Shares of Contemporary Amperex Technology Co., Limited (CATL) took a hit on September 8, sliding 3.65% and at one point plunging as much as 5% during intraday trading. This drop extends a losing streak that has seen the stock shed nearly 27% of its value over roughly four months since hitting a year-to-date peak of 467.34 yuan on May 7. The downward momentum continued at the opening bell on September 9, with investors interpreting the slide as a growing concern over the battery giant's future amid automakers' push for diversified supply sources.
The pressure is mounting from car manufacturers seeking to reduce their reliance on CATL. On September 4, Li Auto announced plans to invest 2.65 billion yuan in Sunwoda Power Technology Co., Ltd. (Sunwoda Power), a subsidiary of Sunwoda Electronic Co., which focuses on developing, manufacturing, and selling power batteries. Following this investment, Li Auto will become the second-largest shareholder in Sunwoda Power with an 11.17% stake. According to South Korean market research firm SNE Research, Sunwoda Power ranked tenth globally in power battery installations in the first half of 2026, capturing a 2.4% market share, compared to CATL's leading 39.9% share.
Li Auto had previously held shares in Sunwoda Power and even established a 50-50 joint venture battery manufacturing company with it last October. The company emphasized that this latest investment is not purely financial, but rather a move to deepen collaboration from joint R&D and manufacturing into a long-term aligned partnership. During an earnings call on August 26, Li Auto's CEO Li Xiang stated, "Taking batteries as an example, our self-developed capabilities cover the complete system including cells, packs, BMS, and thermal management." By September 7, the company announced that its self-developed batteries have already been integrated into models like the L8, L6, and i8, with plans to deploy them across its entire lineup. Flagship products, including the MEGA and i9, are also expected to gradually transition from CATL-supplied solutions to in-house ones.
Li Auto is not alone in this quest for greater control. On September 4, Xiaomi EV officially partnered with CALB and Sunwoda Power on strategic cooperation for its "Xiaomi Dragon Armor Battery." Previously, CATL was Xiaomi's primary power battery supplier. This broader shift among automakers toward alternative battery suppliers or self-development largely stems from their desire to gain more leverage in negotiations.
The underlying tension is economic. Data from the China Passenger Car Association showed that the automotive industry's profit margin stood at only 3.6% from January to July this year. Secretary-General Cui Dongshu noted that the recent decline in profit margins remains significant, warning that major automakers "will face acute pressure on profitability" if they lack bargaining power in the battery supply chain. Meanwhile, CATL reported a impressive net profit of 43.28 billion yuan in the first half of this year.
The trend of automakers seeking more influence in the battery segment has been brewing for years. In July 2022, then-chairman of GAC Group, Zeng Qinghong, highlighted that batteries account for a growing share of vehicle costs—estimating they make up 40%, 50%, or even 60% of the total—and quipped, "So am I just working for CATL now?" GAC had invested in CALB and sourced batteries from them, though it later faced customer complaints about CALB battery swelling, prompting public apologies from both firms.
Still, escaping CATL's dominance is no simple task. "It's hard for automakers to break away from CATL because its power battery quality is indeed stable; using their products reduces a lot of concerns," noted Mo Ke, founder of True Lithium Research. He added that CATL's position has actually strengthened this year, as some quality issues have surfaced with other battery suppliers, making carmakers more dependent on the market leader and potentially emboldening CATL in price discussions. Mo Ke cited a recent example: starting September 1, lithium batteries became subject to a 2% consumption tax after years of exemptions. "This added cost should theoretically fall on automakers, but some have been forced to negotiate with battery manufacturers about sharing it. In such negotiations, CATL may appear quite assertive," he said.
At the heart of the matter lies a fundamental power shift. "Automakers are seeking to redistribute profits with CATL. While vehicle manufacturers operate on razor-thin margins, CATL's profit rate still exceeds 10%," Mo Ke explained. "Through self-development or turning to other suppliers, automakers aim to pressure CATL." He characterized the strategy as an attempt to force the battery titan into a pricing war.