a top auto executive publicly complained that his company was effectively "working for" Contemporary Amperex Technology Co., Limited (CATL). Now, a growing number of carmakers are aggressively reducing their reliance on the battery titan by partnering with multiple second-tier battery manufacturers.

Leading this charge is Li Auto, which since September has not only taken a stake in Sunnyvale Power (a subsidiary of Sunwoda) but also announced plans to equip its entire vehicle lineup with self-developed batteries. The power battery sector has long been defined by "one superpower and multiple strong players," but with automakers joining forces with smaller battery firms, CATL's unassailable top position may finally be under threat.

Industry insiders point out that while "vehicle-maker supremacy" aligns with automotive industry logic, car companies are unwilling to remain margin-takers. However, they must ensure the quality of batteries sourced from new suppliers. Recent safety incidents involving vehicles fitted with batteries from second-tier producers have raised concerns, with CATL Chairman Robin Zeng stressing that "quality is the most important keyword" for the new energy industry.

Multiple Strategies to Cut CATL Dependence

On September 7, Xiaomi Auto entered the extended-range EV market with CALB and Sunwoda as its cell suppliers, marking the latest example of a carmaker diversifying away from CATL. Xiaomi's pure electric vehicles had previously relied mainly on CATL and FinDreams Battery, but now the company is visibly expanding its supplier base.

While Xiaomi's shift has been high-profile, many other automakers have quietly integrated second-tier battery makers into their supply chains. Li Auto, however, is moving fastest of all. On September 4, Sunwoda announced that Li Auto would invest RMB 2.65 billion in its subsidiary Sunwoda Power for an 11.17% stake. Three days later, Li Auto revealed that its self-developed batteries are already installed in models like the L8, L6, and i8, with full deployment across all models planned.

Li Auto's Senior Director of Power Battery Liu Zhimin noted that the company began battery R&D at its founding in 2015, covering both extended-range and pure electric applications. That said, most automakers' self-developed batteries or partnerships with second-tier suppliers have not yet extended into cell manufacturing. Several auto executives previously told reporters that their companies are exploring upstream integration, focusing mainly on modules and battery packs.

Battery cell production requires long-term accumulation in materials, processes, equipment, yield rates, and quality management, along with scaled industrial coordination, according to one industry veteran. Given the fiercely competitive auto market, carmakers prefer to allocate resources toward user-perceivable technological breakthroughs such as larger capacity, 5C ultra-fast charging, long life, high safety, low-temperature performance, and system integration. Li Auto's self-developed efforts remain laser-focused on 5C ultra-fast charging cells, as Liu explained.

Carmakers Seek Cost Cuts and Greater Bargaining Power

The "working for the battery maker" narrative stems from the long-standing debate over whether battery companies are siphoning away automakers' profits. In the first half of 2026, only Leap Motor posted net profit growth among listed automakers, with the industry's average net profit margin hitting a decade-low of 1.6%. Battery makers, meanwhile, largely enjoyed profit increases, with only Sunwoda seeing a decline among major listed players.

This has fueled arguments over whether automakers' poor profitability is the fault of battery suppliers or intense competition among carmakers themselves. What matters now is how car companies can earn more. A new EV maker executive said it would be a "pity" to miss out on battery-related profits by staying out of the sector. In the new energy era, power batteries account for 30% to 40% of total vehicle cost under normal circumstances.

The profit struggle is fundamentally about reclaiming bargaining power. In the fuel-vehicle era, automakers controlled core components like engines, establishing a "vehicle-maker supremacy" model. In the EV era, they lost that control. As early as 2022, Cui Dongshu, secretary-general of the China Passenger Car Association, argued that new energy automakers must master battery technology just as fuel carmakers master engines. Controlling battery production affects after-sales, recycling, and reuse chains, and gives automakers greater pricing power.

On the recent "de-CATL" discussions, Cui highlighted the importance of automakers deepening their battery capabilities and taking on the associated technical and quality responsibilities. Liu Liguo, Li Auto's Senior Vice President of Electric Vehicle R&D, said that regardless of who manufactures the cells, automakers ultimately bear responsibility for user experience and safety. Li Auto wants customers to recognize the "Li Auto standard" and guarantees consistent, top-tier performance across all delivered vehicles.

Battery Control as a Market Value Driver

Listed automakers' market valuations also reflect a "one superpower, multiple strong players" pattern. As of September 11's close, BYD's market cap stood at RMB 710.5 billion, while SAIC Motor, Chery Auto, and GEELY AUTO were valued at RMB 134.7 billion, HK$173.9 billion, and HK$144.9 billion respectively. A carmaker insider noted that BYD's RMB 500 billion valuation premium over peers isn't based on sales alone. In August, BYD sold 440,300 vehicles, SAIC sold 357,000, Chery sold 263,000, and Geely sold 270,200.

"BYD has batteries," the insider said, referencing his participation in his company's market value management team research. Unlike other automakers, BYD originated in the battery industry before entering autos in 2003, and now ranks second only to CATL in power battery installations. From January to July 2026, BYD was the world's second-largest battery installer both domestically and globally.

The advantages of full battery production capacity are clear. In the first half of 2026, BYD's auto business gross margin hit 22.33%, versus 12.6% for SAIC, 16.1% for Chery, and 17.9% for Geely. The degree of autonomy in battery supply directly determines automakers' profitability and valuation upside. Geely, for example, has built 70-80 GWh of internal battery capacity in 2026, with plans for 200 GWh and 300 GWh in 2027 and 2028 respectively.

"The battery industry plays a vital role in Geely's development," said Geely Chairman An Conghui at the 2026 interim results briefing, promising multiple breakthroughs in the battery field ahead.

Reducing CATL Dependence Doesn't Mean Abandoning It

As more carmakers embrace second-tier battery suppliers, talk of "de-CATL" has resurfaced. This isn't the first time such discussions have emerged. In 2021, CATL's domestic market share exceeded 50%, sparking concerns about over-concentration in the supply chain. Automakers then deliberately nurtured alternative battery makers, pushing CATL's share down to 43.11% by 2023. However, CATL's domestic share has rebounded, rising 2.55 percentage points year-on-year to 45.37% during January-July 2026, growing much faster than rivals.

Given CATL's current dominance, most automakers cannot completely abandon it, according to one car company executive. In 2026, premiumization and globalization are key industry trends, and CATL's advantages over other battery makers lie precisely in these areas. In the high-end pure electric segment, CATL launched its third-generation Kirin battery with 280Wh/kg energy density, offering 1,000km range alongside 10C ultra-fast charging while keeping pack weight at 625kg. CATL CTO Gao Huan described the Kirin as an important choice for high-end EVs balancing long range and lightweight design.

Overseas, CATL has built multiple factories across Europe and Southeast Asia, and uses its LRS (Licensing, Royalty, Service) model in North America, partnering with Ford on a battery plant. An industry source noted CATL's early overseas expansion, which included completing carbon footprint assessments, EU Battery Regulation compliance, and certification from foreign automakers, plus global logistics capabilities. From January to July 2026, CATL ranked first globally in EV battery installations with a record 39.90% market share.

CATL's answer is quality. Zeng Yuqun stated that as China's new energy industry goes global, the external world cares about "whether Chinese brands can be trusted long-term." Qualified power batteries must adhere to the fundamental standards of "safety, reliability, and long life." However, recent batch quality failures in some automakers' models have been linked to second-tier battery supplier products, drawing consumer criticism. Going forward, carmakers that cannot bypass CATL may need to explore new collaboration models with both CATL and other battery makers to suit everyone's evolving needs.