CATL, a Chinese electric vehicle battery manufacturer, reported a 164 percent jump in revenue during the second quarter of 2022.
The profit figure has doubled when compared to sales in 2021. The increase was driven by Chinese authorities launching incentives to increase sales of electric vehicles to cushion the impact of the pandemic.
Through this policy, a number of vehicle manufacturers such as Tesla, Volkswagen and BMW began doubling their orders for electric vehicle batteries at CATL to meet the demand for electric vehicles in China, which is one of the largest markets besides the US and Europe.
Until this battery factory revenue from April to June yesterday, posted an increase to 64.29 billion yuan with a net profit of about 6.68 billion yuan.
Before the Chinese government injected incentives for purchasing electric vehicles, the demand for EVs in China declined and even EV sales in this bamboo curtain country bucked the trend of car sales in the main market.
This condition is further exacerbated by the lockdown in several cities including Shanghai, due to the soaring positive cases of COVID-19. The reason is that the Chinese government took the initiative to provide an injection of incentives to spur sales of electric vehicles in its domestic market.
After the implementation of the policy, EV sales in China recorded an increase, according to data from the China Automobile Manufacturers Association, the demand for electric vehicles in the first quarter of 2022 reached 120 percent.
This increase is certainly good news for electric vehicle battery manufacturers such as CATL, even to add to the coffers of revenue CATL said that it had signed long-term contracts with battery material suppliers, this step was taken to reduce the pressure of rising costs on electric batteries.
Considering that in 2021, CATL’s profit margin on EV batteries had dropped 22 percent due to rising metal prices, especially lithium.
In addition to signing long-term contracts, CATL is reportedly accelerating its expansion in the European market by supplying electric batteries to automotive companies Mercedes-Benz and BMW. To make this plan a success, CATL even helped build a battery factory worth US$7.6 billion in Hungary.
Not only that, CATL is also reportedly exploring shipments to supply the battery needs for electric vehicles belonging to the Ford manufacturer in the United States. Through this expansion, CATL’s market share in the global EV battery market in the first half of 2022 increased dramatically to 34.8 percent.
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