By Zhang Yan and Brenda Goh
SHANGHAI/HONG KONG (Reuters) – CATL, the world’s biggest maker of electric vehicle batteries, on Friday reported a 23.6% drop in first-quarter profit, its first decline in two years, as it struggles with rising prices. raw material costs and the resurgence of Covid-19 in China.
The company, whose customers include Tesla, Volkswagen and BMW, had a net profit of 1.49 billion yuan ($226.69 million), up from 1.95 billion yuan a year earlier, despite a big jump in revenue, from 19.17 billion to 48.68 billion yuan.
Prices of key metals such as lithium nearly doubled in the quarter, weighing on CATL’s profit margins and prompting it to raise battery prices in March.
Like its rivals, CATL is ramping up production and supply of minerals to meet growing demand for electric vehicles. The company said earlier this month that it has secured exploration rights to a lithium clay deposit in China’s Jiangxi province and has entered into a joint venture in Indonesia to mine nickel.
Consulting firm Wood Mackenzie says CATL is expected to more than triple its cell manufacturing capacity by 2025.
The company has remained far ahead of its rivals. About 51% of nickel-cobalt-manganese (NCM) batteries and 49% of lithium phosphate (LFP) batteries installed in China’s electric vehicles in the first three months were from CATL, according to the China Automotive Battery Research Institute.
By comparison, rival BYD supplies 1.6% of NCM batteries and 34% of LFP batteries, while LG Energy had its name on 6% of installed NCM batteries, the institute said.