CATL Pre-IPO: Funds for Capacity Expansion to Power China to Leading EV Battery Producer Status?

A Common Concern: Is There Enough Lithium to Support the Expected Growth in EVs?

Commercialisation of Solid-State Battery Technology Seems to Be Taking Too Long

Equity Analyst, LightStream Research

Aqila Ali

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

China Consumer discretionary / Thematic (Sector/Industry)

<p>During the past few weeks, there has been news going around about China’s EV Battery Industry. Asia Nikkei on the 30<sup>th</sup>of June reported that the world’s fourth-largest battery producer (China’s third largest battery producer, although a small-scale producer), Optimum Nano, is to halt its battery production for about six months. This was followed by <a href="https://www.smartkarma.com/entities/72" target="_blank" data-smartkarma-citation="entities:72:1">Nissan Motor Co Ltd (7201 JP)</a> cancelling the sale of its battery subsidiary to China’s GSR (July 2nd). Having witnessed this, on the other hand, China’s second largest battery producer, <a href="https://www.smartkarma.com/entities/20962" target="_blank" data-smartkarma-citation="entities:20962:1">BYD Co Ltd (H) (1211 HK)</a> released news that it aims to quadruple output by 2020E (June 28th). What has been the reason for certain Chinese battery producers halting production while others continue to be optimistic with expansion plans? Is there something wrong with the Chinese battery industry that is likely to put the battery makers in trouble? It should also be noted that no news from <a href="https://www.smartkarma.com/entities/24404" target="_blank" data-smartkarma-citation="entities:24404:1">Contemporary Amperex Techn-A (300750 CH)</a> (which went public recently) has been made recently. In our insight: <a href="https://www.smartkarma.com/insights/catl-pre-ipo-funds-for-capacity-expansion-to-power-china-to-leading-ev-battery-producer-status" target="_blank" data-smartkarma-citation="insights:20681">CATL Pre-IPO: Funds for Capacity Expansion to Power China to Leading EV Battery Producer Status?</a> , we mentioned that the rising production and sales of EVs in China places the local EV battery makers in a bright spot. We mentioned that, as China positions itself as the Detroit of EVs, it could emerge as the preferred destination for battery production. This insight aims to capture the possible reasons for the downfall of certain battery producers, analysing the Chinese battery industry and its players and the possible effect of these news on CATL as well.</p>

During the past few weeks, there has been news going around about China’s EV Battery Industry. Asia Nikkei on the 30thof June reported that the world’s fourth-largest battery producer (China’s third largest battery producer, although a small-scale producer), Optimum Nano, is to halt its battery production for about six months. This was followed by Nissan Motor Co Ltd (7201 JP) cancelling the sale of its battery subsidiary to China’s GSR (July 2nd). Having witnessed this, on the other hand, China’s second largest battery producer, BYD Co Ltd (H) (1211 HK) released news that it aims to quadruple output by 2020E (June 28th). What has been the reason for certain Chinese battery producers halting production while others continue to be optimistic with expansion plans? Is there something wrong with the Chinese battery industry that is likely to put the battery makers in trouble? It should also be noted that no news from Contemporary Amperex Techn-A (300750 CH) (which went public recently) has been made recently. In our insight: CATL Pre-IPO: Funds for Capacity Expansion to Power China to Leading EV Battery Producer Status? , we mentioned that the rising production and sales of EVs in China places the local EV battery makers in a bright spot. We mentioned that, as China positions itself as the Detroit of EVs, it could emerge as the preferred destination for battery production. This insight aims to capture the possible reasons for the downfall of certain battery producers, analysing the Chinese battery industry and its players and the possible effect of these news on CATL as well.

Contemporary Amperex Technology (CATL) (300750 CH)

China's EV Battery Industry:Cut in Subsidies and Rise in Technical Standards Challenge Small Players