Chinese battery giant CATL faces revenue drop amid EV market challenges

In China, the Contemporary Amperex Technology Company Limited (CATL), the world's leading manufacturer of electric vehicle batteries, has reported a significant decline in its annual revenue. For the year ending December 2024, the company posted a 9.7% decrease, bringing its revenue to 362 billion yuan, equivalent to approximately 50.01 billion USD. This downturn not only highlights the effects of intense competition in the electric vehicle market but also reflects the broader challenges faced by manufacturers amid pricing pressures and changes in consumer demand. The drop in revenue is particularly striking as it marks the first time since the company began releasing its operating figures in 2015 that it has experienced a decline in yearly revenue. Despite the decline in revenue, CATL has reported an impressive increase in its net profit, which rose by 15% year-over-year to 50.74 billion yuan. This profit increase can be attributed to various factors, including the company’s strategic initiatives, cost management, and demand for its products amid a growing shift towards electric vehicles in the Chinese market. In 2024, sales of electric vehicles surged by 40% year-on-year, reaching 11 million vehicles, driven by subsidies and consumer incentives that supported the growth of the market, which is a vital segment for CATL’s business. CATL is now preparing for a significant step in its business strategy as it aims for a listing on the Hong Kong stock exchange. The expected initial public offering (IPO) could raise at least $5 billion, making it the largest in Hong Kong since Kuaishou raised $5.32 billion in early 2021. This IPO reflects investor confidence in CATL’s long-term growth potential, despite the current challenges and revenue decline. However, the company faces additional complexities as it continues to navigate the geopolitical landscape, especially after being placed on the U.S. Department of Defense’s list of Chinese Military Companies, which could restrict its operations in the U.S. market. Moreover, uncertainties surrounding tariffs and international trade policies are considered risks for CATL. The company has expressed intentions to address these challenges while denying any military affiliations. It aims to assure both investors and regulatory bodies that it remains focused on its core business of electric batteries and renewable energy solutions.