Al Root

Shares of electric-vehicle-battery supplier Contemporary Amperex Technology Co. Ltd., or CATL, and Honda Motor both rose after making decisions about vehicle electrification that seem to point in opposite directions.

For starters, CATL stock jumped 16.4% in its Hong Kong trading debut on Thursday. The company raised about $4.6 billion, selling 135.6 million shares at HKD$263 apiece.

The Chinese company was already publicly traded in China, trading under the code "300750." The Hong Kong stock symbol is "3750." The Hong Kong jump values CATL at about $175 billion, 8% higher than stock prices in China imply. That gap should close over the coming days as traders with access to both markets arbitrage it away.

The money will help CATL, the world's largest maker of EV batteries, with a global market share approaching 30%, expand in Europe. It's stepping on the gas while Honda is hitting the break.

Tuesday, Honda announced plans to "realign [its] automobile business strategy to address [the] current business environment." EV sales just aren't growing as expected outside of China, where they make up roughly one-third of all new car purchases.

In 2024, Honda believed EVs and fuel-cell-powered vehicles would account for about 40% of total sales by 2030. That implied sales of about 2 million EVs annually by the end of the decade. It was prepared to spend 10 trillion Yen, or $69 billion, over 10 years to make that happen.

Now, "the environment surrounding the automobile industry is changing day by day," the company said in a news release. "Uncertainty in the business environment is increasing, due particularly to the slowdown in the expansion of [the] EV market due to several factors, including changes in environmental regulations, which had been the premise for the widespread adoption of EVs, as well as changes in trade policies of various countries."

Honda expects EVs to account for less than 30% of new-car sales by 2030. It will reduce EV spending by 3 trillion Yen, or almost $21 billion.

Investors reacted positively to the cut. Honda stock was up 0.8% in overseas trading, while S&P 500 futures were down 0.2%, and Dow Jones Industrial Average futures were flat.

Both stocks are up while making decisions that appear at odds with one another. It might boil down to the idea that EV demand is still growing globally, just not as fast as expected. Investors appear pleased that Honda is taking a cautious approach while also pleased the global battery leader continues to invest for growth.

It's also possible that CATL and Honda investors think differently about the future.

Write to Al Root at allen.root@dowjones.com

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May 20, 2025 07:52 ET (11:52 GMT)

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