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CATL expected to surpass BYD in valuation

Jack From Gasgoo| November 03,2017

CATL BYD battery, China power battery giant, CATL SAIC, CATL Dongfeng,CATL Changan

Shanghai (Gasgoo)- Recently, Dongfeng Motor and Changan Automobile announced successively to invest in the Chinese battery maker Contemporary Amperex Technology Co. Ltd. (CATL). Up to now, three state-owned automotive groups have held stakes in CATL.

The battery maker’s seasoned equity offering showed that its valuation has been up to RMB 84 billion, which surpasses many vehicle makers and is only lower than SAIC, GAC, BYD and Great Wall.

On June 15, CATL made an announcement to start the pre-listing tutoring on some media and the sponsor institution is China Securities, a Chinese investment bank and brokerage firm. That means the company officially started its IPO process.

According to CATL’s plan, it will raise another RMB 30 billion and its battery capacity will grow sixfold to 50 gigawatt hours by 2020, which will make it ahead of Tesla’s gigafactory in Nevada.

In spite of its outstanding market performance, the company’s valuation also raised some suspicion that the value is so high for a company with only 6-year history. The current value of BYD, whose business covers vehicle and battery, is no more than RMB 88 billion. If CATL becomes a listed company, it is likely that its value will surpass that of BYD.

As the market competition becomes more and more intense, BYD decided to supply products to a market customer base. In June, Wang Chuanfu, founder of BYD, said that the automaker has been exploring the possibility with several carmakers on supplying battery products to them.

Industry analysts said there are three cooperation approaches for new energy vehicle maker and Tier 1 battery manufacturer. The carmaker can invest battery manufacturer and vice versa. For example, Hefei Guoxuan High-tech’s made an investment in BAIC BJEV. The third way is to set up a joint venture or to form close cooperative relationship, just as SAIC and CATL.

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