Zeng Yuqun has taken a more prominent role, as CATL pushes forward with its battery swapping technology in a firm response to rapid charging innovations. The evolving landscape of CATL reflects a significant correlation with Zeng’s visibility. In 2021, CATL maintained its leadership in global power battery installations for five consecutive years, achieving a market value exceeding RMB 1 trillion within three years of its listing, making it the first company on the Growth Enterprise Market to reach this milestone. Interestingly, during that year, Zeng seemed to vanish from public view, adopting a low-profile approach typical of his character.
Having entered Shanghai Jiao Tong University’s Ship Engineering Department at just 17, Zeng pursued his doctorate under the tutelage of the renowned battery expert Chen Liquan. The rapid growth of CATL has left it with few competitors in the market, and Zeng’s reserved demeanor further kept him from the spotlight in the company’s early days. However, times have changed. With escalating collaborations between CATL and its OEM partners, Zeng has begun to emerge at press conferences, lending his support to automotive companies.
The market is now evolving at a pace that seems unimaginable compared to the earlier days of electric vehicle development. Currently, CATL is navigating through a tumultuous industry landscape. The company reported a decline in revenue for the first time in its financial results for 2024. Prior to this, CATL’s second listing in Hong Kong demanded considerable effort as well. With challenges ranging from a dip in operational performance to intensifying competition, Zeng has had to step back into a more active role.
Shortly after the financial report was released, on March 18, Zeng stood alongside Li Bin to sign an agreement to establish a global battery swapping network with NIO, while also advancing the formulation of industry standards for battery swapping. Historically, Zeng has not been one to embrace excessive formalities. Despite being a prominent player in the industry, CATL had not actively sought media attention. However, during the dinner following the signing ceremony with NIO, Zeng surprisingly prepared a thoughtful gesture: a dish crafted from taro, winter melon, and radish, labeled with the phrase “With NIO, we gather together.” This demonstrated a sense of solidarity during a challenging time for NIO.
Nevertheless, for CATL, being a partner in such an endeavor is far from simple. With fluctuating prices for power batteries, diminishing revenues, and volatility in its energy storage and battery swapping businesses, CATL first needs to validate the correctness of its strategic path.
1. First Revenue Decline in Seven Years
For CATL, experiencing a decline is unusual. The financial report released on March 14 for 2024 indicated that the company achieved revenue of RMB 362.01 billion, marking a 9.7% year-on-year decrease—its first annual revenue drop since going public in 2018. Despite this, CATL’s net profit attributable to shareholders reached RMB 50.75 billion, a 15.01% increase compared to the previous year, setting a new historical record and averaging a daily profit of RMB 139 million. However, the signal of declining revenue could foreshadow impending changes.
Currently, CATL’s business lines are primarily divided into power battery systems, energy storage battery systems, battery materials and recycling, and battery mineral resources. Power batteries serve as both the foundational business and the main source of income, meaning any changes in power battery market share directly affect overall performance. In 2024, CATL’s lithium battery shipments reached 475 GWh, reflecting a 21.79% year-on-year increase, capturing 37.9% and 36.5% of the global power battery and energy storage battery markets, respectively, both ranking first worldwide. While it appears to retain its leading position, competitors are quietly gaining ground. In 2022, CATL’s global market share was still as high as 43.4%, but over three years, nearly 7% of that share has been redistributed among other power battery suppliers.
The power battery industry is experiencing an intense price war, even fiercer than that among OEMs. In 2024, the dramatic drop in lithium carbonate raw material prices—over 65%—has become a significant headache for all power battery manufacturers. While this price reduction may seem beneficial for the industry as a whole, it has considerably compressed the survival space for battery companies. Industry insiders indicate that some second-tier battery suppliers have even dipped their quotes to the point of breaching cost thresholds.
CATL’s strategy has been to leverage economies of scale to mitigate the effects of raw material price fluctuations. The company currently operates 13 battery production bases with a planned capacity of 676 GWh, making it the largest producer of lithium-ion batteries globally. This scale helps alleviate pricing pressures from end-user supply. To secure profit margins within tight pricing constraints, CATL has introduced new products like the Shenxing and Kirin batteries in 2024, which offer better gross margin advantages. Data shows that in 2024, high-margin products such as Kirin and Shenxing batteries rapidly penetrated the passenger vehicle market, increasing the gross margin for power batteries to 23.94%, up 5.81 percentage points year-on-year.
Correspondingly, CATL stands out as one of the few companies investing over RMB 10 billion in research and development. The financial report revealed that CATL’s R&D expenditure reached RMB 18.61 billion in 2024, with its R&D team surpassing 20,000 personnel. Over the past five years, R&D investments have exceeded RMB 60 billion. As a leading player in the industry, CATL needs substantial R&D investment—whether voluntary or forced—to build an effective technological moat that distinguishes it from its competitors. However, the slowing growth rate of the industry and the waning of its lucrative phase remain crucial factors influencing the cyclical development of the company. It is evident that in the power battery sector, where the clustering effect among leading players is so pronounced, the industry is rapidly shifting from growth competition to competition for existing market share.
According to SNE Research, the year-on-year growth rate of global power battery usage in new energy vehicles has decreased from 71.8% in 2022 to 27.2% in 2024. Similarly, CATL’s power battery sales growth rate has dropped from 107.09% in 2022 to 18.85% in 2024. While it may be an exaggeration to claim that CATL’s industry dominance is under threat, the cumulative effects of these changes could foreshadow shifts in the company’s future trajectory.
2. Energy Storage Business Struggling to Hold Up
As traditional business units begin to plateau, new sectors become crucial for future growth—such as CATL’s energy storage business. At a recent energy storage product launch, CATL emphasized the importance of this sector for its future development, a determination rooted in twelve years of strategic planning. Since entering the power battery industry, CATL has been involved in national wind and solar storage projects. Initial progress was slow, but by 2023, energy storage had become the second-largest source of revenue for the company, accounting for 14.94% of total revenue that year. However, in 2024, energy storage performance may not live up to expectations. CATL’s energy storage revenue for the year reached RMB 57.3 billion, comprising 15.83% of total revenue. Although its share increased, the revenue amount represented a 4.36% year-on-year decline, primarily due to plummeting energy storage prices.
In 2024, CATL’s average selling price for energy storage batteries was RMB 0.616/Wh, down more than 29% from RMB 0.868/Wh the previous year. Notably, in the fourth quarter, energy storage battery shipments were approximately 16 GWh, nearly a 50% decrease compared to the third quarter. This sudden downturn has reminded CATL, which had begun to see a glimmer of hope in its energy storage business, of the industry’s volatility.
The appeal of energy storage for power battery manufacturers, including CATL, largely stems from its ability to absorb surplus capacity in the current battery production arms race. Moreover, the profit margins for energy storage are quite substantial. In 2024, CATL’s energy storage business realized a gross margin of 26.84%, higher than the 23.94% margin from its power battery business. However, it is crucial to note that CATL’s energy storage clients are more globally dispersed compared to its power battery customers. Currently, CATL’s energy storage clients and partners include domestic and international companies such as NextEra, Synergy, Excelsior, Jupiter Power, Flexgen, and major Chinese energy corporations.
This global footprint and increasing number of overseas clients expose CATL to various policy shifts and market fluctuations. On one hand, the lengthy and intricate nature of overseas business cycles leads to slow payment turnaround. On the other hand, adjustments to export tax rebate policies in the last quarter of the previous year directly impacted fourth-quarter revenues. Additionally, geopolitical factors inevitably affect CATL’s overseas operations. The developments in Hungary, Germany, and Spain are indicative of such considerations.
Domestically, the most significant influence comes from policy changes. Starting in 2025, new energy projects will no longer be mandated to include energy storage facilities, shifting to a market-driven guidance model. The cancellation of mandatory energy storage policies has already taken effect nationwide. The future of market competition, characterized by the elimination of low-quality capacity, will undoubtedly affect industry development, leading to a more cautious demand landscape. Even CATL will need to contemplate technological innovation and business model exploration in this new era, especially with competitors closely watching its moves. Reports indicate that EVE Energy is rapidly advancing its energy storage battery business, having already secured intentions for 81 GWh of energy storage battery orders over the next five years.
3. CATL’s Battery Swapping Push Against Fast Charging
Compared to the two robust business segments reflected in the financial data, CATL’s battery swapping initiative may be the most frustrating for Zeng Yuqun. After three years of pursuing battery swapping, the advent of fast charging technology has cast a shadow over their ambitions. In 2022, CATL launched its first battery swapping product—the Chocolate Battery Swap Block. This modular battery assembly, resembling chocolate, can deliver a range of 200 kilometers per battery pack. However, initial packaging modes were space-consuming and costly, failing to garner interest from automotive manufacturers. Thus, in the first two years, CATL’s battery swapping business remained in the exploratory stage and was not a focal point of the company’s strategy.
In 2023, CATL introduced a new generation of Chocolate Battery Swap Blocks under a full pack swapping model, boasting a maximum range of 600 kilometers, attracting more automotive companies to join CATL’s Chocolate Battery Swap Alliance. At the end of last year, during a battery swapping business launch event, CATL revealed ambitious goals to establish 1,000 battery swapping stations by 2025, covering over 30 cities. This objective directly surpasses another major proponent of battery swapping in the industry—NIO.
Unlike CATL’s transition within the power battery sector, NIO has been in the battery swapping realm longer, thus facing a longer investment period. Industry consensus suggests that battery swapping is a capital-intensive, high-investment, and long-cycle industry with complex supply chains and numerous stakeholders involved. Zeng is acutely aware of these challenges, which are reflected in his statements. This understanding has led many industry experts to conclude that the collaboration between CATL and NIO is a natural evolution in the industry’s development. “For CATL, collaboration is a great way to achieve technical interoperability and accelerate commercialization,” stated an industry insider.
However, just as the collaboration was announced, BYD simultaneously unveiled advancements in high-power fast charging technology. This solution reportedly allows for a maximum charging power of 1,000 kW, enabling a recharge rate of 2 kilometers in one second, with a five-minute charging session providing 407 kilometers of range. This level of efficiency rivals traditional refueling, making the battery swapping time of about 100 seconds seem less competitive.
According to BYD, it is currently laying the groundwork for 4,000 fast charging stations, with around 500 set to be operational by early April, coinciding with the launch of the Han L and Tang L. Theoretically, once a technical breakthrough occurs, implementation becomes merely a matter of time. As a vertically integrated powerhouse in the industry, BYD’s execution capabilities remain a significant advantage. The future of energy replenishment—whether through battery swapping or fast charging—will ultimately be validated through practice. Clearly, the future market for energy replenishment is no longer simply divided into “battery swapping, home charging, and public charging stations” as Zeng previously envisioned. The stakes for CATL are indeed getting higher.
