While the balance sheet shows record-breaking profit, the equity market is signaling deep anxiety about the company's future influence. CATL amassed a net profit of RMB 43.284 billion in the first half of the year, which translates to roughly RMB 240 million per day, showcasing its formidable earning power.

Despite this impressive financial performance, its A-shares plummeted by more than 6% on September 15th to a one-year low, with its H-shares also taking a hit. This sharp decline brought the combined company valuation to below RMB 1.5 trillion, and since the May peak, the stock has retreated over 30% from its high, erasing about RMB 700 billion in market value. The paradox is stark: profits are soaring, but investors are heading for the exits.

A key development adding to the pressure is Li Auto's strategic investment of RMB 2.65 billion in Xinwangda Electric Vehicle Battery (EVB), making it the second-largest shareholder with an 11.17% stake. This injection of capital is a clear signal that automakers are actively looking to build alternatives to reduce their reliance on the dominant supplier.

As part of this shift, the upcoming 2026 Li L8 will be equipped entirely with Xinwangda cells, effectively removing CATL from its supply list for that model. The battery packs will be produced by a joint venture between Li Auto and Xinwangda, with Li Auto defining the product's specifications while Xinwangda focuses solely on manufacturing. Furthermore, the firm's newly filed 2026 Li i6 will also incorporate Xinwangda and CALB as additional battery suppliers.

Li Auto is not alone in this endeavor. Xiaomi has introduced CALB and Xinwangda for its "Longjia" battery. Harmony Intelligent Mobility is diversifying its supplier base for several models. Automakers like Geely, Great Wall Motor, GAC, and SAIC are also expanding their battery capabilities through self-development, joint ventures, and investments in suppliers. They want to control the future of the battery supply chain.

The motivation is largely financial. CATL's gross margin for the first half stood at 23.93%, while Li Auto's automobile gross margin fell significantly to 9.4% year-on-year. Many car companies are struggling to turn a profit, while their main battery supplier enjoys a net profit of over RMB 43 billion in the first half alone. The goal for automakers is to gain more leverage in negotiations over pricing, production schedules, and technology solutions. Nurturing second-tier suppliers like Xinwangda and CALB serves to apply price pressure and reduce supply chain vulnerability.

The deeper battle is about who defines the core features of electric vehicles, such as driving range, fast charging, safety, and low-temperature performance. If battery technology is dictated entirely by one supplier, automakers' own competitive claims are weakened. Li Auto is demonstrating a new model where the company sets performance standards and designs the battery system while the cell manufacturer becomes a manufacturing partner. This marks a significant shift of power back to the automaker.

From a purely financial perspective, CATL hasn't lost its foundational position, maintaining a 46.7% share of domestic passenger car battery installations in the first half of the year. However, the real threat is that it's transitioning from a mandatory choice to an optional one, a shift that the market clearly recognizes.

This sentiment is reflected in market data where main funds saw a cumulative net outflow exceeding RMB 4.8 billion in the ten trading days leading up to September 8th. Analyst opinions are also diverging; CLSA pointed to lower-than-expected Q2 gross margins, while DBS Vickers lowered its A-share price target from RMB 640 to RMB 585. In contrast, UBS and Morgan Stanley maintain positive ratings on the company, and Goldman Sachs set a target of RMB 565. Despite this support from some analysts, the capital exodus indicates a substantial degree of market anxiety about the company's future.

The company's massive buyback program tells the story of its perceived value. On July 24th, CATL announced a record plan to repurchase between RMB 20 billion and RMB 40 billion of its A-shares at a price ceiling of RMB 573 per share. Yet, with the stock declining, the company delayed action, and as of the end of August, no shares had been repurchased. It wasn't until September 11th that they executed an initial buyback of just 604,300 shares for roughly RMB 200 million—only one percent of the program's minimum amount. The stock continued its slide regardless, dropping 2.23% to close at RMB 330.51 before the announcement was made after the market close.

CATL continues to generate exceptional profits, but the market is voting with its feet, suggesting that investors are not just looking at current earnings but are increasingly uncertain about the company’s future bargaining power. The long-term trajectory of the industry points toward a more balanced and diversified supply chain, where automakers will have greater freedom and influence over their key components. As a result, CATL is no longer the automatic, unchallenged leader but a significant player in a landscape that is becoming more competitive.