CATL (1Q26 Trans): Q2 builds remain fully booked; capacity utilization holds at 85%-90%.
The following is Dolphin Research's transcript of CATL's FY26 Q1 earnings call. For our take on the results, cf. 'CATL: The 'TSMC' of the Energy Era'.
I. Key takeaways
1. Shareholder returns & financing: A general mandate for financing in HK is standard practice and does not imply an offering. Market chatter about 'raising in HK to fund A-share buybacks' is unfounded.
2. Outlook: Q2 production schedules remain full, with capacity utilization at a high 85%–90% range. GPM for the year is expected to be broadly stable, and Apr–May schedules remain positive with no adverse impact from geopolitical tensions.
3. KPIs: Q1 revenue was RMB 129.1bn (+52.45% YoY) and attributable net profit RMB 20.7bn (+48.52% YoY). Blended GPM was about 25%, down slightly YoY, while per-watt profit stayed broadly stable. Cash and trading financial assets exceeded RMB 410bn at quarter-end, and total assets surpassed RMB 1tn for the first time.
4. Treasury allocation: With deposit yields falling, the quota for wealth management products was raised from RMB 80bn to RMB 120bn. Shifting part of deposits into wealth management lifted fair value gains significantly YoY.
5. Resources build-out: 'Times Resources Group' has been set up as the upstream resources platform with registered capital of RMB 30bn. It consolidates years of mining stakes to enable specialized investing and operational management.
II. Details from the earnings call
2.1 Management highlights
1. Battery sales & share
a. Q1 EV + ESS shipments grew over 60% YoY. b. Global EV battery usage share was 40.5% in Jan–Feb 2026 (+1.8pp YoY), with overseas share at 32.1% (+2.2pp YoY). c. Q1 domestic EV battery installation share reached 47.7% (+3.4pp YoY).
2. R&D & technology
a. R&D intensity remains high; the 2026 Tech Day (Apr 21) will be the most tech-dense event since inception. b. New products and ecosystems will be unveiled, each addressing the industry's most pressing questions.
2.2 Q&A
Q: How do you view the outlook for data-center-attached storage and the commercial synergy roadmap?
A: Two years ago we flagged the sizable storage demand alongside data centers. The trend is now clearer as AI use cases proliferate, token consumption surges, and compute plus data-center capacity scales rapidly. The key bottleneck is power and energy adequacy, and we see energy availability as the binding constraint.
Traditional gas turbines or grid supply alone cannot meet demand; this is evident not just in China and the U.S., but globally as DC projects boom. Energy packages vary by site: gas-turbine, solar + storage, or grid-tied solutions. In a fully off-grid extreme, a single data center could require 15–20 GWh of storage, which is a very large number.
From the energy-supply angle, CATL has been exploring and driving optimal DC energy solutions. The challenge spans a long chain from cells and power electronics to medium/high voltage and generation, plus software. We are strong on cells and recently invested in Zhongheng Electric to strengthen power electronics, which helps form system-optimal solutions. Going forward, we will keep pushing toward truly end-to-end optimal offerings for data centers.
Q: What was the mix between EV and ESS sales in Q1?
A: Total shipments topped 200 GWh, with ESS at 25% and the rest EV batteries. ESS share rose meaningfully vs. prior quarters.
Q: Any near-term impact from the Middle East conflict on EV or ESS orders?
A: It is not a good thing and we prefer to grow business in a peaceful world. Long term it will accelerate the energy transition, and in the short term we have seen some new orders as users worry about oil supply and switch to electricity for vehicles and storage. But these are short-lived factors, and we focus on the long-term implications.
From our side, production remains quite full. Capacity utilization has stayed at 85%–90%, a very saturated level in Q1 and likely in Q2 as well. Last year we even lost some orders due to extreme tightness; this year capacity additions are helping, but utilization remains high.
Q: Are there supply-chain links you worry about due to geopolitics?
A: We have done a lot on supply-chain layout and traceability, including compliance with the EU Battery Regulation. While the war has broad effects, the impact on China is relatively smaller given high localization in EV supply chains. Industries tied to oil and gas may be affected to varying degrees; for now it is manageable, but prolonged conflict could have growing impacts.
Q: Q1 GPM was about 25%. How is the cost pressure, and what is the full-year margin outlook?
A: GPM is down vs. last year. One reason is raw-material inflation; lithium carbonate and other commodities have been rising from last year into Q1. We offset this via supply-chain setup, scale, and product design, including a hero-SKU strategy, and results are decent.
Another factor is mix shift as ESS weight increases, with domestic ESS breakthroughs rising quickly. Most costs are linked with pass-through mechanisms. We did not raise prices proactively; battery prices adjust with raw-material swings under our pricing formula, and some customers have annual price resets.
Q: What will be unveiled at the Apr 21 Super Tech Day?
A: It remains highly confidential internally, and we will launch new technologies, products, and ecosystems. Please join us onsite or online; we believe there will be meaningful updates, but we cannot provide spoilers now.
Q: How did revenue mix and margin by segment (batteries, materials, mining, etc.) change vs. last year?
A: Mix is broadly similar to last year, and profitability is relatively stable. These segments do not materially alter the group picture and can be modeled using prior assumptions.
Q: Progress on resuming Yichun lithium carbonate ops? Any impact from Zijin Mining's former chairman Chen Jinghe reportedly advising the company?
A: Yichun obtained the mining permit late last year and is proceeding through the restart process. Other mines in Yichun are also moving toward compliant restarts with local governments pushing for normalized operations. The 'advisor' story is a rumor, and there is no new external update on the lithium business.
Q: After BYD launched its ultra-fast charging battery, how has non-BYD demand for CATL's ultra-fast charging changed, and what is the ASP uplift?
A: CATL rolled out the Shenxing 4C fast charge years ago, then Shenxing Plus and even higher-rate fast charge, staying at the forefront technically. We are glad to see BYD follow the ultra-fast path. Our prior ultra-fast products have good OEM collaborations, but adoption was not ubiquitous.
BYD's launch is prompting more industry thinking and plans. After their promotion, more OEMs approached us for deeper cooperation, and fast charge is an area where we hold long-standing advantages. This is positive for us.
Q: What is CATL's battery share in exported EVs?
A: We do not have an official figure, but our internal estimate suggests exports largely come from China-made EVs, so share should mirror domestic. Given higher quality requirements for exports, CATL batteries are used more often, so export share should be slightly higher than our domestic average.
Q: Sales split among passenger vehicles, commercial vehicles, and construction machinery?
A: Passenger vehicles are roughly two-thirds. Commercial plus specialty vehicles are about one-third, and construction machinery is still small and typically counted with commercial.
Q: Latest on the Hungary plant?
A: The plant topped out at the end of last year, and equipment installation and commissioning are largely done, so ramp-up is near. Phase II is progressing in an orderly manner.
Q: What was Q1 overseas revenue contribution? Any impact from the export VAT rebate cut from 9% to 6%?
A: Overseas was roughly one-third last year and is similar this year. The rebate change from 9% to 6% has limited overall impact.
Q: How do production costs at the Hungary plant compare with China?
A: Relative cost is somewhat higher than in China, but there is a clear advantage vs. Germany on labor and line efficiency. We are still in the ramp and aim to narrow the gap via product selection optimization and SKU simplification to stabilize lines and boost efficiency, which can offset much of the cost.
Q: Q1 EV battery volume was about 150 GWh, up 50%+; where did the growth come from?
A: First, our passenger-vehicle share rose notably in Q1 to about 47%–48%, which is significant. In addition, battery per vehicle climbed 10%–15%; together they add up to considerable growth. Second, commercial vehicles are rising quickly, with heavy trucks and logistics volumes sizeable.
All volumes are normal deliveries and invoiced sales, with no special stocking factors. March improved vs. Jan–Feb; PV demand typically peaks year-end, dips at Lunar New Year, then recovers after the Two Sessions as policies roll out.
We expect additional stimulus and many new models announced at the Beijing Auto Show, some of which we have already seen and look competitive. They should drive the next leg of demand.
Q: How exactly does raw-material price inflation pass through? Any proactive price hikes in Q1?
A: No proactive price hikes in Q1. Our pricing formula includes metal linkage, so raw-material volatility automatically passes through to battery prices, which is not a discretionary move but a built-in mechanism. Some customers also have annual price resets being implemented.
Q: What is the 3–5 year industry view behind CATL's renewed capacity expansion?
A: Good observation: we expanded rapidly in 2022, were more cautious in the next two years, and started to add back capacity from H2 2024 as we were among the first to see signs of recovery. We are continuing to expand in 2025 and this year.
On EVs, PV penetration is breaking 50%, making electrification increasingly certain. With battery per vehicle also rising, penetration plus per-vehicle uplift both add to demand. On CVs, penetration is accelerating; heavy trucks grew over 100% YoY last year, and once the cost tipping point is crossed for a production tool, expansion is rapid.
On ESS, domestic policy (Docs 136 and 2114, capacity tariffs) is clarifying, enabling ESS to become genuinely profitable, so domestic demand is booming. Overseas, in addition to economics-driven ESS, AI is driving material storage needs for data centers. These factors stack up, making the electrification trend highly certain.
We estimate the combined EV + ESS market could exceed 4 TWh by 2030, with CAGR over the next few years potentially above 25%–30%. Capacity decisions are grounded in our analysis, customer feedback, and visible incremental demand; we remain prudent and do not add capacity without clear visibility, yet current high utilization compels us not to miss market opportunities.
Q: What is the core logic behind 'Times Resources Group' with RMB 30bn registered capital?
A: The backdrop aligns with our expansion logic and demand outlook. Several TWh of batteries require large amounts of lithium, copper, aluminum, nickel, etc., which is enormous, and amid global instability, commodities and resources are more valuable. We have been building upstream exposure for years; now we are consolidating past stakes into one platform for specialized investing and operations to better allocate advantaged resources and stabilize the supply chain.
Q: How to interpret the HK general financing mandate? Is the rumor about 'HK raise to repurchase A-shares' true?
A: The AGM approves a general financing mandate, which is standard for HK-listed firms and simply authorizes the BOD to act on opportunities; it does not mean we will definitely raise. If and when we do, the BOD will choose timing and instruments in the best interest of the business.
The 'HK raise to buy back A-shares' rumor is baseless. The general mandate pertains to Hong Kong, and such unverified rumors should not be taken seriously.
Q: Why did fair value gains surge nearly 10x YoY in Q1?
A: Deposit yields have fallen sharply, so at the start of the year we raised the wealth management quota from RMB 80bn to RMB 120bn and shifted some deposits into wealth products. The YoY change mainly reflects this allocation shift.
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