By ZHUANG Jian
For quite a while, CATL stock seemed to be only going up, until it didn't. After having almost doubled in 2021, the shares slid nearly 20 percent in the first week of trading after the Chinese New Year holiday. Losing more than 200 billion yuan (US$3.15 billion) in market value, shares closed at 508 yuan on Monday, nearly 30 percent below the December highs.
Investors have been concerned about overvaluation since last May when CATL first reached 1 trillion yuan in market cap. Morgan Stanley came up with a price expectation of 251 yuan, far below the price at the time (434 yuan). Competition, they said, was increasing every day and the relatively new business was significantly overvalued. This ran counter to mainstream opinion, which holds a somewhat starry-eyed view of the company’s prospects. At least four of CATL’s top ten shareholders reduced their holdings last year, with Hillhouse Capital dumping about a quarter of its stock.
Investment in renewable energy and electrification of transportation might quadruple by 2050 but perhaps CATL is ahead of the curve. Last year, CATL batteries powered half of China’s new EVs but were significantly outcompeted in Europe and the Americas by LGES and Panasonic. LGES raised US$10.8 billion in South Korea’s largest IPO last month and CEO Kwon Young-Soo expects to overtake CATL in the future.
The sodium-ion battery CATL introduced last year is more efficient but more technologically challenging than its lithium-ion counterpart. Mass production is to begin by 2023.
Startups CALB and Svolt make only a tenth of what CATL does but both are aggressively expanding. Last year CATL committed 76.5 billion yuan to build or expand six factories, which would take its total capacity to 600 GWh by 2025, well within reach of the plans of CALB and Svolt. CALB was sued last year by CATL for intellectual property infringement.
