Tesla battery maker, CATL, doubles profit in Q2 earnings | Elon Musk News

Chinese EV battery maker CATL continues its reign as the world’s largest battery maker after strong growth in its second quarter earnings.

As the transition to electric vehicles in the auto industry picks up pace, the need to lock down critical EV battery content is becoming apparent.

Automakers are scrambling to close deals with EV battery makers to ensure they have the raw materials to ramp up production and hit their electric vehicle targets. For example, Volkswagen and Mercedes-Benz yesterday announced deals to source minerals from Canada.

Meanwhile, CATL is an important supplier to major EV manufacturers such as Tesla, BMW and Volkswagen, to name a few. The battery supplier is now ranked No. 1 in EV battery usage for the fifth year in a row.

Despite concerns over economic growth in China, CATL’s income continues to rise. There were significant supply chain issues due to the COVID-19 lockdown in China as factories and plants were shut down.

Electric vehicle makers in China are feeling the pressure this year. For example, XPeng, a major EV maker in China, reported 7,000 fewer deliveries in the second quarter, compared to its peak 41,751 in Q4 2021.

CATL is overcoming these issues with major EV partnerships and a major share in the growing EV battery market. The battery maker helped Tesla scale production at the Gigafactory Shanghai to become the foremost global EV factory.

The success is fueling the development of CATL outside of China. The company first announced a $1.96 billion battery factory in Germany (to support German automakers ramping up EV production) with 8 GWh of battery capacity annually. Then, earlier this month, the battery giant said it would invest $7.4 billion in Europe’s largest 100 GWh battery plant in Hungary.

The new investments may seem excessive, but as you’ll see from CATL’s second-quarter earnings, the company is growing rapidly. In addition, more battery capacity will be needed to meet the growing demand for electric vehicles.

CATL continues second quarter earnings success despite industry hurdles

Even as global economic conditions are deteriorating due to rising inflation and geopolitical tensions, EV sales continue to pick up.

In China, EV sales 120% rose According to the China Association of Automobile Manufacturers, in the first half of 2022. In fact, most automakers are seeing an increase in EV sales this year.

That being said, CATL continues to control the EV battery market with a 34.8% share in the first half of 2022, up from 28.6% last year. South Korean LG Energy Solutions, which supplies major EV makers such as Tesla, GM and Ford, earned second place.

However, CATL appears to be weathering the storm better than its counterpart. For one thing, CATL’s revenue jumped a massive 158% in Q2 over the previous year to reach 64.29 billion yuan (about $9.36 billion).

CATL experienced some pressure on margins as battery metal prices remain elevated. Lithium Prices Are up 343% in the last one year and are reaching record highs. Despite this, according to Reuters, CATL’s net profit grew 164%, reaching more than $974 million in its Q2 earnings.

To help tackle rising battery costs across the industry, CATL says it has entered into long-term contracts with suppliers, which will help reduce costs. CATL in its second quarter earnings also mentioned that it has signed agreements with Ford and other automakers in the US as the new Inflation Reduction Act is likely to increase demand for EVs with new tax incentives.

CATL BWM iX3 Source: CATL

Electrek’s Tech

It cannot be denied that the need for EV batteries is significant; Automakers are looking to ramp up EV production, batteries and the materials to make them as they become increasingly scarce.

Battery manufacturers such as CATL and LG are working to increase supply for the EV rollout to be successful. The world’s largest EV battery maker is getting bigger as its second quarter earnings show.

It’s no surprise to see CATL increase sales as EV makers seek to close deals for batteries — but what’s surprising is how well the company is handling macroeconomic changes.

Despite growth concerns in its primary market, the battery maker is expanding into almost every segment, which will help mitigate the impacts.

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