Chinese EV battery giant CATL starts trial production at Hungarian factory

A Chinese government publication has rebuked concerns about a shift away from battery giant Contemporary Amperex Technology Limited (CATL), arguing that diversification among suppliers and in-house battery projects are standard commercial practices. The commentary, from the Ministry of Industry and Information Technology (MIIT), cautioned against portraying these moves as deliberate efforts to weaken CATL or disrupt carmaker-supplier relationships.

Numerous Chinese automakers, including Xiaomi, Li Auto and Xpeng, have recently expanded partnerships with alternative battery suppliers or announced plans to develop batteries in-house, sparking speculation about a potential market overreaction. CATL's shares have fallen around 25% since mid-August and nearly 35% from a May record high.

The company remains the leading player in China's battery market, accounting for over 41% of power-battery installed capacity in August, more than double its nearest competitor BYD. However, the MIIT-linked commentary emphasized that supplier diversification is not a new trend and that many automakers have already adopted multi-supplier strategies or invested in in-house battery production to reduce reliance on CATL.

The report cautioned that debates over "de-CATLisation" could distract from a more pressing issue: intense price competition in China's electric vehicle industry, which is now extending upstream through the supply chain. The commentary stressed that efforts to slash costs should focus on boosting technological efficiency rather than simply driving down procurement prices.