CATL shares clouded by bleak outlook after mega Hong Kong debut

HONG KONG – Contemporary Amperex Technology Co (CATL) has received little love following its splashy US$5.3 billion (S$6.8 billion) listing in Hong Kong in May, as investors eye multifold challenges in the global electric vehicle (EV) battery market.

Its Shenzhen-listed shares are down more than 7 per cent from a high in May, weighed down by concerns over heightened competition in China’s market, US tariff threats and slowing demand. The Hong Kong stock remains 19 per cent above its listing price, though there are large wagers on a decline.

Investors are struggling to find the next big growth driver, with the Chinese EV market maturing and worries that batteries are becoming commoditised. Quarterly sales for CATL, the world’s biggest EV battery-maker, have missed analyst estimates for seven consecutive quarters.

“It all comes down to the longevity of the growth trajectory for CATL,” said Mr Jerry Wu, a London-based fund manager at Polar Capital, who holds a small position in the stock. “China is halfway through in electric vehicle penetration, and what’s the growth beyond China EV?” 

The Hong Kong debut had been much hyped as a way to give global investors better access to CATL. That has helped the H-shares outperform the mainland stock so far, with additional boosts from expectations of passive fund inflow due to index inclusions.

Bearish bets are pronounced, however, with short interest on CATL-H at 28 per cent of the free float, according to data from S&P Global. That compares with less than 2 per cent for China’s EV leader BYD and smaller battery peer CALB Group Co.

While Asian investors tend to be focused on shorter-term results, the bigger concern for foreign investors is that EV batteries are becoming “very much like a typical kind of commodity or cyclical cycle”, said Mr Horace Tse, an analyst at CLSA.

This raises the importance of innovation for CATL and the question of whether the firm can develop and commercialise the next big product, he added. 

China’s ongoing EV price wars are another threat to profitability, with parts suppliers reeling from swelling inventories and delayed payments from auto manufacturers. CATL has been seen as a better fit for survival given its dominant position, though smaller rivals like CALB and Gotion High-tech Co are making inroads. CATL’s shares have underperformed peers in 2025.

“Many automakers in China are willing to dual-source and buy from a second-tier player,” said Macquarie Capital head of China equity strategy Eugene Hsiao. CATL still makes good products, “it’s just that a lot of the peers have probably caught up, and now its only edge really is scale”.

CATL faces additional headwinds from US President Donald Trump’s tariffs due to its supply contract with Tesla. The Chinese company was also put on a Pentagon blacklist earlier in 2025.

Despite geopolitical headwinds, expansion into other overseas markets that are less competitive and offer higher margins remains a top priority for CATL.

Much of the proceeds from its blockbuster Hong Kong listing will be used to fund its planned US$7.6 billion expansion in Europe, where it is investing in factories in Germany and Hungary.

The company’s energy storage batteries division is also touted by analysts as the next sales growth driver.

CATL’s growth has slowed along with the overall EV industry, with sales declining in 2024 after more than doubling in both 2021 and 2022. But sell-side analysts remain overwhelmingly bullish, citing the firm’s dominant position and expansion potential.

Mr Zhikai Chen, head of global emerging market equities at BNP Paribas Asset Management, is among investors who still hold the stock. While CATL’s growth is now only in line with the market, “I think people are forgetting that that is a huge market that’s still growing at double digits every single year”. BLOOMBERG