Chinese battery maker Contemporary Amperex Technology (CATL) is having a very good year. The company’s stock price has risen by around 167% over the past 12 months. The soaring share price took the company to a market value of more than $ 200 billion, making it the third-largest listed company in mainland China, according to the Wall Street Journal.
CATL has catapulted more investors to Forbes’ famous billionaire list than any other public company in the world, more than Google, Facebook or Tesla. No less than nine names on the list have over $ 1 billion in their coffers, thanks to their bets on CATL.
Most analysts cite the company’s supply deal with Tesla as one of the main factors in its rapid growth, and there is no doubt that its association with the cool California automaker has kept the once-in-the-dark business. in the headlines. In early 2020, CATL, which was already China’s largest manufacturer of electric vehicle batteries, signed a two-year supplier agreement with Tesla. In June, the companies agreed to extend their relationship until December 2025. Recently, Tesla urged its battery suppliers to step up the pace, and CATL responded with plans for a major new battery plant in Shanghai.
Tesla is not CATL’s only customer, and perhaps not even the largest. The company also supplies batteries to BMW, Volkswagen and Daimler, as well as China’s NIO, XPeng and Li Auto, all of which have seen record sales growth. As Reuters puts it, the company is establishing “a meteoric pace of expansion that will consolidate its lead as the world’s largest supplier.”
Above: CATL and the investors who have benefited massively from the company’s recent surge (YouTube: Forbes)
When it comes to the company’s stock price, CATL’s lead is unchallenged for now – rival battery makers Panasonic and LG Chem have also seen their shares skyrocket over the past year, but CATL significantly outperformed both. (It has also left its automaker customers in the dust – Tesla’s share price has risen just over 110% in the past twelve months.)
Looking to the future, it looks like there are plenty of opportunities to shop around for drumming. “The 2020s will be the golden age of the battery industry in terms of growth,” Neil Beveridge, senior energy analyst at Sanford C. Bernstein, told the WSJ, adding that CATL currently accounts for 30% of the global market for electric vehicle batteries, and more than half of the market in China.
Some stock pickers say battery makers, such as CATL, are probably better bets than automakers, who face an increasingly competitive market. “It’s too risky to bet on a brand because the race for electric cars has just started,” Dennis Chien, senior analyst at HSZ Group, told The Journal. “However, major component manufacturers like CATL will remain the main beneficiaries in the long run, regardless of which electric vehicle brand wins the electric car race in China. “
Written by: Charles Morris; Source: Wall Street Journal; Video: Forbes