Battery Giant CATL Responds to Investor Concerns

Contemporary Amperex Technology Co. Ltd. (CATL), a global leader in lithium-ion battery development and manufacturing, released a record of investor relations activities on Thursday. Investors exchanged views with the company on its net profit, gross profit margin, and product prices in the first quarter of 2022.

In response to the decrease in net profits in the first quarter compared to the fourth quarter of 2021, CATL said: “The price increase of raw materials such as lithium carbonate exceeded expectations, while the product price for clients increased relatively cautiously. The sales volume in the first quarter dropped due to seasonal factors while the price increase and the month-on-month sales decline can explain the main reasons for the change in net profit attributed to parent company owners.”

Investors also inquired about the product pricing strategy of CATL. The company said: “We have certain processes for the friendly price negotiation with clients, and there are differences in different customer situations and application scenarios, so we cannot set the same price for different clients. Overall, the negotiation and price adjustment with customers have been mostly completed. We will gradually implement measures in the second quarter of 2022.”

In addition, in view of the impact of recent price increases on vehicle orders, CATL commented: “There are differences in application scenarios. Under the backdrop of rising oil prices, consumers who need to consider their oil-electricity balance have relatively high acceptance of new energy vehicle price increases, but the impact in some scenarios, such as operations and energy storage, is relatively large.”

When talking about the impact of the epidemic, CATL said that the part of Ningde city where the company’s headquarters and main production bases are located has recently experienced an outbreak. Under the rapid response and action of the government, the city lifted restrictions before Labor Day. In addition, the epidemic outbreak in Shanghai and other areas has caused a reduction in many of automakers’ output, which may have some impact on consumption. With the gradual resumption of work and production, the overall impact has been small. Meanwhile, the company’s annual production capacity is expected to meet customer demands.

SEE ALSO: CATL Power Battery Factory in Shanghai Resumes Production

In March this year, Bloomberg reported that the battery provider considered several sites for building a battery factory valued at $5 billion, and even considered building the factory in North America. CATL responded on Thursday that the company discussed with its US customers about various possible supply and cooperation schemes as well as the possibility of localized production, but the firm will have to take into account the influence of worker training, efficiency, labor unions and other factors on quality and cost in each individual situation.