Shares of battery maker Contemporary Amperex Technology (CATL for short, SHE: 300750) rose by 10% on July 13 to its peak of RMB 215.82 (USD 30.5), reaching a total market cap of nearly RMB 500 billion (USD 70 billion). CATL remains the most valuable company on the Shenzhen Stock Exchange’s ChiNext board since June 5.
CATL’s share price may have been boosted by news that it will supply power batteries to Tesla’s (NASDAQ: TSLA) Gigafactory in Shanghai starting this month. According to a February circular, CATL has signed a two-year contract with Tesla, 36Kr reported.
Meanwhile, shares of Tesla have skyrocketed more than 275% in 2020, driven by factors including better-than-expected earnings, solid vehicle deliveries, and a slew of Wall Street analyst upgrades, Market Insider reported.
Headquartered in China’s southeastern Fujian province, CATL, known as one of the leading lithium-ion batteries manufacturers for electric vehicles, also announced in early July that it formed a comprehensive strategic alliance with Japanese automobile giant Honda.
Growing in tandem with the Chinese government’s policies supporting the development of clean-energy vehicles, CATL owns the domestic market of both ternary lithium-ion and lithium iron phosphate batteries with 50.2% and 57.2% market share, respectively, in 2019, Sina reported.
Internationally, however, CATL’s leading position since 2017 is lost to LG Chem of South Korea and Panasonic of Japan in the latest quarter, as SNE Research’s data showed.
In addition, BYD, CATL’s major rival in China who manufactures both EVs and batteries, also saw its market share drop.
Reasons for the slowdown can probably be traced to declining EV sales in China last year, due to diminishing government subsidies.
In 2020, however, Chinese authorities decided to extend subsidies for new energy vehicle purchases by two additional years to offset the impact of the COVID-19 pandemic, KrASIA reported in early April.
Notably, CATL was founded in 2011 based on the vehicle battery unit of ATL, whose lithium-ion battery products are widely used by smartphone brands like Apple, Samsung, Huawei, and others.