Tesla Battery Supplier's Shares Shoot Up As It Forecasts Profit Boost For 2023

Contemporary Amperex Technology (CATL), a major Chinese electric vehicle battery manufacturer, has projected a substantial increase in its 2023 profit. This forecast has led to a significant rise in the company’s shares despite a general market downturn.

What Happened: CATL’s shares on the Shenzhen stock exchange experienced a notable 7.9% increase, reaching 151.90 yuan (approximately $23.98) on Wednesday afternoon, as reported by The Wall Street Journal. This marks the highest intraday gain since June last year.

The company, a prominent supplier to Tesla Inc., has projected a 38%-48% rise in its full-year net profit for 2023. This equates to a figure between 42.5 billion yuan and 45.5 billion yuan ($5.94 billion-$6.36 billion). Though less than the 93% surge in net profit posted in 2022, the projected growth has exceeded market expectations.

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Analysts at Citi have expressed that the concerns regarding CATL’s battery margins are exaggerated. They have maintained a buy rating and a 313 yuan ($44.08) target price on the stock. The company’s guidance has also surpassed the profit expectations of Nomura analysts.

CATL’s sales have steadily risen in recent years, driven by the increasing global demand for electric vehicles. According to market researcher Mordor Intelligence, the global EV battery market is expected to reach approximately $62 billion this year and nearly triple in size by 2029.

Why It Matters: In 2023, CATL solidified its position as the dominant player in the global EV battery market, with a market share of 40.9%. This was a significant increase from the previous year.

Despite its strong market position, CATL’s expansion into the U.S. market has faced opposition from some U.S. lawmakers. This has led to calls for an investigation into Chinese companies linked to Ford Motor’s Michigan battery plant, where CATL is a supplier.

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