By Michael Elkins
Battery makers in China were put on notice this week, following a message from President Xi Jinping. On Monday, the President said that he had mixed feelings about CATL (SZ:300750) and its status as the world’s largest battery maker. Xi said that he was “both pleased and concerned” about CATL’s electric vehicle battery dominance.
Xi’s remarks showed CATL has drawn the attention of top Chinese officials. Since last year, CATL’s customers have complained about its market position and the company itself has warned about the risks of the industry expanding too quickly.
Three battery industry executives – including two at CATL – and two people close to regulators working with the industry told Reuters that they understood Xi’s remarks to be a warning to both the company and the wider battery industry.
One of the five, a senior manager at CATL, said Xi’s remarks were concerning for the whole industry. “Pressure is being imposed on all parties,” he said, adding that “even if the government steps on the brake, CATL’s position within the industry won’t be shaken.”
Xi was quoted by Xinhua as saying regulation had a place to ensure that emerging industries like battery production developed in a “steady and prudent manner” to avoid “a boom and a headlong rush that would dissipate in the end.”
CATL’s deal to license its battery technology for production at a plant run by Ford (NYSE:F) also faces potential scrutiny in the United States and China as EV industry competition between the two nations intensifies. Republican Senator Marco Rubio has called for the Biden administration to review the deal.
CATL told investors that the partnership, which it said was based on “commercial considerations” has been moving ahead.