Exclusive Interview: Why Did CATL's Annual Profit Reach 72.2 Billion?

The image is sourced from CATL’s official account.

During the 2026 National Two Sessions, CATL Chairman Zeng Yuqun made a statement in the “Committee Channel” that set a clear direction for China’s new energy industry: not only to sell products to the world but also to promote technology and standards globally.

The CATL 2025 financial report, released almost concurrently, validated the weight of this statement with a set of astonishing data: an annual revenue of 423.702 billion yuan and a net profit attributable to the parent company of 72.2 billion yuan, both breaking historical records. The net profit saw a year-on-year increase of 42%, far exceeding the 17% revenue growth rate, and it alone surpassed the combined profits of 13 domestic listed vehicle companies (using the 13 A-share listed vehicle companies that have released 2025 performance forecasts or reports as a reference).

In the past, the market referred to CATL as “King Ning” primarily due to its consecutive years of holding the top global market share in power batteries. However, the unexpected report of earning nearly 200 million yuan daily forced the industry to reevaluate the company; it is no longer just a battery manufacturer but is systematically transforming into a global zero-carbon energy service provider.

To deeply analyze the underlying logic of CATL’s strategic transformation, “Enterprise Observer” exclusively interviewed CATL, uncovering the core code for heavy asset industries to navigate cycles and the evolution path from chain master to ecological co-builder during the “14th Five-Year Plan” period.

01

From Chain Master to Ecological Co-builder

In the past, competition within the power battery industry focused on capacity, scale, and price. Even though CATL had a long-standing scale advantage as the world’s largest power battery market share holder, external perceptions remained stuck at “the world’s largest battery supplier.” A key indicator from the 2025 financial report completely shattered this impression: its overseas business gross profit margin reached 31.44%, significantly higher than the 24% level of domestic business.

This difference is not simply due to regional pricing disparities but is a premium brought about by technology output and standard recognition. Technology industry analyst Gao Zhenglin told “Enterprise Observer”: “CATL’s logic for going abroad is not just a simple migration of capacity, but rather bringing mature technology systems, manufacturing standards, and service solutions to establish in markets like Europe and North America, where stringent requirements for battery safety, cycle life, and carbon footprint match its technological advantages, forming the gross margin difference between domestic and foreign operations.”

This is precisely what Zeng Yuqun emphasized as the strategic focus in the “Committee Channel”: “From product export to upgrading to technology export and standard export.”

This strategic elevation is more clearly reflected in the layout of Xiamen Zero Carbon Technology City. As the core support for the company’s second growth curve during the “14th Five-Year Plan,” the Zero Carbon Technology City completely breaks the traditional business model of “selling batteries” and shifts towards providing zero-carbon system solutions. From the Xiaogang Zero Carbon Demonstration Base to photovoltaic + energy storage systems in Chile and the Democratic Republic of Congo, to energy storage solutions for cement plants in Pakistan and zero-carbon power systems for California’s electric grid, CATL is gradually integrating various scenario models into replicable and exportable zero-carbon city solutions. A relevant person from CATL told “Enterprise Observer”: “The company has always focused on three major directions: the replacement of fixed fossil energy, the replacement of mobile fossil energy, and innovative integration of market applications. The Zero Carbon Technology City is the culmination of this layout, integrating power batteries and energy storage at its core, along with renewable energy, intelligent microgrids, digital energy management, and green electricity trading, to create a one-stop zero-carbon service ecosystem.”

As the scale of profits and the position in the industry chain continue to rise, the market is increasingly focused on a practical issue: as a chain master enterprise holding pricing power, how will CATL balance its high profits with the ecosystem of complete vehicles and components? How can it lead the Chinese supply chain to go global, rather than just exporting battery products?

From CATL’s layout, one can clearly glimpse its strategic intentions. CATL is evolving from an integrator of the industry chain to an enabler of industry capital. In January 2026, CATL announced its intention to strategically invest 3.15 billion yuan in Fulinh Precision Machinery, elevating past project-level cooperation to a deeper binding of equity and strategy. This is not a simple financial investment but signifies CATL’s evolution from merely being an industry chain integrator to becoming an enabler of industry capital. The logic is to pull core component enterprises into its globalized system through capital ties for joint technological research and development, standard co-construction, and overseas deployment, ultimately achieving a collective overseas expansion of the supply chain.

Against the backdrop of accelerating the cultivation of strategic emerging industries and promoting high-end equipment and new energy to go global during the “14th Five-Year Plan,” CATL’s choice is already quite clear: it does not aim to be a solitary winner that squeezes upstream and downstream but rather becomes an ecological leader that opens technology, shares standards, and co-expands markets. Gao Zhenglin stated that only when the entire Chinese new energy supply chain possesses global competitiveness can the long-term safety and growth of battery enterprises have a true foundation; this is the long-term responsibility of chain master enterprises.

02

Ultimate Efficiency in Heavy Asset Industries

In 2025, the most prominent contradiction in the global lithium battery industry is the coexistence of overcapacity and structural demand shortages. The overall capacity utilization rate of the industry is generally below 60%, with many small and medium enterprises’ production lines idle, and fixed asset depreciation continuously eroding profits. CATL, however, delivered operating data that is almost “reverse industry”: total capacity of 772 GWh, output of 748 GWh, and a capacity utilization rate of 96.9%.

In heavy asset manufacturing, this number approaches a physical limit. What is even more intriguing is that the company simultaneously recognized an asset impairment provision of 9.079 billion yuan, including a fixed asset impairment of 2.66 billion yuan. On one hand, CATL is fully producing and selling, while on the other, it is actively phasing out old capacity, forming a unique “dynamic blood replacement” model.

How does CATL determine when to eliminate and when to expand? Its decision-making logic always revolves around a core standard proposed by Zeng Yuqun—high-quality investment.

According to Gao Zhenglin, the technology iteration in the lithium battery industry is extremely rapid; today’s advanced capacity may become inefficient in two to three years. CATL never judges capacity based on “whether it can still produce” but rather on “whether it aligns with the next generation of technology directions, whether it possesses cost competitiveness, and whether it supports zero-carbon goals.” Once a production line can no longer match the new system, even if it can still produce, it will decisively recognize impairment and clear it out, concentrating resources on the new generation of smart manufacturing bases. This ability to “dare to eliminate, dare to expand, and dare to fully produce” is a core barrier that most heavy asset enterprises find difficult to replicate.

While peers are still passively digesting excess capacity, CATL achieves profit growth against the trend through ultra-high utilization rates, pushing unit depreciation, unit energy consumption, and labor costs to the extreme, forming a strong cost moat. Financial reports show that CATL’s end-of-period capacity under construction still reaches 32.1 GWh, which seems to imply enormous capital expenditure pressure. However, combined with the 96.9% full production status, it is actually based on a forward-looking layout for global market demand rather than blind expansion.

Regarding the balance between hard capacity expansion and soft power research and development during the “14th Five-Year Plan,” CATL’s strategy is to always adhere to the dual collaboration of high-quality capacity and high-intensity research and development. The expansion of capacity under construction focuses on new generation battery technologies, energy storage systems, and zero-carbon related capacities, highly binding with research and development directions; research and development investments revolve around new materials, new chemical systems, AI research and development, with the core goal being to enhance capacity efficiency, reduce production costs, and strengthen product competitiveness. Regarding the assessment of research and development conversion rates, CATL has established a comprehensive closed-loop mechanism internally, tracking the entire process from research and development investment to patent output, technological landing, and cost reduction and efficiency improvement results.

CATL’s logic is simple: research and development is not an expense but a long-term competitiveness investment, aiming either for technological breakthroughs or clear cost reduction benefits, with ineffective research and development strictly prohibited.

It is this capacity management logic of “precise expansion, decisive elimination, and research and development empowerment” that enables CATL to stand firm amidst industry cycle fluctuations. While peers are still troubled by idle capacity, CATL, with its ultra-high efficiency, achieves profit growth against the trend, with net cash flow from operating activities reaching 133.2 billion yuan. Sufficient cash flow provides solid support for capacity replacement and research and development investments, also strengthening the company’s confidence to navigate cycles.

03

Emerging Business Lays Groundwork for Long-term Growth

If super-high capacity utilization is the ballast stone for CATL’s current profitability, then battery recycling and emerging business layouts will determine CATL’s growth space in the next decade.

Public data indicates that in 2025, CATL’s waste battery recycling volume reached 210,000 tons, a year-on-year increase of 63.2%, far exceeding the 39.2% growth rate of 661 GWh battery sales. At the same time, the gross profit margin of the recycling business skyrocketed to 27.27%, a year-on-year increase of 16.76 percentage points. This group of data means that battery recycling has upgraded from the environmental protection support link at the back end of the enterprise to a front-end strategic resource guarantee link, becoming a core part of CATL’s full industrial chain ecological closed loop.

A relevant person from CATL stated that CATL’s subsidiary, Bangpu Recycling, leads and participates in the formulation of over 80% of the national standards for lithium battery recycling, making it a core promoter of the industry’s standardization and normalization development. Through its independently developed DRT directional recycling technology, it achieves ultra-high recovery rates of 99.6% for nickel-cobalt-manganese and 96.5% for lithium, establishing a complete lifecycle ecology of “battery production—usage—recycling—regeneration materials—remanufacturing.” “In the past, the industry focused on front-end production and neglected back-end recycling, leading to excessive reliance on imports for strategic resources like lithium, nickel, and cobalt. Now CATL elevates the recycling business to a strategic height. In the company’s planning, the annual processing capacity of waste batteries will exceed 1 million tons in the future, with half of the global lithium raw materials to come from recycled lithium within 20 years. This not only significantly reduces reliance on overseas mineral resources but also mitigates cost risks associated with fluctuations in raw material prices, forming a dual supply pattern of ‘mining resources + urban mines,’” the person told “Enterprise Observer.”

This layout not only aligns with the “14th Five-Year Plan” requirements for green and low-carbon development but also restructures the company’s cost structure. Regenerated materials, compared to mineral raw materials, have significant cost advantages and avoid risks from fluctuations in international commodity prices, making the company’s profitability more stable. For CATL, the circular economy is no longer just an environmental story but a tangible cost advantage and supply chain security foundation.

Unlike the gradual realization of benefits from the recycling business, emerging businesses such as battery swapping and low-altitude economy are still in the investment phase, contributing limited overall revenue. In 2025, revenue from the battery swapping business was only in the billion-yuan range, almost negligible relative to the total revenue of over 420 billion yuan. However, CATL continues to invest heavily, forming a development model where “main business profits nurture new business growth.” Regarding market concerns about the “tolerance for new business investments,” CATL has not explicitly stated but its actions have already demonstrated its attitude—emerging businesses are key layouts for the company’s transformation into a zero-carbon energy service provider with limited short-term financial contributions but immeasurable strategic value.

For example, in the battery swapping business, CATL plans to build nearly 4,000 battery swapping stations by 2026, covering over 140 cities with its Choco battery swapping stations and creating a “five horizontal and five vertical” trunk network with its Qiji battery swapping. A relevant person from CATL stated that the battery swapping business is not merely a channel for battery sales but an independent energy service business, serving as a core carrier for distributed energy storage and virtual power plants. Each battery swapping station is a distributed energy storage node, enabling vehicle-to-grid interaction through V2G technology to participate in grid peak shaving and frequency regulation. In the future, the battery swapping network and energy storage network will fully collaborate, becoming an important part of the new energy system. The person further pointed out: “This ‘transportation-energy’ dual-drive model not only promotes large-scale replacement of new energy vehicles but also provides integrated solutions for source, grid, load, and storage for the new power system through the collaborative operation of the distributed energy storage network, helping to build a cleaner and safer energy system.”

In the more forward-looking low-altitude economy field, CATL has also chosen to secure its position early. From testing 4-ton electric aircraft to the completion of multi-scenario verification of 2-ton and 5-ton eVTOLs by Pinnacle Aviation, the company has already completed technological reserves in high energy density, high safety, and lightweight battery directions. CATL believes that the low-altitude economy will be the golden track for the next decade, just like the new energy vehicles a decade ago. A relevant person from CATL stated: “Future low-altitude aircraft will have extremely high requirements for safety, energy density, and range; a single technological route cannot support this. CATL will continue to promote a diversified material system and innovative routes to provide an energy foundation for the entire industry.”

04

AI Reshapes the Innovation Paradigm

Over the past decade, CATL’s cumulative research and development investment exceeding 90 billion yuan has yielded core achievements such as the Kirin Battery, sodium-ion battery, and Shenxing ultra-fast charging battery. Meanwhile, the 22.1 billion yuan R&D investment in 2025 has shifted the focus of innovation towards AI empowerment, initiating a fundamental transformation in the R&D paradigm.

Zeng Yuqun has explicitly stated that in the future, artificial intelligence will be used more in research and development. This is not a vague technological direction but a transformation of the R&D system that has already been implemented.

A relevant person from CATL told “Enterprise Observer” that in intelligent design, CATL relies on the massive battery design and performance data accumulated over the years, adopting a dual-driven model of mechanism data to iteratively design based on performance indicators, significantly shortening development cycles and reducing trial-and-error costs. In performance prediction, the deeply integrated mechanistic data model significantly enhances predictive accuracy and can support continuous optimization of predictive models by identifying mechanistic cognitive biases through big data mining.

In new materials research and development, CATL attempts to combine high-throughput experiments, intelligent algorithms, and interface characterization to form a complete path from “clear visibility” to “fast screening” and then to “accurate calculation.” By clarifying the solvation structures of electrolyte liquid phases and interfaces using in-situ spectroscopy and other methods, it provides real and reliable training data for algorithms; then, leveraging high-throughput platforms to quickly validate a large number of formulation combinations; finally, using AI models to assist in performance prediction and directional judgment. In this way, the research and development approach that originally relied on experience and repeated trial-and-error gradually becomes evidence-based and more efficient.

Facing the challenge of balancing short-term profit demands from the capital market with long-term corporate layouts, CATL has a clear understanding. The net profit of 72.2 billion yuan and sufficient cash flow of 133.22 billion yuan lay the foundation for balancing short and long term. On the one hand, high cash dividends are returned to the capital market, with plans for a cash dividend of 69 yuan for every 10 shares in 2025, totaling over 36 billion yuan in dividends, meeting investors’ short-term return needs; on the other hand, it insists on reinvesting excess profits from its main business into emerging businesses, research and development innovations, and global layouts, not abandoning long-term strategies due to short-term profit pressures.

Regarding the tolerance for losses in new businesses and their timelines, CATL uses the realization of strategic value as the core judgment standard. As long as the business direction aligns with the transformation into a zero-carbon energy service provider, fits the construction of a new energy system, and conforms to the country’s strategic emerging industry layout during the “14th Five-Year Plan,” necessary investments will be maintained, but the pace of investment will be strictly controlled to ensure that it does not impact the profitability and cash flow safety of the main business.

In CATL’s logic, the new energy industry is a long-cycle track that cannot be measured by short-term performance on a quarterly or annual basis. Maintaining robust current profitability while building a new growth curve for the next five to ten years is the long-termism that chain master enterprises should embody.

From the world’s largest power battery manufacturer to a global zero-carbon energy service provider; from the scale-leading “King Ning” to a technology standard exporter, ecological co-builder, and industry capital enabler; from relying on a single product for growth to constructing a comprehensive system of “battery + energy storage + recycling + battery swapping + low-altitude + zero-carbon ecology,” CATL’s upgrade path vividly illustrates the leap from “growing large” to “growing strong” in China’s new energy industry.

CATL leaves a clearer guiding principle for the industry: the core resilience in the industrial cycle does not stem from counter-cyclical scale expansion but is built on extreme operational efficiency, flexible dynamic capacity, continuous technological innovation, and a complete ecological closed loop; the long-term core value of the enterprise lies not in short-term profit fluctuations but in deeply participating in the global energy transition process, thereby firmly securing an irreplaceable position.