CATL's 72 Billion Profit and the Automotive Industry's Historic Lowest Profit Margin

By: Yu Lei

Edited by: Gan Meng

Produced by: Automotive Industry Economics

“Last year, the industry’s profit margin was only 1.8%, which is really sad—many companies are still burning money,” said Chery Group Chairman Yin Tongyao during this year’s Two Sessions.

According to data released by the National Bureau of Statistics, China’s auto market sold 1.725 million more new cars in 2025, but the total retail sales of automobiles decreased by nearly 75 billion yuan compared to last year. The industry’s situation of increasing revenue but decreasing profits is becoming more severe.

CATL’s full-year revenue in 2025 reached 423.702 billion yuan, a 17.04% increase; net profit was 72.201 billion yuan, a 42.28% increase.

In stark contrast, CATL earned over 720 billion yuan in 2025, while many domestic listed automakers struggled all year, with net profits unable to match CATL Chairman Zeng Yuqun’s personal dividend of 8.1 billion yuan. In 2022, GAC’s former chairman Zeng Qinghong complained, and three years later, his words still hit hard.

Many reports analyze CATL’s ability to generate profits, generally attributing it to technological leadership, breakthroughs in overseas markets, high capacity utilization, and a market share of over 43% in power batteries.

But in reality, the entire power battery industry isn’t just CATL—almost all well-known battery companies are profitable. Even Xinwanda, embroiled in lawsuits and accused by Geely of poor cell quality, is seeing profits grow. The choice to focus on effort and strategy is once again materializing.

Besides CATL, another highly profitable company in the automotive supply chain is Huawei. In 2024, Huawei’s smart vehicle business achieved a total revenue of 26.353 billion yuan, a 474.4% increase, marking its first full-year profit.

In the first half of last year, Huawei’s smart vehicle revenue reached 27 billion yuan, a 110% increase, with an operating profit of 1.3 billion yuan. The full-year data has not yet been released, but given Huawei’s astonishing growth rate, it’s destined to be a bumper year.

While CATL and Huawei are enjoying big gains, the entire vehicle industry is barely getting a sip of the soup, and the weaker players are licking the bottom of the bowl. Why is reality so harsh?

The answer lies in the current era of China’s automotive industry—an era of intelligent electric vehicles. Intelligence is core; about 30-50% of an electric vehicle’s cost is spent on batteries. If the vehicle also features advanced functions like urban assist driving, then roughly another 20% of the cost is allocated to smart features.

Today, many new energy vehicle companies can only buy these technologies from suppliers—meaning high-value-added work is outsourced. A typical example: in the first half of 2025, Seres sold each vehicle and paid Huawei 136,000 yuan, while the average transaction price of the Wey brand last year was 386,000 yuan.

The logic is simple: most automakers want to control these two core areas and have made efforts, but results have often fallen short.

In 2025, the smart-driving unicorn Mileway Technology failed; Chery’s Dazhuo Intelligent was dissolved and restructured; SAIC’s Lingzhu Technology was integrated into the R&D headquarters. Currently, only Techway, incubated by traditional automakers, remains operational.

The failures of Mileway and Dazhuo share a common reason: they struggled to balance the demands of mass production from their parent companies with the pursuit of cutting-edge technology, ultimately failing at both.

In fact, most traditional automakers face similar dilemmas when developing intelligent features. Their primary goal is always to ensure sales and keep their large production capacities running. Past achievements have become a burden for transformation.

Talking about batteries again, BYD has surged in recent years, largely because it can supply 100% of its batteries internally. But BYD is an exception—most other automakers can only produce batteries for their own use initially. Without a certain scale of new energy sales, the investment in R&D and factory construction isn’t cost-effective. Studies suggest that only when a carmaker’s annual sales in a single market reach 500,000 units or their battery demand hits 15 GWh can building their own battery factory be financially viable.

Therefore, Great Wall, with insufficient sales volume, can only keep its batteries independent and seek external clients. Meanwhile, Geely and Chery, whose new energy sales have grown rapidly in recent years, are increasing their self-supply ratios.

Geely’s Geely Jiyou, with over 15 GWh of vehicle installations last year, has crossed the so-called critical threshold for power batteries. According to plans, Geely aims to increase its battery self-supply ratio to 30% within the next two years.

Chery has quietly established a battery company called Yiyuan Energy. It started building a production base in Anhui three years ago, and its first phase—5 GWh of battery production—is now fully operational. It is said that Chery plans to raise its battery self-supply ratio to 40%.

Looking ahead, automakers with certain sales scales will likely choose to produce their own cells, at least reducing reliance on external supply. Those without sufficient scale will continue to envy others—an inevitable consequence of the ongoing restructuring of the automotive supply chain.

As for intelligent technology, Huawei has a clear advantage, but competition among suppliers is fierce, and costs are dropping rapidly. There is a big debate in the industry about whether automakers should develop their own systems. Regardless, doing it themselves is always the best option.