As the leader in the battery industry, Contemporary Amperex Technology Co., Limited (CATL) continues to dominate in terms of battery installation volumes and market shareNevertheless, recent data reveals a concerning downward trend in both metrics for the companyThis decline poses challenges not just for CATL, but may also signal shifts within the entire electric vehicle (EV) sector.

Recently, the China Automotive Power Battery Industry Innovation Alliance unveiled its September data, highlighting the dynamics of the automotive power battery marketWith the automotive market generally witnessing a "golden September, silver October" surge in sales, the overall installation volume for power batteries in China also observed a significant increase

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For September, the total reached 36.4 GWh, marking a robust growth both on a monthly and yearly basis.

Despite CATL's strong performance, the company's data reveals that its battery installation volume stood at 14.35 GWh in SeptemberThis is a 5% decrease from the previous year’s figure of 15.12 GWh, marking CATL as the only player within the top five battery manufacturers to experience a decline during this periodIn contrast, competitors like BYD, Zhongxin Innovation, Yiwei Lithium Energy, and Guoxuan Hi-Tech have all reported varying degrees of growth.

Furthermore, CATL's market share in the battery installation domain shrank to 39.41%, a significant plunge of over eight percentage points year-on-year

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This was the first time in 2023 that CATL’s market share dipped below the 40% markIndustry analysts suggest that this drop may be tied to decreased sales for one of its largest clients, Tesla, in the Chinese market.

Data from the China Passenger Car Association indicates that Tesla’s retail sales in China fell by an alarming 43.9% in September, with total units sold at 43,507. This decline was particularly sharp compared to August's sales of 64,694 units, making Tesla the brand with the largest drop among the top ten new energy vehicle manufacturers of the month.

From January to September 2023, Tesla’s cumulative sales in China stood at 433,700 units, reflecting a year-on-year growth of 36.4%; however, this growth rate is slowing down

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Likewise, CATL's market share for power batteries from January to September has decreased to 42.75%. Some experts believe that as new models like the updated Model 3 begin to ramp up production, CATL’s battery installation volumes may see a corresponding uptick.

Interestingly, CATL has not heavily relied on a narrow client base; recent financial reports indicate that its top three customers contribute less than 50% to its total revenueWhile BYD can integrate battery supply directly into its own vehicle production, CATL still relies on orders from auto manufacturers to bolster its installation volume.

Throughout the year, rumors surfaced regarding Tesla potentially changing battery suppliers, leading various automobile manufacturers to gradually reduce their dependence on CATL

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Companies are focusing on supply chain security and cost considerations, increasingly opting for second-tier suppliers like Zhongxin Innovation, Yiwei Lithium Energy, and Guoxuan Hi-Tech.

In its semi-annual financial report, CATL acknowledges that as domestic and international battery firms announce ambitious production expansion plans, some carmakers are planning to establish their own battery production capabilitiesIf these new capacities come online as scheduled, a rapid increase in battery supply within the market could intensify competition.

Between January and September, CATL and BYD collectively dominated the power battery market, with market shares of 42.75% and 28.94%, respectively

However, both companies experienced declines in their market share percentages, thus opening doors for second-tier battery manufacturers to seize opportunities in the market.

In the first half of this year, CATL achieved a revenue of 189.2 billion yuan and a net profit of 17.55 billion yuan, which certainly showcases the company's robust financial healthHowever, against this strong backdrop, CATL faces concerns about its decreasing production capacity utilizationTheir utilization rate in the first half of the year was 60.5%, down more than 20 percentage points from 81.25% in the same period last yearIn 2021, CATL’s production capacity utilization had peaked at 95%.

This declining utilization rate reflects a broader issue of overcapacity within the Chinese power battery sector

According to the data released by the Battery Alliance, the production volume of power and energy storage batteries in China from January to September reached 533.7 GWh, of which power batteries accounted for approximately 92.1% at around 491.5 GWhHowever, the total sales volume was only 425 GWh, indicating a near 1.16 production-to-sales ratioSurprisingly, the battery installation volume during this same period was only 255.7 GWh, accounting for just 52% of the total production.

Even with these challenges, CATL remains committed to expanding its production capacityIn the first half of the year, it maintained existing capacity at 254 GWh, with a utilization rate of 60.5% and had an additional 100 GWh under construction.

It is worth noting that CATL is experiencing robust growth within international markets