China’s leading EV battery makers’ profits nearly double that of industry’s carmakers
China's EV battery manufacturers saw their combined net profit nearly double that of major carmakers in the first half of the year, despite weakening domestic demand for electric vehicles. Seven leading battery makers, including CATL, reported over 50 billion yuan (US$7.4 billion) in net profit from January to June, marking a 49 percent year-on-year increase. In contrast, 11 major Chinese EV makers experienced a 19 percent decline in combined interim net profit, totaling 28.8 billion yuan. This divergence highlights a widening profitability gap between upstream battery suppliers and downstream vehicle manufacturers in the Chinese EV market.
The real story in China's EV sector is the sharp divergence in profitability between battery makers and carmakers. While the overall EV market faces weakening demand, seven major battery manufacturers, including CATL, collectively posted over 50 billion yuan in net profit in the first half, a 49 percent increase. This contrasts with an 11-company group of EV makers, from BYD to Great Wall Motor, whose combined net profit shrank by 19 percent to 28.8 billion yuan over the same period. This trend reflects how intense price wars are squeezing downstream EV manufacturers, concentrating profits among leading upstream suppliers. The 75 percent higher combined net profit for battery makers compared to carmakers in H1 2023, up from a minor lag a year prior, underscores a significant shift in value capture within China's EV supply chain. For Asian markets, this points to the strategic importance of controlling key components like batteries, even as the end-product market becomes more competitive.
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