China’s CATL beat annual earnings expectations on the back of a strong fourth quarter. The company, a leading battery supplier to Tesla and others, cited worldwide demand for electric vehicles.
Contemporary Amperex Technology, or CATL, disclosed in a Thursday regulatory filing in China that net income swelled 92.9% to 30.72 billion renminbi ($4.4 billion) in 2022. That beat analysts’ expectations of 28.8 billion RMB.
Its revenue for the full year vaulted 152% to a record 328.6 billion RMB ($47.3 billion), in line with estimates.
For the fourth quarter, CATL reported revenue of 118.25 billion RMB ($16.98 billion). That marked a 107.5% year over year increase, and up 21.4% from Q3.
Its Q4 net profit came in at RMB 13.14 billion, up 60.6% vs. a year ago and up 39.5% from Q3.
CATL’s gross margin improved to 22.6% in Q4 after falling in Q1 and Q3 due to the increase in battery raw material prices.
“The global market demand for new-energy vehicles continues to grow rapidly, leading to a rapid increase in the scale of the power battery industry,” CATL said.
World’s Largest EV Batter Maker
The company supplies several Western automakers besides Tesla (TSLA), including Mercedes-Benz (DDAIF), BMW (BMWYY) and Volkswagen (VWAGY).
In February, Ford (F) announced it will license technology from CATL to make lithium iron phosphate (LFP) batteries at a $3.5 billion plant in Michigan.
CATL also supplies Chinese EV makers including the U.S.-listed startups Nio (NIO), XPeng (XPEV) and Li Auto (LI).
The company, based in Fujian province, is the world’s largest EV battery maker, accounting for 37% of global sales in the first 11 months of 2022, according to South Korea’s SNE Research.
China’s BYD (BYDFF) and South Korea’s LG Energy Solution claimed a joint second place with a 13.6% share each.
China EV Stocks
Shares in CATL popped 2.2% on the Shenzhen exchange Friday. China EV stocks sold off broadly, as a round of steep price cuts fuel overcapacity fears.
CATL is a top holding in the KraneShares Electric Vehicles & Future Mobility Index ETF (KARS).
BYD shares, which trade over the counter in the U.S., tumbled 5.4% to 25.82 Friday.
U.S.-listed shares of Li Auto edged higher Friday. Nio and Xpeng fell around 2% each.
Tesla stock rallied 0.8%, near 174, after a four-day slide.
On Friday, CATL confirmed it’s negotiating new prices with EV customers.
The company already owns some mineral resources. But it doesn’t want to reap windfall profits, management said, according to local media reports.
Earlier reports suggested it’s offering discounted battery prices to select customers, including Nio, Li Auto and Huawei, in an attempt to fend off rising competition, including from BYD.
Sales of so-called new energy vehicles (NEV), which include fully electric, hybrid and hydrogen-powered vehicles, rebounded in February after a seasonally weak January, due to the Chinese new year holiday.
China NEV sales more than doubled in 2022.
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