CATL’s next bet is bigger than electric cars

{"text":[[{"start":0,"text":"An electric heavy truck uses a battery pack that’s about seven times larger than that of a typical passenger electric car. As commercial transport goes electric, it is opening up a new growth market for battery makers."}],[{"start":16.1,"text":"China is leading this shift. Heavy trucks powered by new energies, which include battery electric and hybrid plug-ins, accounted for 37 per cent of sales in the first eight months of this year and more than 50 per cent in September. These big beasts are increasingly leaning towards battery swapping models, where spent batteries get replaced with fresh ones at dedicated swapping stations to avoid lengthy charging times. CATL plans to have 900 heavy truck swap stations by the end of this year, and 10,000 across China longer term."}],[{"start":49.52,"text":"The benefit, for the Chinese battery behemoth, is threefold. For one thing, seamless swapping requires there to be more batteries in the system than trucks. Second, swappable batteries do not have to be sold alongside the chassis. Rather, they are rented out, turning the battery into a separately financed asset that generates recurring revenue throughout the truck’s life cycle. Swapping stations can also charge batteries when electricity prices are low and use or sell stored power when prices rise."}],[{"start":79.2,"text":"Any opportunity to nibble extra margin is a much-needed upside for battery makers, who face falling prices and commoditised products. CATL’s latest results illustrate the challenge: third-quarter sales rose 59 per cent compared with the same period a year earlier, but that was driven by a surge in the number of units sold; net profit increased just 14.5 per cent."}],[{"start":102.92,"text":"Battery swapping is still a relatively small part of CATL’s business, which remains dominated by battery sales for electric vehicles. But the direction of travel is clear. CATL is moving beyond selling batteries towards building an infrastructure business, both for road transport and for stationary energy storage systems, which put electricity aside for later use."}],[{"start":null,"text":"

"}],[{"start":124.48,"text":"Shares of CATL trade at about 11 times forward earnings, less than half their valuation a year ago and well below previous peaks as the group transitions from an EV growth story to a more mature industrial business. If it can turn its battery expertise into a new infrastructure business, it may well regain pricing power in a market where hardware alone no longer guarantees an edge."}],[{"start":146.18,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793188415_1969.mp3"}