The first decline in two years, CATL's net profit in the first quarter fell 23.62% year-on-year!

CATL, the world's largest electric vehicle battery manufacturer, released its first-quarter financial report on April 29.

The financial report shows that the company achieved total operating revenue of 48.68 billion yuan in the first quarter of this year , a year-on-year increase of 153.97%; net profit was 1.493 billion yuan, a year-on-year decrease of 23.62%.

As the world's largest electric vehicle battery manufacturer, CATL's clients include not only well-known brands such as Tesla, Volkswagen and BMW, but also in-depth business cooperation with the top ten international energy storage customers such as Nextera, Fluence, Wartsila, Tesla and Powin.

Compared with the previous period, this time the net profit has dropped for the first time in two years. What exactly caused the decline in CATL's net profit? How did CATL deal with it?

What caused the decline in CATL's net profit?

Although CATL's revenue jumped significantly from 19.17 billion yuan in the same period last year to 48.68 billion yuan, its profit in the first quarter was still lower than the 1.95 billion yuan profit in the same period last year.

The soaring raw material costs and the recurrence of the epidemic in China are the main reasons for the first decline in CATL's net profit in two years in the first quarter.

In the first three months of 2022, prices of key metals for battery manufacturing, such as lithium , rose and almost doubled, putting pressure on CATL's profit margins.

In addition to CATL, other battery manufacturers have also reported that their recent earnings have declined due to rising raw material costs and supply chain disruptions .

Not long ago , battery supplier South Korea 's LG reported a 24% drop in quarterly profits .

How does CATL solve the problem of rising raw material costs?

On May 5, the company's senior management responded to issues such as CATL's decline in first-quarter net profit during an investor question-and-answer session .

Jiang Li, vice president of CATL, said at an online press conference that the company has adopted long-term contracts, investment, self-production and recycling to solve the problem of raw material supply shortage.

As global oil prices soar, demand for electric vehicles continues to grow.

Like other competitors , CATL is currently increasing its battery production and mineral procurement to meet the needs of the electric vehicle market .

Not long ago, CATL said it had obtained exploration rights for lithium clay deposits in Jiangxi Province and established a nickel mining joint venture in Indonesia.

In addition, in response to rising raw material prices, CATL also raised battery prices in March .

Although CATL's gross profit margin for electric vehicle batteries fell from 26.56% in the previous year to 22% in 2021.

But the Ningde, Fujian-based company still leads rivals in the domestic market.

According to data from the China Automotive Battery Research Institute, in the first three months of this year, 51% and 49 % of the nickel-cobalt-manganese batteries and lithium phosphate batteries installed in Chinese electric vehicles came from CATL.

Not only that, CATL is also very popular among overseas car companies.

According to Zeng Yuqun, chairman of CATL, with the large-scale mass production and delivery of CATL's products overseas in 2021, CATL has won unanimous praise from overseas customers. Therefore, they strongly hope that CATL will increase its supply proportion in the next fixed-point cycle , that is, after 2026, and become their most important supplier.

With strong demand from foreign customers, CATL will further expand its overseas markets.

Chairman Zeng Yuqun also said CATL is exploring the possibility of localized production in China for overseas automakers .

Financial Report

CATL