Contemporary Amperex Technology Co., Limited (CATL) reported third-quarter net profit attributable to shareholders of 21.25 billion yuan ($3.16 billion), down 5.77% from the previous quarter but up 14.54% year over year. Revenue increased 58.58% year over year and 11.8% sequentially to 165.22 billion yuan.
CATL Quarterly Profit Falls 5.77% as Tax Costs Rise
Revenue grew strongly year-on-year, but weaker margins and reduced tax support pushed quarterly profit lower.
Green rows show year-on-year growth, yet the tax applied only in September will span the entire fourth quarter.
The battery maker’s quarterly gross margin fell to 20.69%, marking a second consecutive quarterly decline. CATL attributed the decrease in profit per unit to changes in product mix, a consumption tax on lithium batteries and reduced export tax rebates.
CATL’s Hong Kong shares fell 10.64% to HK$368 at the time of writing, their lowest level since July 2025. Its Shenzhen-listed shares declined about 12%.
China resumed levying a consumption tax on lithium-ion batteries and other battery products on September 1 at a transitional rate of 2%. The rate is scheduled to increase to 4% on September 1, 2027. Separately, the value-added tax export rebate rate for battery products was reduced from 9% to 6% on April 1 this year and will be eliminated on January 1, 2027.
CATL CFO Zheng Shu said the consumption tax is included in product prices, making it difficult to pass the additional burden downstream without renegotiating prices. Discussions with customers over cost-sharing arrangements remain underway.
The export rebate reduction was more fully reflected in third-quarter results because of timing differences between shipments and revenue recognition. The consumption tax will apply throughout the fourth quarter, compared with only September during the third quarter.
JPMorgan downgraded CATL’s Hong Kong shares to Neutral and lowered its earnings forecasts, citing concerns about consumption taxes, reduced export rebates and trade barriers. CATL management said some of the quarterly pressure could be temporary and expects new products, new technologies and customer negotiations to support long-term profitability.
The company said global power and energy storage battery demand could grow 20% to 30% in 2027, supported by commercial vehicle electrification, the European market and overseas energy storage demand.
Source: CnEVPost
