Shares of CATL sank 4.3% to HK$485.00 on September 22, extending a brutal selloff that has now erased roughly $100 billion in market value since the stock's May peak. Market chatter about possible September output cuts and a potential reduction in third-quarter unit net profit, along with concerns over rising competition from automakers' supply diversification, weighed on the shares. The decline is hitting CATL even as the broader tech sector rallies — a clear signal that investors see company-specific trouble, not just macro noise.

  • Automakers Are Actively Breaking Up With Their Top Battery Supplier

The biggest structural threat is customer defection. Li Auto said on September 7 that its in-house developed batteries will gradually be rolled out across its entire lineup, and that the new-generation Li Mega will also switch from CATL batteries to its in-house developed batteries.

Xiaomi has expanded its battery supplier roster to four companies — CATL, FinDreams, CALB, and Sunwoda — and batteries for its new Sky Nomad lineup are supplied by Sunwoda and CALB, with CATL absent.

The profit imbalance is seen as the core reason: CATL's overall gross margin was 23.93% in the first half of 2026, while Li Auto's vehicle margin in Q2 was just 9.4%, down 10 percentage points year on year. Automakers simply cannot afford a dominant supplier earning far more per car than they do.

  • A New Battery Tax Gives Carmakers Another Reason to Go Solo

China now levies a 2% consumption tax on lithium-ion batteries, rising to 4% from September 2027, while automakers that produce their own batteries and install them directly in vehicles can avoid or deduct the tax. That regulatory nudge makes in-house battery programs financially rational, accelerating the diversification trend that's already pressuring CATL's pricing power.

  • The Numbers Still Look Strong — For Now

CATL's revenue in the first half was 276.9 billion yuan, up 54.80% year on year, and its net profit was 43.28 billion yuan, up 41.98%.

CATL still held a 41.45% share of China's power battery installations in August. But with the stock at a P/E of roughly 16.5x and shares down 34% from their May record high , the market is clearly pricing in future margin erosion, not today's earnings.

  • Investors Are Betting on a Structural Shift, Not a Bad Quarter

47 sell-side analysts still unanimously assign the stock a Buy rating , yet the stock keeps falling. Power batteries typically account for 30% to 40% of total vehicle cost , giving automakers enormous incentive to claw back control. The question is no longer whether CATL's customer concentration erodes, but how fast — and whether its energy-storage and next-generation technology bets can fill the gap before margins compress.