Cracks are appearing in the 'Iron Throne' of the 'Prince of Ning'

This situation will adversely affect the future development of the entire automotive industry—and, more seriously, could even trigger premature innovation exhaustion across the sector. When battery costs swallow up most automakers’ profits—leading to revenue growth without corresponding profit growth—their financial capacity to invest in R&D and functional innovation naturally shrinks. Once the scope for innovation narrows and new models fail to attract consumers, market enthusiasm will inevitably wane. In fact, the growth rate of new-energy vehicles (NEVs) has already begun to slow. According to data from the China Passenger Car Association (CPCA), the recent retail sales growth rate of domestic NEV passenger vehicles has fallen below 20%, with demand growth for power batteries slowing in tandem. Slowing growth, compounded by insufficient innovation, could shift the entire NEV market from vigorous expansion toward stagnation. At that point, even if CATL’s technology remains world-leading, its inability to sustain soaring profits without a rapidly expanding market would constitute a form of backlash against CATL itself. Winning on technology—but losing on vision? From ‘sole supplier’ to ‘multi-supplier co-distribution,’ automakers’ accelerated push for supply-chain diversification has undoubtedly created unprecedented opportunities for second- and third-tier battery manufacturers. Yet this does not mean they can effortlessly seize the market share formerly held by CATL. Significant technological gaps persist between these smaller players and CATL. From the Shenxing ultra-fast charging battery (6-minute full charge), to the Qilin battery (1,000 km range), to the Xiaoyao super extended-range hybrid battery (600 km pure-electric range), CATL’s technologically discontinuous product portfolio has erected formidable barriers—securing its irreplaceable position in the high-end NEV market. Even in the mid- and low-end segments, CATL’s power batteries remain the strongest performers. Early this year, Zeekr announced a recall of its Zeekr 001 WE 86 models manufactured between July 2021 and March 2024 due to battery-related issues. Its original battery supplier was Sunwoda; the recall solution involved replacing those batteries with CATL units—a de facto validation of CATL’s technological leadership. For second- and third-tier battery makers, an even grimmer prospect looms: this technological gap may widen further. In an industry demanding both massive capital and cutting-edge expertise, current profit disparities directly determine R&D investment disparities—which, in turn, risk deepening future generational technology gaps. CATL’s leading-edge technology enabled it to capture the lion’s share of the NEV boom—and forged its commercial legend within the automotive industry. Yet prolonged dominance atop the ‘Iron Throne’ has also fostered a kind of technical ‘hegemony’ over the automotive supply chain. To preserve this hegemony, CATL has imposed restrictive non-compete clauses, engaged in intellectual property disputes, and pursued aggressive, high-priced acquisitions—leaving peers and upstream/downstream partners frustrated and voiceless. This conduct has, frankly, been unseemly. As economist Ren Zeping sharply observed years ago: “CATL doesn’t behave like an industry leader.” In the arena of commercial competition, CATL remains the undisputed global king of power batteries—its strength currently unmatched. Yet when such dominant leadership begins impeding the healthy development of the entire industry, a non-negligible crisis may arise from policy risk.

Are automakers ‘de-CATL-izing’? Is it a clean break—or self-rescue?

Underlying this trend is CATL’s increasingly overwhelming dominance—provoking automakers’ dual fears: being financially drained and losing control over their core identity. 01 Profit Imbalance and Overreach of话语权 (Decision-Making Power) The automakers’ collective move toward ‘de-CATL-ization’ is no accidental supply-chain adjustment—it is an inevitable countermeasure against long-standing imbalances in industrial profits and misaligned decision-making authority. The Profit Black Hole: Who toils—and for whose benefit? In 2025, CATL’s annual net profit attributable to shareholders reached RMB 72.201 billion. In Q1 2026 alone, its net profit attributable to shareholders hit RMB 20.738 billion—exceeding the combined Q1 net profits of seven major domestic automakers: BYD, Geely, Chery, SAIC, Great Wall, Seres, and Changan. Data shows that in 2026, the average net profit margin across China’s auto manufacturing industry stood at only about 3.4%, remaining at a historic low—while CATL consistently maintains a sales net profit margin above 17%. The disparity is staggering. Put simply: numerous automakers pour enormous resources into R&D, absorb heavy losses from fierce price wars, and shoulder immense pressure to deliver sales volume—yet their total annual profits still fall short of CATL’s single-year earnings. At the 2022 World Power Battery Conference, Zeng Qinghong—then Chairman of GAC Group—famously lamented: “Battery costs now account for 40–60% of total vehicle cost—and keep rising. So am I really just working for CATL?” That question still echoes today. Usurpation of Definition Rights: Who Defines ‘Premium’—Me or You? If unequal profit distribution represents the underlying grievance automakers have long tolerated, then CATL’s cross-industry encroachment into defining what constitutes ‘premium’ in NEVs has crossed the final red line—becoming the key catalyst for the rupture in relations. Per standard industry division of labor, batteries are core components; automakers—as clients—retain ultimate authority over vehicle positioning, pricing, and premium branding, while battery suppliers merely provide compatible technical solutions and products. Yet CATL is now progressively blurring these boundaries, attempting to seize authority over the definition of ‘premium’ in the NEV sector. At CATL’s Super Tech Day in April 2026, Chief Technology Officer Gao Huan publicly advanced a controversial claim: “For premium NEVs priced above RMB 250,000, using LFP batteries amounts to de facto downgrading—NCM is the sole optimal choice for high-end, long-range models.” This statement directly invalidated the premium positioning of numerous automakers’ flagship models, imposing a rigid hierarchy of ‘premiumness’ based solely on cathode chemistry—an outright overreach into automakers’ product-definition sovereignty. At the Beijing Auto Show, Sun Huajun—CTO of BYD’s Battery Business Group—responded forcefully, declaring unequivocally: “Battery manufacturers hold no right to define automotive premiumness”—striking at the heart of the industry’s core conflict. A quick plug for the Tengshi Z: pre-sales have begun, starting at RMB 680,000. Its Track Edition carries a domestic pre-sale price exceeding RMB 1 million (RMB 1.18 million, excluding optional extras). And yes—it uses an LFP battery (BYD’s second-generation Blade Battery). Beyond this, leveraging its technological and production-capacity advantages, CATL has quietly established de facto industry rules: premium battery cells are routinely supplied under quota-limited, priority-negotiation terms. Such a scenario—where the client is constrained by the supplier, and core decision-making authority is usurped—is intolerable to automakers over the long term. Yet constrained by CATL’s technological moat and production scale, automakers had little choice but to acquiesce silently for years. Supply-chain diversification has thus become their sole viable path to breaking free from this passive predicament.

King CATL Stranglehold on Chinese EV Makers Starts Loosening

3 days ago

Chinese automakers like Li Auto and Xiaomi are diversifying battery suppliers beyond CATL to reduce costs and gain bargaining power. This trend challenges CATL's market dominance amid fierce pricing competition in the EV sector.

bloomberg

2026-09-17

King CATL Stranglehold on Chinese EV Makers Starts Loosening

King CATL Stranglehold on Chinese EV Makers Starts Loosening

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