© Reuters. FILE PHOTO: A sign of Chinese battery maker Contemporary Amperex Technology Ltd (CATL) is seen on its building in Ningde, Fujian province, China August 8, 2018. Picture taken August 8, 2018. REUTERS/Stringer
SHANGHAI/HONG KONG (Reuters) -CATL, the world’s biggest maker of electric vehicle (EV) batteries, reported a 23.6% drop in first-quarter profit on Friday, its first decline in two years, as battling soaring raw material costs and a resurgence of COVID-19 in China.
CATL, whose customers include Tesla (NASDAQ:), Volkswagen (ETR:) and BMW, posted a net profit of 1.49 billion yuan ($226.69 million), according to a filing with the Shenzhen Stock Exchange.
That figure was down from profit of 1.95 billion yuan a year earlier, despite a sharp rise in revenue to 48.68 billion yuan from 19.17 billion yuan a year earlier.
Prices for key metals such as lithium nearly doubled in the first three months, weighing on CATL’s profit margins and prompting it to raise battery prices in March.
Other battery makers reported lower profits for the March quarter, hit by rising raw material costs and supply chain disruptions. South Korea’s LG Energy Solution Ltd (LGES) reported a quarterly profit decline of 24% earlier this week.
Like its competitors, CATL is accelerating its production and supply of minerals to meet the growing demand for electric vehicles.
It said earlier this month that it had secured exploration rights for a lithium clay deposit in China’s central Jiangxi province and set up a joint venture in Indonesia for nickel mining.
Consulting firm Wood Mackenzie says CATL is on track to more than triple its cell manufacturing capacity by 2025.
CATL’s electric vehicle battery gross profit margin fell to 22% in 2021 from 26.56% the previous year.
The Ningde, Fujian-based company has remained far ahead of its competitors in the domestic market. According to the China Automotive Battery Research Institute, 51% of nickel-cobalt-manganese (NCM) batteries and 49% of lithium phosphate (LFP) batteries installed in Chinese electric vehicles in the first three months came from CATL.
By comparison, rival BYD supplies 1.6% of NCM batteries and 34% of LFP batteries, while LG Energy had its name on 6% of installed NCM batteries, the institute said.
($1 = 6.5852 renminbi)