The battery price war is playing into CATL’s hands

{"text":[[{"start":3.7,"text":"Chinese battery makers, battling sluggish domestic demand for electric vehicles, are instead flogging their wares to homes, data centres and power grids. The global market for energy storage systems is big enough to absorb the excess, but at what price?"}],[{"start":19.38,"text":"So far, it seems to be working. Global energy storage cell shipments reached about 612 gigawatt-hour in 2025, nearly double the previous year’s total according to data from InfoLink Consulting. Chinese battery maker CATL sold 121 GWh, up nearly 30 per cent from the previous year, with its energy storage business accounting for about 15 per cent of group revenue."}],[{"start":45.44,"text":"Yet the economics offer a more complicated story. CATL’s energy storage revenue increased just 9 per cent in 2025, implying that revenue per unit of storage fell about 15 per cent. Blame an abundance of supply."}],[{"start":59.98,"text":"Battery makers took early growth numbers in storage space as a cue to invest heavily. The global lithium-ion battery industry already had about 900 GWh of excess production capacity last year, according to McKinsey estimates, significantly more than global energy storage demand of 612 GWh. On top of that, they have been building new and dedicated storage production lines. That has left the sector in a difficult position. Makers have little choice but to compete away much of the benefit of the new market opportunity by undercutting one another on price."}],[{"start":92.66,"text":"The consequences, however, are not distributed evenly. Despite CATL’s 15 per cent decline in revenue per unit of battery capacity, its energy storage gross margin has held steady at about 27 per cent over the past three years and is nearly 3 percentage points higher than its EV battery margins. Its declining cost of production speaks to the benefit of being the leader in its field."}],[{"start":null,"text":"

"}],[{"start":115.68,"text":"Across many industries, Chinese manufacturers have demonstrated a willingness to tolerate slim margins in pursuit of market share and scale. But in batteries, CATL has already won that race."}],[{"start":127.52,"text":"As the world’s largest battery maker, its cost structure is becoming increasingly difficult for rivals to replicate. The longer pressure on sector margins persists, the less attractive it will become to build the next factory whether for EVs or storage systems. For CATL, the industry’s overcapacity problem may eventually become self correcting."}],[{"start":152.06,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1789017500_9930.mp3"}