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CATL Stock: Contemporary Amperex Technology Co Ltd

Contemporary Amperex Technology Co Ltd is a Chinese company that manufactures and sells power battery systems. The company’s primary business is the research, development, production, and marketing of novel energy vehicle power battery systems and energy storage systems, as well as the selling of energy storage systems.

Power battery systems, energy storage systems, and lithium battery materials are among the company’s most popular products. The products of the company are primarily employed in the domains of electric passenger cars, electric buses, and special vehicles, such as electric logistics trucks, among others. The company sells its products both within the country and to customers in other parts of the world.

Following its initial public offering (IPO) this month, lithium-ion battery manufacturer Contemporary Amperex Technology Co. Ltd (CATL) surpassed all other companies on China’s Nasdaq-like ChiNext stock exchange in terms of market capitalization.

The offering resulted in the world’s largest battery manufacturer for electric vehicles receiving over $1 billion in capital for expansion. The value of CATL’s shares increased by 44 percent on its first day of trade, exceeding the maximum permitted under Chinese trading regulations and valuing the business at around $12.3 billion.

As reported by Reuters, “Chinese initial public offerings (IPOs) frequently climb by the maximum permitted on their first day, assisted by regulators’ cap on valuations and investor anticipation of such a rocket start.”

However, during the next four days, shares proceeded to rise to the maximum extent permitted by Chinese laws, surging by about 76 percent in the span of a week.

The initial public offering (IPO), which was supported by Goldman Sachs, saw CATL sell 217 million shares, or ten percent of the firm, at a price of 25.14 yuan ($3.92) a share.

According to Reuters, ordinary investors bid for 3,201 times the number of shares that were available, while fund managers bid for 537 times the number of shares that were available. Bloomberg stated that CATL’s initial public offering (IPO) resulted in the creation of three new millionaires in China within 48 hours.

CATL’s founder Zeng Yuqun

They are CATL’s founder Zeng Yuqun, who has a 26 percent investment in the company, vice chairman Huang Shilin, who owns a 12 percent stake, and shareholder Pei Zhenhua, a clean-technology executive who purchased a 6.1 percent stake in the company through a holding firm.

CATL holds a dominant position in the Chinese electric vehicle industry, having signed strategic partnerships with manufacturers such as the state-owned SAIC Motor Corp., the electric bus powerhouse Yutong, and Geely, which owns the Volvo and Lotus brands, among others. CATL is headquartered in Beijing.

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Other companies that sell batteries to the Chinese manufacturer include BMW, Honda, Hyundai, Nissan, Toyota, and Volkswagen, and it is rumoured that it is in negotiations with Daimler as well. The initial public offering (IPO) was designed to obtain capital to fund development aspirations in China.

According to the Financial Times, CATL, which now has an estimated 12 gigawatt-hours per year of battery manufacturing capacity, intends to increase that capacity by another 24 gigawatt-hours per year by 2020.

Following Tesla’s Gigafactory, the capacity will be provided by a 24-line factory in Huxi, China, which will be the world’s largest battery production hub after that of the company. CATL also intends to do research and development on novel batteries for electric cars and energy storage, as well as on other related topics.

CATL Stock: Contemporary Amperex Technology Co Ltd

Later on, the business hopes to establish a manufacturing facility in Germany to fulfil the needs of European automobile manufacturers. According to sources, CATL, which is located in Ningde in southeast China, is considering a location in Thuringia, central Germany, for a future manufacturing facility.

Manufacturing in Poland or other parts of Europe is also being considered, according to reports. According to the Financial Times, CATL has cut back its fundraising aspirations compared to last year, when China removed incentives for electric vehicles.

Still, its listing is the next chapter in one of the most amazing growth stories in the battery business, which has been documented previously. The firm has only been in operation for seven years, yet during that time it has risen to become the dominant player in the lithium-ion battery market.

As a result, it is currently regarded as China’s response to LG Chem and Panasonic in the lithium-ion battery industry.

Benchmark Mineral Intelligence predicts that by 2023, CATL will have far outperformed its competitors in terms of manufacturing capability, with 50 gigawatt-hours of battery gigafactory capacity in China alone, according to the company.

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This means that China will account for more than half of all lithium-ion production capacity in the globe by that time, according to the analytics group. A large portion of this will be used to supply China’s domestic electric vehicle industry, which is already the largest in the world.

Bloomberg New Energy Finance predicts that China will sell 2.5 million electric vehicles in 2020, according to the company. Sales of electric vehicles increased by 72 percent in 2017, reaching 580,000 units, or 777,000 units if plug-in hybrids and fuel-cell vehicles are included in the equation.

China also possesses 99 percent of the world’s electric buses and two-wheelers, according to the International Energy Agency.

Given the breakneck pace of growth in China’s electric vehicle market, it is hardly surprising that CATL has piqued the interest of investors, according to Daniel Finn-Foley, senior analyst for energy storage at GTM Research. “It is hardly surprising that CATL has piqued the interest of investors,” he added.

“Anyone having a battery to sell will be able to raise significant capital from the Chinese electric car industry,” he said.

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