Functions for the Market
- Global battery giant, CATL, is leveraging its blockbuster Hong Kong debut to fuel a European expansion.
- U.S.-China trade frictions, including potential cuts to green energy incentives and tariffs, are forcing battery makers like CATL to look to other markets.
- Analysts predict steady revenue growth for CATL, projecting its power battery systems sales to top $68 billion by 2029.
Background
The largest stock listing of 2025 is by the world’s biggest battery maker, a Chinese company profiting from energy transition efforts that Republicans in the US want to defund to finance tax cuts. Amid the ongoing tariff tensions between the US and China, Contemporary Amperex Technology Co. Ltd., better known as CATL, is set to start trading in Hong Kong after raising $4.6 billion in the secondary listing.
In April, a congressional committee called for withdrawal from a deal by two US banks working on the listing, Bank of America Corp. and JPMorgan Chase & Co. The committee cited a Pentagon blacklist which included CATL and several other prominent Chinese firms with alleged links to the Chinese military. The blacklist carries no specific sanctions and CATL denies the allegations. Both banks decided to move forward with the deal, while CATL opted to pursue a Regulation S offering, which excludes sales to US onshore investors and exempts the issuer from certain US regulatory filing obligations.
PRODUCT MENTIONS
President Donald Trump’s tariffs on Chinese imports and desires to cut funding for US green projects threaten battery makers. A Republican budget blueprint to save $560 billion on clean energy tax credits over 10 years, would end them for EVs after next year and for homes after this year. A proposal to disqualify companies from claiming key tax credits if they use components or critical minerals imported from certain countries, including China, would effectively kill the credits even sooner.
The issue
After a tough year in 2024 as battery prices declined, analysts see revenue from CATL’s power battery systems topping $68 billion by 2029, a steep increase from the $35 billion it reported in 2024. In the same period its energy storage battery revenue may grow from $8 billion to $22 billion. CATL, which controls 35% of the global EV battery market, was ahead of rivals with an operating margin of 15% and R&D spending of $2.58 billion in 2024. It also maintained better debt to equity ratios and free cash flow.
CATL’s Hong Kong listing is designed to help fund a battery plant in Hungary, adding to a facility in Germany and a planned factory in Spain. Trade tensions with the US and Republican efforts to sunset clean energy initiatives have led CATL to try to shield itself by licensing its technology, increasing research and development, and sourcing materials from more neutral regions. First-quarter R&D expenses increased 11%.
CATL will need to keep innovating to stay on the cutting edge and maintain market dominance. Among the top takeaways from the April Shanghai auto show were CATL’s Shenxing battery that charges to 520 kilometers in five minutes, its cheaper Naxtra sodium-ion battery and its Choco-SEB battery swapping system.
Tracking
BYD, Xiaomi and CATL are involved in raising $4-6 billion to fund EV or battery projects this year. Track offerings with the IPO <GO> function.
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