As electric vehicles continue to gain popularity, the demand for high-quality EV batteries is also on the rise. One company that has been making waves in this industry is Chinese battery giant CATL. In their latest financial report, CATL reported a 7% increase in first-quarter profit, reaching a total of $1.45 billion.
This increase in profit comes after a decline in the fourth quarter of 2023, which had some industry experts worried about the company's future. However, CATL has bounced back and is showing stronger fundamentals in early 2024.
In fact, Morgan Stanley recently re-rated CATL's shares to overweight from equal-weight, citing these stronger fundamentals. Additionally, just before the earnings release, Moody's Ratings upgraded CATL's credit ratings to A3 from Baa1 and changed the outlook to stable from positive.
Moody's cited CATL's "steady earnings, low leverage and increasing net cash position, even as price competition is constraining revenue growth." This shows that CATL is not only able to maintain profitability but also grow its cash reserves despite price competition in the market.
CATL's market share by batteries in China-made EVs stood at 44.9% in March, down from the previous month but still significantly higher than its 2023 levels. This is a testament to the company's dominance in the Chinese market, which is the largest auto market in the world.
While CATL is facing competition from smaller rivals like BYD and CALB, these companies still have a long way to go before they can catch up to CATL's market share. In fact, BYD's market share grew to 26.8% in March, while CALB's grew to 6.7% over the same period. This still pales in comparison to CATL's 48.9% share of the domestic market in the first quarter.
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