China’s Contemporary Amperex Technology Co Ltd (CATL), the world’s largest battery manufacturer, has informed its suppliers of its willingness to provide financial support to accelerate technological innovation in battery materials and equipment. This initiative is part of CATL’s efforts to alleviate stress on its supply chain amid intense price competition in the electric vehicle (EV) market.
In a letter to suppliers dated December 2024, CATL expressed its readiness to cover a portion of their research and development costs and make advance payments for projects to ensure technological progress. The company also offered assistance with certification processes to expedite the application and production of new battery materials, aiming to help suppliers increase their market share.
CATL confirmed the authenticity of the letter but declined to comment further.
Over the past two years, the Chinese EV market—the largest and most advanced globally—has experienced fierce price competition, pressuring automakers and suppliers to cut costs significantly. Market leader BYD is poised to sell more cars than Ford or Honda globally, driven by aggressive discounts in its home market, where it sells 90% of its vehicles. BYD has asked some of its suppliers to further reduce prices next year, indicating that the price war may intensify.
Industry executives and analysts have warned that such intense competition could force companies to reduce investment in research and development due to weakened profitability.
In an interview with Reuters in November, CATL Chairman Robin Zeng acknowledged the importance of a profitable supply chain where all participants receive a reasonable share of profits to ensure survival. “As the big player in batteries, we want to maintain, or try our best to maintain, oxygen for everyone,” Zeng said.
CATL has extended its leadership in the EV battery market, achieving a global market share of 36.8% in the first ten months of the year, up from 35.9% during the same period in 2023, according to SNE Research. In contrast, South Korea’s LG Energy Solution saw its market share decline to 11.8% from 13.9%.
This week, CATL announced plans for a third European factory, to be built in partnership with Stellantis in Spain. Zeng noted that the company’s first two factories in Europe are expected to become profitable in 2025 and 2026.
Source: Reuters
