Car companies no longer need to work for CATL

Looking back a year ago, the supply and demand pattern of the power battery industry underwent a revolutionary change.

At that time, battery supply was scarce, and car companies were all working for CATL; However, as 2024 approaches, the situation is vastly different. The supply and demand relationship in the power battery market has reversed, from insufficient supply a year ago to overcapacity today. According to data from the China Automotive Power Battery Industry Innovation Alliance, battery production far exceeds actual demand, leading to a decrease in capacity utilization rates for companies such as CATL and causing their stock prices to hit rock bottom.

There are many causes of battery shortage. Firstly, the continuous increase in battery costs poses a huge burden on new energy vehicle companies. The Chairman of GAC Group has publicly criticized battery manufacturers such as CATL for excessively pursuing short-term profits while neglecting the long-term development of the industry. Secondly, the excess production capacity is due to the surge in investment projects and fierce market competition, resulting in excessive capacity expansion. Battery companies are facing unprecedented difficulties. Several power battery companies have experienced production shutdowns, with companies such as Jiawei New Energy and Panasonic Battery announcing production shutdowns or bankruptcies. The reshuffle of the electric vehicle market has reduced the overall demand for power batteries, forming a profound "structural surplus" in the industry.

This "structural surplus" manifests as overcapacity in low-end batteries, while there is still market demand for high-quality batteries. The General Manager of FAW Group has warned that this overcapacity is a risk for the industry, especially with the iteration of new energy vehicle technology, the market's demand for high-quality batteries will gradually become prominent.

In the face of difficulties in the domestic market, Chinese battery companies have set up factories overseas in an attempt to find new opportunities in overseas markets. However, this also brings a series of challenges. European and American countries have increased the difficulty of competition for overseas enterprises by cultivating local battery companies and implementing regulations to restrict the import of batteries. Meanwhile, although Chinese battery companies have invested a large amount of funds in going global, they still face obstacles in localization and brand recognition.

Data shows that the demand for electric vehicles in European and American countries has been increasing year by year, but due to regulatory restrictions, local battery companies have taken a dominant position. This makes it difficult for small and medium-sized enterprises to withstand high costs and intense competitive pressure during their overseas journey. Overall, the power battery market is undergoing tremendous changes and challenges. Only those enterprises with a global layout and strong research and development capabilities can survive in the fierce market competition.

In 2024, car companies may not really need to work for CATL anymore, but in the face of the future, finding a suitable positioning and strategy is still a problem that every enterprise must ponder deeply.