Foreword:

In September 2026, the power battery industry was rocked by major developments. Automakers are no longer satisfied with simply 'buying batteries' but are extending their reach into core battery operations. Meanwhile, CATL's A-share price had retreated more than 35% from its year-to-date high, with its market capitalization shrinking by over RMB 700 billion. These events collectively point to a trend: a fundamental transformation in the cooperation model between automakers and battery manufacturers.

Author | Fang Wensan

Image Source | Internet

Three Stages of Cooperation Model Evolution: From Long-Term Agreements to Equity Stakes to 'White-Box' Customization

In the past, cooperation between automakers and battery manufacturers was primarily limited to selecting suppliers, waiting for production scheduling, and receiving standardized specifications. Automakers placed orders, and battery manufacturers supplied products according to standard specifications, establishing a clear buyer-seller relationship.

However, this model is now being disrupted. Automakers have upgraded their 'bundling' strategies from early-stage long-term purchase agreements to a trinity of equity increases, joint ventures, and collaborative R&D for deeper integration. Li Auto invested RMB 2.65 billion in Sunwoda Electric Vehicle Battery, and combined with previous holdings through related entities, it now holds approximately 11.17% of the company, making it the second-largest shareholder after Sunwoda.

Xiaomi's Dragon Scale Battery breaks away from the traditional model where automakers simply purchase battery cells and package them. Instead, it establishes a new industrial paradigm encompassing vehicle definition, in-house battery pack development, joint cell customization, and full-chain quality control. Xiaomi defines core parameters such as the battery's electrochemical system, voltage platform, and cell specifications from a vehicle perspective. It leads the development of the battery pack's mechanical structure, electronic and electrical architecture, thermal management, and BMS software, while deeply participating in cell material selection and manufacturing processes. Xiaomi's quality experts are stationed at supplier production lines, which feature over 8,000 quality inspection points, enabling end-to-end management of primary and secondary suppliers. This cooperation model, where downstream players deeply participate in upstream R&D and manufacturing management, is known as the 'white-box' approach.

He Xiaopeng expressed this more directly. He stated that XPENG is not looking to produce cells in-house but rather to take full autonomous control over the entire battery pack supply chain, with cells still supplied by Calb, Sunwoda, and SVOLT Energy. He explained this choice by saying, 'Investing in cell production ultimately benefits others.' XPENG's strategy is to allocate resources to battery pack structural design, BMS, and thermal management—areas that can significantly differentiate vehicle range.

Are Automakers Eager to 'De-CATL'? The Answer Lies in Profit Statements

The fundamental driver behind automakers' collective adjustment of their battery supply structures stems from a structural imbalance in profit distribution. In the first half of 2026, CATL reported revenue of RMB 276.9 billion and net profit attributable to shareholders of RMB 43.284 billion, equating to approximately RMB 240 million in daily earnings, with a comprehensive gross margin of 23.93%. In contrast, the average profit margin of China's automotive manufacturing industry during the same period was just 3.8%. Li Auto's automotive gross margin in the second quarter was only 9.4%, a year-on-year decline of 10 percentage points. Yin Tongyue, Chairman of Chery Holding Group, stated bluntly at the World Power Battery Conference that the industry's overall profitability lags far behind that of the manufacturing sector, with many companies still operating at a loss.

For a pure electric vehicle with a 70 kWh battery, battery costs account for 30% to 40% of the total vehicle BOM cost and nearly one-third of the selling price. For every vehicle sold, roughly one-third of the revenue flows to the battery sector. Supporting second-tier battery companies is the most direct strategy for automakers. By introducing multiple suppliers to foster competition, they aim to lower procurement costs while weakening CATL's pricing power and dominance.

A report by Shanghai Securities News pointed out that profit-constrained automakers are intentionally supporting second-tier battery companies to break the monopoly. Stock prices of second-tier battery companies like Sunwoda have recently surged, forming a stark contrast to CATL's stock price pressures.

Supply Security and Technological Definition: Deeper Strategic Considerations Beyond Price Pressure

If automakers were solely focused on price reductions, their actions would not be so systematic. Deeper strategic considerations lie in two dimensions: The first dimension is supply security. Automakers' long-term reliance on a single supplier means that any fluctuation in battery supply can disrupt entire production plans. Li Auto adopted a 'phased supply' strategy for the i9 launch—the initial batch of models used CATL batteries, with a switch to in-house developed batteries once production capacity ramped up. This approach ensured stable initial supply while laying the groundwork for future autonomous substitution. Liu Jingyu, Chairman of Calb, stated at the Dragon Scale Battery launch that full-chain deep cooperation can truly translate battery companies' technologies into user needs while enabling more precise market understanding and unified standards.

The second dimension is technological definition. With the popularization of battery-chassis integration technology, batteries are deeply bound to powertrains, electronic control architectures, and thermal management systems, making them no longer a 'plug-and-play' standardized component. Range, fast charging, safety, and low-temperature performance are core selling points of new energy vehicles. If battery solutions are entirely controlled by suppliers, automakers lack crucial support for achieving technological differentiation at the vehicle level.

Li Xiang made a clear statement on this: 'For core components that determine user experience and can only meet our product standards through in-house R&D and manufacturing, we will resolutely develop and produce them ourselves. Regardless of the path chosen, the core is to keep product decision-making power in our own hands.' From an industry perspective, this signifies that suppliers' roles are shifting from 'solution leaders' to 'manufacturing partners,' with industrial chain (industrial chain) power beginning to flow back to automakers.

CATL's Foundations Remain Intact, but the Rules of the Game Have Changed

While automakers are intensively adjusting their supply structures, CATL has not lost its market-dominant position. In the first half of 2026, its domestic passenger vehicle battery installation share reached 46.7%, up 5.6 percentage points year-on-year, with a 75.2% share in ternary battery installations. In terms of capacity utilization, its battery system capacity utilization rate reached 96.9% for the full year of 2025 and 94.86% in the first half of 2026, maintaining outstanding manufacturing scale and efficiency.

Ni Jun, CATL's Chief Manufacturing Officer, responded by saying, 'Just because you can build cars doesn't mean you can build batteries. It still takes professionals to do professional work.' Objectively, the high-end vehicle market remains CATL's most stable segment, with no significant short-term impact on its shipments and profitability.

However, the true impact of 'de-CATL' lies not in CATL immediately losing orders but in its transformation from a 'must-have' to an 'option' for automakers. When automakers can readily shift orders to Sunwoda, Calb, or Gotion High-Tech, CATL's absolute pricing power and technological influence are weakened.

In response, CATL is deepening ties through joint ventures, such as establishing Contemporary Chery with Chery Automobile and increasing the capital of Contemporary Changan (a joint venture with Changan and Seres) to RMB 4 billion.

Conclusion

From long-term purchase agreements to equity stakes, and from standardized cells to 'white-box' customization, the cooperation between automakers and battery manufacturers is undergoing a profound restructuring. While CATL remains the most important supplier, it is no longer the sole option, as a new balance in the power battery industry takes shape.

Online References:

New Entropy: 'From Buying Cells to Defining Cells: Power Shifts Downstream in the New Energy Industry Chain'

Kuaitech: 'Automakers' De-CATL Trend Intensifies as CATL Faces Darkest Hour! He Xiaopeng Confirms: XPENG to Start In-House Battery Production This Year'

21st Century Business Herald: 'Automakers Accelerate 'Bundling' with Second-Tier Battery Manufacturers: Is 'De-CATL' Feasible?'

Shanghai Securities News: 'Three Questions About Automakers' 'De-CATL' Trend'