State Media Defends CATL Margins as EV Automakers Suffer Profit Squeeze

A widening profitability gap between battery giant CATL and Chinese automakers has drawn an explicit defense from official state media. In an analytical commentary, People's Daily argued that CATL's 16.9% net profit margin in the first half of the year—contrasting sharply with a 3.8% operating margin across the broader automotive manufacturing sector—is the legitimate result of extensive research spending, production efficiency, and global expansion. As vehicle assemblers struggle under domestic price competition, the publication framed CATL's premium as a model for moving beyond destructive price wars through genuine technological advantage.

The state newspaper's defense signals Beijing's official backing for high-margin, research-intensive supply chain leaders even as final-assembly automakers face intense price deflation. It highlights that industrial policymakers prioritize intellectual property and international competitiveness over demands from vehicle assemblers to artificially compress component costs.

In the first half of the year, China's automotive manufacturing sector recorded an operating revenue profit margin of just 3.8%, while Contemporary Amperex Technology Co., Limited (CATL) reported a net profit attributable to shareholders of 43.284 billion yuan and a net margin of 16.9%. The sharp divergence has fueled an industry-wide debate over the distribution of profits across the new energy vehicle value chain. An analysis published in People's Daily defended the battery giant's returns, attributing the gap to structural shifts where power batteries, semiconductors, and software have replaced traditional mechanical components as the primary determinants of vehicle value. According to the commentary, battery packs for pure electric models equipped with roughly 70 kilowatt-hours now account for 30% to 40% of total bill-of-materials costs and close to one-third of retail prices. While carmakers faced margin compression from domestic price competition and raw material cost pressures, CATL sustained profitability through heavy research and development. The firm spent 22.147 billion yuan on R&D in 2025, bringing its cumulative 10-year research spending above 90 billion yuan and amassing over 54,000 patents worldwide. Highlighting technical milestones like the Qilin condensed matter battery and the Xiaoyao lithium iron phosphate battery, the paper noted that CATL maintained a capacity utilization rate of 94.86%—roughly double the industry average. This operational efficiency diluted unit costs, enabling the supplier to maintain solid profit margins while pricing products only 5% to 10% above competitors without engaging in price-slashing. The commentary also cited CATL's proactive moves to insulate supply chains, including mass-producing sodium-ion batteries to curb reliance on overseas lithium resources and deploying condensed-matter chemistries that keep pack weights below 650 kilograms for passenger vehicle ranges reaching 1,500 kilometers. Beyond automotive batteries, CATL has diversified into energy storage, electric vessels, and aviation. The company's overseas market share expanded from 21.1% in 2021 to 30% in 2025, reaching 33.7% in the first half of the year. Pointing to the 15th Five-Year Plan's call to develop intelligent connected new energy vehicles, the state mouthpiece framed CATL's returns as a justified commercial reward for high-tech manufacturing.