---
endpoint: analytics
pattern: Energy
status: done
latency_ms: 234102
conversation_id: 6bf59d56-f2a3-416c-b644-c354be714a41
citations: 2
created: 2026-05-31 19:06:35Z
---

# What’s the bull case bear case for CATL?

# CATL (300750 CH / 3750 HK) — Bull Case / Bear Case

**Setup**: CATL is the world's #1 EV power-battery and energy-storage-system (ESS) producer, dual-listed on Shenzhen (A: 300750) and Hong Kong (H: 3750, IPO'd May 2025). The framework below synthesizes (i) CLSA's House Conviction Outperform thesis from May–June 2025 deep dives, and (ii) the company's own FY2025 annual report (filed March 2026, the most recent corporate disclosure in scope).

CLSA rating: **HC O-PF on both A and H** with TPs of **Rmb380 / HK$447** [1][14].

---

## BULL CASE

### 1. Structural electrification + ESS demand
- EV penetration is **40% in China and below 20% globally**; CATL — as the leader in automotive batteries — is the primary beneficiary of the next leg of penetration AND long-term grid-scale energy storage tied to renewables [16].
- Even with China EV sales decelerating to a **~10% CAGR through 2030**, the premium (>Rmb300k) and mass (<Rmb100k) ends of the market remain underpenetrated [3].
- FY25 lithium-battery shipments grew **~40% YoY to 661 GWh**, with CATL maintaining global leadership in both power and ESS [18].

### 2. Dominant share with premium-segment pricing power
- CATL commands **72% market share in China's high-end passenger EV battery market** — a positioning that delivers higher ASP and richer margin than mass-market peers, and shields it from the worst of the EV price war [1][2].
- Vertically integrated: in-house R&D across battery materials, systems and recycling, with a product matrix spanning LFP, ternary high-nickel, sodium-ion and condensed-matter chemistries [19].

### 3. Margin expansion story is back
- 1Q25 adjusted GP margin **24.4%, up 1.3ppt YoY / 1.2ppt QoQ** — the inflection management had paused in 2H24 [13].
- CLSA models GP margin re-expanding from **29.5% (2025CL) → 31.2% (2027CL)** and net profit margin holding **14.3% → 15.1%**, with ROIC stepping up from 43.7% → 58.3% over the same window [9][15].

### 4. Tech-Day product launches under-credited
- **Naxtra sodium-ion battery**: 175 Wh/kg energy density, ~500 km range, world's first mass-produced Na-ion product targeted for commercial production by end-2025 — solves the historic energy-density bottleneck while keeping the low-temperature/safety advantages [6].
- **2nd-gen Shenxing LFP**: 12C peak charging → **520 km in a 5-minute charge**, 800 km full-charge range — bringing CATL to parity with BYD's superfast-charging benchmark [5][7].
- These products demonstrate R&D depth and are the underlying driver of the blended-margin expansion CLSA expects in coming quarters [5].

### 5. Europe build-out, balance-sheet armory
- **38% European market share as of 1Q25** and rising; with Northvolt's bankruptcy, the only major non-Chinese local manufacturer is gone [8].
- Three announced European plants — **Germany (14 GWh, achieved breakeven 1Q25), Hungary (100 GWh phased, $8.2bn capex, Phase I end-2025), Spain (50 GWh, 50:50 Stellantis JV, $4.6bn capex, end-2026)** — bringing European capacity to **164 GWh** [9][17].
- The **US$4.6bn HK IPO** and **~US$45bn of cash on balance sheet** fund European capex and next-gen R&D (solid-state targeted for small-scale commercial production in 2027) without leverage risk [10].

### 6. Valuation re-rating optionality
- CATL trades at **~14x 26CL PE vs the 2022–current ~20x average** — implying the market is pricing in a more pessimistic outlook than fundamentals warrant; rerating to historical average is "justified" per CLSA [12].
- SOTP NAV breakdown supports Rmb380 TP: EV batteries Rmb195.7/sh (12x EV/Ebitda), ESS Rmb81.6/sh (12x), materials Rmb22.8/sh, others Rmb13.3/sh, plus Rmb74.8 net cash; H-share gets a 10% premium → HK$447 [14].

### 7. CLSA forecast snapshot

| Metric | 2024A | 2025CL | 2026CL | 2027CL |
|---|---|---|---|---|
| Revenue (Rmbm) | 362,013 | 484,137 | 579,498 | 656,511 |
| Net profit (Rmbm) | 50,745 | 69,202 | 82,978 | 98,869 |
| EPS (Rmb) | 11.57 | 15.18 | 18.20 | 21.69 |
| EPS growth (% YoY) | 15.0 | 31.2 | 19.9 | 19.2 |
| PE (x) | 21.0 | 16.0 | 13.4 | 11.2 |
| EV/Ebitda (x) | 10.0 | 7.8 | 5.9 | 4.5 |
| ROE (%) | 22.8 | 25.2 | 24.7 | 24.2 |
| Net cash/share (Rmb) | 38.57 | 53.05 | 67.50 | 87.75 |

Source: CLSA "Green shoots" (10 Jun 2025) [15].

---

## BEAR CASE

### 1. EV demand deceleration is real
- CLSA's own China auto team flags **China EV CAGR slowing to 10% through 2030**, with OEMs deploying aggressive price cuts to defend share [3]. A deeper-than-modeled global EV slowdown would directly hit power-battery volume growth [4].

### 2. Geopolitics & US tariff overhang
- **~40% of CATL's ESS battery shipments are exported to the US**; worst-case scenario (full loss of US ESS revenue) would impact **~9% of total sales** [11].
- Management guides "low-single-digit" earnings impact assuming pass-through to customers — but that assumes pricing power holds and tariff magnitude is contained. The 90-day extension is still unresolved, leaving headline risk [11].
- Broader risk: unfavourable policies against EVs and/or Chinese components/equipment in the EU and US — "Chinese components risk" is explicitly flagged as a key investment risk [4].

### 3. Commoditisation pressure on margins
- The explicit downside scenario: **"aggressive commoditisation and lack of technological advancement and differentiation could lead to negative operating leverage for CATL"** [4]. LFP technology has narrowed CATL's lead (BYD's superfast-charging Blade was the impetus for 2nd-gen Shenxing), and Korean/Japanese peers (LGES, Samsung SDI, Panasonic) are not standing still.

### 4. Capital intensity — Europe execution risk
- Germany plant took from **end-2022 → 1Q25** to reach breakeven [8] — ~9 quarters of negative drag on a 14 GWh facility. Hungary (100 GWh, US$8.2bn) and Spain (50 GWh JV, US$4.6bn) are an order of magnitude larger; execution slippage or under-utilization would be a multi-billion-dollar drag.
- Stellantis JV concentration: Spain depends on a single anchor partner; any change in Stellantis EV strategy materially affects the plant's economics [17].

### 5. H-A premium reversal risk
- CATL-H has been trading at a **~12% premium to CATL-A** post-listing, vs CLSA's TP that bakes in a 10% sustained premium [14]. The thesis depends on this being "the new normal" for large-cap dual-listed Chinese names — if BYD-H's recent premium reverses, CATL-H is mechanically more vulnerable than CATL-A.

### 6. Cyclical risk to the margin-expansion call
- Quarterly adj GP margin path is not linear: **1Q24 23.1 → 2Q24 23.4 → 3Q24 27.9 → 4Q24 23.3 → 1Q25 24.4** [13]. The bull case rests on Naxtra and 2nd-gen Shenxing scaling cleanly through 2026; any product-launch hiccup or pricing concession to OEMs would invalidate the rerating thesis.

### 7. Sodium-ion / solid-state are option value, not earnings drivers (yet)
- Sodium-ion mass production is end-2025; solid-state is targeted only for **small-scale commercial production in 2027** [10]. The bull case credits CATL for both, but neither is a near-term P&L contributor — and either could be leap-frogged by peers, eroding the "#1 R&D" narrative.

---

## NET — How CLSA Adjudicates

CLSA's High-Conviction Outperform call rests on **three things outweighing the risks**: (i) premium-segment positioning insulates ASP/margin from the broader EV slowdown [2], (ii) tariff impact is over-discounted in the current 14x PE vs 20x historical average [11][12], and (iii) the Tech-Day product cadence (Naxtra, 2nd-gen Shenxing) revives the blended-margin expansion story [5]. The bear case turns on whether commoditisation/policy compresses operating leverage faster than the European volume ramp and premium-mix improvement can compensate [4].

---

**Sources**
[1] CATL — Green shoots (HC O-PF), CLSA, 10 Jun 2025 — 607961671LinqAlpha.PDF — premium-market positioning, 72% high-end share, TP raised to HK$447
[2] CATL — Green shoots, CLSA, 10 Jun 2025 — premium ASP/margin and underpenetrated premium EV growth
[3] CATL — Green shoots, CLSA, 10 Jun 2025 — China auto team: 10% EV CAGR to 2030, premium/mass underpenetrated
[4] CATL — A new era (HC O-PF), CLSA, 20 May 2025 — 607959766LinqAlpha.PDF — Investment risks: EV adoption deceleration, adverse policy, commoditisation
[5] CATL — A new era, CLSA, 20 May 2025 — Margin expansion from new product launches; 1Q25 GM 24.4% +1.3ppt YoY
[6] CATL — A new era, CLSA, 20 May 2025 — Naxtra sodium-ion: 175 Wh/kg, ~500km, commercial production end-2025
[7] CATL — A new era, CLSA, 20 May 2025 — 2nd-gen Shenxing LFP: 12C peak charge, 520km in 5 min, 800km range
[8] CATL — A new era, CLSA, 20 May 2025 — 38% Europe market share 1Q25; three European plants; Germany breakeven 1Q25
[9] CATL — A new era, CLSA, 20 May 2025 — Europe plant table: Germany 14 GWh / Hungary 100 GWh / Spain 50 GWh JV
[10] CATL — A new era, CLSA, 20 May 2025 — US$4.6bn HK raise; ~US$45bn cash; solid-state 2027
[11] CATL — A new era, CLSA, 20 May 2025 — US tariff worst-case 9% of sales; mgmt guides low-single-digit EPS hit
[12] CATL — A new era, CLSA, 20 May 2025 — 14x 26CL PE vs 20x historical avg; rerating thesis
[13] CATL — A new era, CLSA, 20 May 2025 — Quarterly adjusted GP margin series 1Q24–1Q25
[14] CATL — Green shoots, CLSA, 10 Jun 2025 — SOTP valuation: Rmb380 A-share TP, 10% premium → HK$447 H-share TP
[15] CATL — Green shoots, CLSA, 10 Jun 2025 — Financial summary table 2023A–2027CL
[16] CATL — A new era, CLSA, 20 May 2025 — Investment thesis (40% China EV penetration, <20% global)
[17] CATL — A new era, CLSA, 20 May 2025 — Spain plant: 50:50 Stellantis JV, 50 GWh, US$4.6bn capex, end-2026
[18] CATL FY2025 Annual Report, Mar 2026 (300750) — Chairman's letter: lithium-battery shipments +~40% to 661 GWh
[19] CATL FY2025 Annual Report Summary, Mar 2026 (300750) — vertical R&D capability across battery materials, systems, recycling

## Citations

- [18] **宁德时代：2025年年度报告** · external
- [19] **宁德时代：2025年年度报告摘要** · external

