Contemporary Amperex Technology, which has repeatedly declared that it will not manufacture cars, is increasing its investment in automakers.

Recently, Ji Auto under SAIC has welcomed a new round of financing. In addition to the investment companies under the five major banks of the Industrial and Commercial Bank of China, the Agricultural Bank of China, the China Construction Bank, the Bank of China and the China Development Bank, and the top institutions such as Shanghai State-owned Assets Supervision and Administration Commission, the leading power battery company Contemporary Amperex Technology also participated in this capital increase.

Since 2018, Contemporary Amperex Technology has invested in nine new energy vehicle companies.

What impact will the continuously expanding 'circle of friends' have on Contemporary Amperex Technology and related new energy vehicle companies?

1. Contemporary Amperex Technology has invested and held shares in nearly 10 new energy vehicle companies.

Together with Ji Auto, there are now nine terminal new energy vehicle companies directly invested and held by Contemporary Amperex Technology, including NIO Automobile, Avita Corporation, Aiways Automobile, Jinkang Seres Automobile, BAIC BluePark New Energy Technology, Chery New Energy Automobile, Chongqing Sokon Industry Group Stock and BYD Company Limited.

Among them, new energy vehicle companies such as NIO Automobile, Avita Corporation, Chongqing Sokon Industry Group Stock, Jinkang Seres Automobile, and Chery New Energy Automobile have already established a stable foothold in China's new energy vehicle market, achieving good results with monthly sales of over 10,000.

These new energy vehicle companies are not only investment targets for Contemporary Amperex Technology, but more importantly, they are also their power battery customers.

Contemporary Amperex Technology's latest power battery products will also be first used in the products of these new energy vehicle companies, enhancing the attractiveness of the models to users. Conversely, the rapid growth in sales of these new energy vehicle companies has also driven the growth of Contemporary Amperex Technology's market share.

Taking the outstanding performance of Jinkang Seres Automobile as an example, the monthly sales volume of Jinkang Seres Automobile has reached nearly 20,000 vehicles this year, an increase of over 100% year-on-year. It was successfully listed in May this year and became the fourth new car making force to be listed on the New York Stock Exchange after Weilai Automobile. As an investor and power battery supplier of Jinkang Seres Automobile, the relationship between Contemporary Amperex Technology and Jinkang Seres Automobile is particularly close. The star product of Contemporary Amperex Technology, Kirin Battery, was announced to be first used in the models of Jinkang Seres Automobile on its release.

In the first quarter of this year, in the power battery matching of Jinkang Seres Automobile, Contemporary Amperex Technology accounted for as much as 65%, covering models such as Jinkang 001, Jinkang 007, Jinkang 009 and Jinkang X.

However, not all the new energy vehicle companies invested by Contemporary Amperex Technology have performed well. For example, Byton, which was invested by Contemporary Amperex Technology in the early stages, has been declared bankrupt and liquidated by the court in 2023. Aiways Automobile has also disappeared from the domestic market, completely shifting its focus to overseas markets for difficult survival. In addition, Contemporary Amperex Technology also reduced its holdings in stages in 2023 and withdrew from the top ten shareholders of Chongqing Sokon Industry Group Stock in its interim report.

2. Contemporary Amperex Technology continues to deeply bind terminal new energy customers.

Although the power battery installation volume of Contemporary Amperex Technology is still growing, the continuous decline in domestic market share is an undeniable fact.

In the context of the domestic power battery price war, power battery manufacturers have reduced prices to seize market share. Coupled with the rise of BYD's self-supply and self-sales, Contemporary Amperex Technology's market share has fallen below 50%.

Therefore, it is necessary for Contemporary Amperex Technology to deeply bind terminal customers to maintain the advantage of domestic market share and stand out in the price war.

Contemporary Amperex Technology deeply binds downstream new energy vehicle customers by direct investment in terminal new energy vehicle companies. In addition, it also deeply binds with terminal new energy vehicle companies through joint ventures to establish power battery factories, technological and brand innovation strategic cooperation.

(1) Jointly build battery factories

Contemporary Amperex Technology's power and storage battery plants are divided into wholly-owned and joint venture battery bases. The wholly-owned battery base is the main production force, distributed in more than ten cities such as Ningde, Jiangsu, Sichuan, Qinghai and overseas in Germany and Hungary. The joint venture battery base aims to form complementary advantages, product sharing and capacity risk sharing between new energy vehicle companies and power battery companies. The new energy vehicle companies can obtain stable and high-quality battery products, while battery manufacturers can guarantee supply chain management, reduce channel costs, and expand market share. Currently, CATL has established battery bases named SAIC-CATL, Geely-CATL, GAC-CATL, Dongfeng-CATL and FAW-CATL in collaboration with SAIC Motor Corporation, Geely Auto, Guangzhou Automobile Group, Dongfeng Automobile and First Automobile Works respectively, with a total planned capacity of over 120 GWh.

The joint venture battery base aims to form complementary advantages, product sharing and capacity risk sharing between new energy vehicle companies and power battery companies. The new energy vehicle companies can obtain stable and high-quality battery products, while battery manufacturers can guarantee supply chain management, reduce channel costs, and expand market share.

Currently, CATL has established battery bases named SAIC-CATL, Geely-CATL, GAC-CATL, Dongfeng-CATL and FAW-CATL in collaboration with SAIC Motor Corporation, Geely Auto, Guangzhou Automobile Group, Dongfeng Automobile and First Automobile Works respectively, with a total planned capacity of over 120 GWh.

In the future, CATL also plans to establish the Beijing CATL Battery Base jointly with Xiaomi Group and BAIC Group, and cooperate with Ford Motor, General Motors and Tesla to build battery bases in the United States or Mexico through the battery technology authorization mode. These collaborations will not only help overseas new energy vehicle companies obtain cost-effective lithium iron phosphate batteries, but also help CATL expand its overseas market, achieving a win-win situation.

(2) Deep strategic cooperation

CATL's strategic cooperation agreements with terminal vehicle companies are mostly for five to ten years, mainly focusing on the technical development of power batteries and brand innovation. During this period, CATL's new high-quality products are prioritized for use in the new energy vehicle models of deeply cooperative companies.

Currently, CATL's partners include Chery Automobile, Li Auto Inc, Xpeng Inc and Nio Inc, among others, and these companies have each received the first supply of CATL's star products - sodium-ion batteries, Kirin batteries and Shenxing batteries, enhancing the competitiveness and attractiveness of their respective models.

Against the backdrop of fierce competition among new energy vehicle companies and the continued price war in the power battery market, deep ties between new energy vehicle companies and power battery manufacturers that involve complementary advantages, cost reduction and risk sharing may be an effective way to break through the dilemma.