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Chinese EV battery makers continue to dominate the global market. Just recently, leading Chinese EV battery maker CATL unveiled that their Shenxing battery will be produced in Europe. This newly launched battery can achieve a range of 700 kilometres on a single charge and can be charged to 80% in just 10 minutes. Charging time and range are two major sticking points for EVs. CATL indicated that the battery will be used in a variety of electric vehicles, including passenger cars, buses, and trucks.
Not just CATL, several other Chinese EV battery makers are also making a breakthrough in the market with their innovative technologies. The industry is flourishing, and China dominates the global EV battery manufacturers market with nearly a 56% share, surpassing the West.
Raw material mining, government support boosts Chinese EV battery industry
China enjoys this positioning due to its mining of a substantial portion of graphite, rare earth, cobalt, and lithium, the critical raw materials for EV batteries. The nation owns 40% of the cobalt reserves, besides, it has strategically partnered with countries like Australia, North America, and Africa for the mining and supply of the raw material mining that isn’t available locally. In terms of critical components, China manufactures almost all of them such as cathodes, anodes, separators, and electrolytes. Not just this, the companies also control other stages of the supply chain including refining and final assembly.
Moreover, China’s EV battery market is experiencing a boost due to the government’s commitment to its net-zero objectives. The government has supported the sector with cheap land and energy, due to which the Chinese companies have been able to undertake large volume mining of minerals at a more competitive rate.
Gregor Sebastian, a researcher on China’s industrial policy at the Berlin-based Mercator Institute for China Studies (MERICS) told Indian Express, “Beijing has signalled early on that electric vehicles will be a strategic national priority, inducing Chinese firms to invest in mining, raw material refining and battery technologies.”
According to the China Automotive Battery Innovation Alliance (CABIA), China’s power battery installed capacity grew 33.3% over the year to 32.2 GWh in July 2023. Also, research by IMARC indicates that the China electric vehicle battery market is expected to exhibit a growth rate (CAGR) of 25.1% during 2023-2028.
Top EV battery stocks in China
Almost 50% of the top 10 global EV battery makers belong to China. These top players supply batteries to international auto giants like Tesla, Ford, BMW, and Volkswagen. We list down the top 4 Chinese EV Battery stocks that investors may want to consider:
Contemporary Amperex Technology General Information (CATL)
CATL is the world’s largest EV battery maker. It specialises in the development and production of lithium-ion batteries. Through its innovative technology, it develops batteries for high energy density and safety, longer service life, and super-fast charging. As of July 2023, CATL has an installed base of 6.86 GWh in the LFP battery market with a 31.69% share in China.
For the year ended 31 December 2022, the company’s operating income climbed 75.2% over the year to 35.1 bn yuan ($4.85 bn). Additionally, CATL saw year-on-year revenue growth of 152.1%, totalling 328.6 bn yuan ($45.37 bn).
With a market capitalisation of 980.11 bn yuan ($135.33 bn), the company is listed on the Shenzhen Stock Exchange (SZ: 300750). Its shares declined 9.84% over the past one year. CATL boasts a PE ratio of 22.84 and a price-to-book ratio of 5.43.
BYD Company
BYD is involved in designing, developing, and manufacturing new energy vehicles, or NEVs. Not just automobile production, BYD is also engaged in the manufacturing of rechargeable EV batteries. Some of its other business interests are handset components, assembly services, and photovoltaics business.
According to the latest reports, BYD aims to collaborate with Korean manufacturer, KG Mobility to establish an EV battery plant in South Korea. The volume production is likely to commence by January 2025.
The company saw a 202.4% year-on-year increase in its operating profit, reaching 23 bn yuan ($3.18 bn) in the full year ended December 2022. During this same period, BYD achieved substantial revenue growth, witnessing a 96.2% year-on-year increase, amounting to 424.1 bn yuan ($58.56 bn).
The company, with a market capitalisation of HK$743.02 bn ($94.80 bn), has its shares traded on the Hong Kong Stock Exchange (HK: 1211). Over the past year, BYD stock has experienced a 14.35% surge. The company boasts a price-to-earnings ratio of 28 and a price-to-book ratio of 5.69.
China Aviation Lithium Battery (CALB)
CALB is a leading Changzhou-based energy technology company whose main products include EV batteries for energy storage systems. Not just manufacturing, CALB is also involved in the sales and marketing of lithium-ion batteries and related products.
In April 2023, CALB unveiled a new battery technology called “U-structure” which was different from the conventional cylindrical cell. Through the new design, CALB aims to improve cell chemistry and reduce the internal resistance of the cell by 50%.
Last year, the company achieved a year-on-year increase of 198.9% in its revenue earnings, reaching 20.4 bn yuan (equivalent to $2.82 bn). During that same period, its operating profit came in at 576.43 mn yuan ($79.59 mn).
CALB’s shares are traded on the Hong Stock Exchange (HK: 3931). The company currently holds a market capitalisation of $4.07 bn. The company’s stock has experienced a decline of 55.26%. Additionally, its shares are characterised by a PE ratio of 41.55, and a price-to-book ratio of 0.80.
Gotion High-tech
Headquartered in Hefei, Eastern China, Gotion High-tech is engaged in the research, development, production, and sale of power lithium batteries, monolithic lithium-ion batteries, and cell and power lithium battery cathode material.
Gotion High-tech Co Ltd has announced that it would set up a $2 bn electric vehicle (EV) lithium battery manufacturing plant in Manteno, Illinois. The production for the plant is likely to begin in 2024 and generate about 2,600 new jobs.
In 2022, the company reported an operating income of 867 mn yuan ($119.70 mn), which represented an increase of over 1.5 times compared to the previous year. Additionally, Gotion High-tech saw year-on-year revenue growth of 122.6%, totalling 23.1 bn yuan ($3.19 bn).
With a market capitalisation of 42.34 bn yuan ($5.85 bn), the company is listed on the Shenzhen Stock Exchange (SZ: 002074). Its shares have dropped 30.6% over the past year. Gotion High-tech boasts a PE ratio of 91.54 and a price-to-book ratio of 1.76.
Editor’s note: All stock movement figures as of September 8, 2023.
