The near-monopolistic position of Contemporary Amperex Technology Co., Limited (CATL) has created a dynamic where automakers are simultaneously dependent on and wary of the battery giant, with the latter sentiment dominating. No car manufacturer is willing to be constrained in the supply of critical powertrain systems. The collective move by automakers to reduce reliance on CATL has become a focal point in the capital markets recently.

A key manifestation of this shift is the sharp decline in CATL's share price. Over just four months since May, the stock has fallen from 468.75 yuan to around 300 yuan, a maximum drawdown exceeding 32%, erasing roughly 700 billion yuan from its combined A-share and H-share market value. On September 15th, CATL's A-shares plunged 6.16% in a single day, hitting a one-year low, while its H-shares also dropped over 6% simultaneously.

In stark contrast, the company's financial performance remains robust: in the first half of 2026, revenue reached 276.917 billion yuan, a year-on-year increase of 54.80%; net profit attributable to shareholders was 43.284 billion yuan, up 41.98%. Currently, CATL holds a 46.7% share of domestic power battery installations and commands over 75% of the global ternary lithium battery market. The "Battery King" title remains intact.

So why does the stock price of the "Ning King" continue to weaken? What changes have occurred in its valuation logic? And what is the root cause behind this trend?


Accelerated Supplier Diversification by Automakers

Evidence is mounting that new energy vehicle makers are actively restructuring their core supplier networks to reduce dependence on CATL. The power battery industry is moving away from a single dominant player toward a competitive landscape characterized by "two leaders and multiple strong contenders." CATL and BYD form the top tier, while companies like Sunwoda, CALB, and Gotion High-tech occupy the second tier. Major automakers are increasingly extending partnerships to these second-tier suppliers.

Among them, Sunwoda has drawn the most attention. In early September, Li Auto announced a 2.65 billion yuan investment to increase its stake in Sunwoda's power battery subsidiary. Upon completion, Li Auto's related entities will hold a combined 11.17% stake, becoming the second-largest shareholder. The all-new Li Auto L8 will switch entirely to Sunwoda cells, with CATL exiting that model's supply chain. Additionally, subsequent locked orders for the MEGA will feature Li Auto's self-developed 5C ternary batteries.

Xiaomi has also announced that its new Pengcheng series models will be equipped with Xiaomi Longjia batteries, with initial cell partners being Sunwoda and CALB. A Xiaomi EV vice president responded that collaborating with these two suppliers helps integrate their production capacity, creating ample inventory to support large-scale deliveries and shorten wait times for customers. Furthermore, it aids in building a more resilient supply chain, mitigating risks from over-reliance on a single supplier, thereby ensuring stable supply amid market demand fluctuations and industry supply chain changes.

Sunwoda's stock performance presents a sharp contrast to CATL's. On September 16th, Sunwoda's share price surged 13.02% to close at 20.05 yuan, hitting an intraday high of 20.88 yuan, with half-day turnover reaching 2.61 billion yuan. The power battery sector is showing a clear divergence: "CATL trending down, Sunwoda trending up."

Additionally, the Wenjie M6 pure electric version under Harmony Intelligent Mobility Alliance has introduced Gotion High-tech, while Zhijie and Shangjie models are simultaneously incorporating CALB and Sunwoda. XPeng's MONA series is exclusively supplied by CALB, with CATL retaining only a few high-end long-range variants. Estimates suggest that Li Auto and Xiaomi together account for approximately 13.6% of CATL's domestic installations. Across the entire new energy vehicle industry, CATL's domestic share remains stable above 40%.


Is "De-CATL" a Narrative Bias?

The core objective behind automakers' multi-supplier strategies is to diversify supply chain risks and gain cost bargaining power. Previously, CATL's near-monopoly position meant that automakers were both dependent and wary, with the latter emotion prevailing, as no manufacturer wanted to be subject to another's control in such a critical system. To break free from single-supplier constraints, automakers are proactively reshaping the landscape through a combination of self-developed batteries and introducing second-tier suppliers to dilute CATL's pricing power.

However, institutions like UBS hold a dissenting view, arguing that "de-CATL" is a narrative anxiety amplified by media coverage. UBS points out that automakers reducing their use of CATL products (Li Auto, Xiaomi) have received extensive reporting, while those returning to CATL (NIO's Ledo brand, GAC Aion) have been rarely mentioned, indicating a clear narrative bias. Moreover, the "de-CATL" discussion has persisted for years, yet CATL's domestic share remains stable above 40%. Whether this is a narrative bias or a genuine supply chain restructuring remains to be seen.


15 Automakers' Combined Profits Less Than Half of CATL's

The move to reduce reliance on CATL stems not only from supply chain security considerations but also from imbalances in profit distribution across the industry chain. According to research estimates, in the first half of 2026, the combined net profit attributable to shareholders of 15 major listed automakers was 21.048 billion yuan, less than half of CATL's 43.284 billion yuan profit. While the overall automotive industry profit margin is only 3.6%, CATL's gross margin stands at a staggering 23.93%, earning approximately 2.4 billion yuan per day.

This dynamic where battery manufacturers reap the rewards while automakers subsist on meager margins is unsustainable in the long term. The low-profit issues faced by automakers cannot be solely attributed to CATL. With the slowdown in new energy vehicle growth and intensifying price wars, automakers generally face tough times, and pressures are transmitted down the chain, with smaller suppliers often bearing the brunt. By mid-2026, the average accounts payable turnover days for mainstream automakers was approximately 187 days, an increase of 23 days compared to the end of 2025.

In September, the Ministry of Industry and Information Technology and the State Administration for Market Regulation jointly issued a directive encouraging automakers to pay suppliers within 30 days, with a maximum of 60 days, prohibiting forced acceptance of commercial bills. Automakers with excessively long payment cycles or frequent complaints would face regulatory interviews. However, with CATL, automakers are required to settle payments within an average of 54 days. CATL's bargaining power in the supply chain is so formidable that automakers' usual tactics of squeezing suppliers do not work here.


Who Defines the Product?

A more profound shift lies in the transfer of product definition authority. In the past, automakers purchasing batteries typically selected off-the-shelf specifications from battery manufacturers, having almost no say in core definitions such as material formulas and process standards. CATL previously established joint ventures with the vast majority of automakers, including SAIC, GAC, FAW, and Dongfeng, holding a 51% controlling stake in all aspects of cell manufacturing. While automakers secured stable supply, they remained unable to access the technological core.

Automakers are now transitioning from "buying cells" to "defining cells" because attributes like range, fast charging, safety, and low-temperature performance are not ordinary component parameters but the most critical selling points of a vehicle. If battery solutions are entirely controlled by suppliers, automakers' so-called technological competitiveness lacks a solid foundation.

Xiaomi's Longjia battery serves as a typical example. Xiaomi leads the product definition, responsible for the battery pack's mechanical structure, electronic and electrical architecture, thermal management strategy, and BMS software strategy development, while deeply involved in cell material selection, formula design, and manufacturing processes, implementing full-process quality control. The roles of CALB and Sunwoda have shifted from "solution providers" to "customized manufacturers."

NIO has insisted on self-developed battery packs since its first-generation ES8, investing billions of yuan cumulatively to build capabilities in materials, cells, and millisecond-level BMS, with manufacturing outsourced to Sunwoda. A similar story has already unfolded in the electric two-wheeler sector. While Tianneng and Chaowei once dominated lead-acid battery supply, Yadea and Aima have now reclaimed bargaining power by developing their own batteries.


Contested Valuation: Growth Stock or Manufacturing Entity?

The market is undergoing a systematic reassessment of CATL's valuation framework. Previously, the capital markets afforded CATL a growth stock valuation, based on the logic that its technological and scale barriers would sustain high market share and strong pricing power. However, as automakers pursue self-developed batteries and multi-supplier strategies, this premise is being challenged.

As of September 17th, CATL's TTM price-to-earnings ratio is approximately 16.6 times, with a static P/E of about 19.6 times. The market is no longer willing to pay a premium for long-term growth and is instead pricing the company under a cyclical manufacturing framework.

Looking at the medium to long term, CATL still possesses clear growth potential, particularly in its second growth curve—the energy storage business. In the first half of this year, energy storage battery revenue reached 53.261 billion yuan, surging 87.54% year-on-year. Energy storage battery shipments totaled 125 GWh, with a global market share of 27.1%, up 81% year-on-year. Sodium batteries began delivering initial solutions in September, targeting GWh-level shipments by the end of 2026. The Kirin condensed matter battery begins batch delivery in Q3, offering a range of 1,500 kilometers. In overseas markets, CATL's share during the first five months of 2026 reached 33.7%, up 3.7 percentage points year-on-year, with overseas business gross margin at 29.97%, significantly higher than domestic levels.

CATL is also taking measures to support its stock price. Currently, the company has launched a share buyback and cancellation plan totaling up to 40 billion yuan, the largest in A-share market history. On September 11th, it repurchased 604,300 A-shares for nearly 200 million yuan, followed by another 3,098,300 shares on September 16th, spending 947 million yuan. This has, to some extent, bolstered market confidence.

No king lasts forever. The seemingly solid throne of the "Ning King" has begun to show cracks and sway.