What happened
CATL, a Chinese battery manufacturer, maintains significant export profit margins despite US tariffs, which have minimal impact due to the US market's small contribution to its business. Operating at full capacity, CATL anticipates continued expansion, driven by increasing demand for high-standard energy storage solutions in emerging markets, particularly for renewable energy initiatives and AI data centres. Chinese firms, including CATL, sustain a competitive edge through economies of scale and government support, leading companies like GM to import CATL batteries. CATL's global EV battery market share reached 38% in early 2025, with 43% in Europe.
Why it matters
The sustained market dominance of Chinese battery manufacturers, exemplified by CATL's export profitability and full capacity operations, introduces a persistent supply chain dependency constraint for Western industrial and energy sectors. This situation increases procurement teams' exposure to geopolitical trade dynamics and raises due diligence requirements for ensuring supply chain resilience and compliance with evolving trade policies. Furthermore, the reliance on foreign-sourced high-standard batteries for critical AI infrastructure and renewable energy projects creates an accountability gap for national energy security and strategic technology development.
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