As automakers accelerate their push into self-developed batteries, the transformation may go beyond shifting supplier rosters—it could redefine the premium pricing model that CATL has long relied upon through its complete battery system offerings. On the evening of September 18, after the launch event for the XPeng G9L, XPeng founder He Xiaopeng told media that his company would handle battery development independently starting this year. Previously, Li Auto also announced that its self-developed batteries would gradually cover its entire vehicle lineup. The industry's swift pivot has already sent ripples through capital markets. On September 18, CATL's A-share closed at 301.95 yuan per share, a drop of over 35% from its 2023 high of 467.34 yuan recorded on May 7, while its H-share closed at HK$507, marking an intraday low since March 10. The combined A+H market value has eroded by more than 700 billion yuan from its peak.

Market consensus tends to interpret automakers' battery self-development as two drivers: cutting costs and securing supply. But the ongoing industry shift extends far beyond simply swapping suppliers. Automakers are striving to reclaim control over battery product definition, directly challenging the profit pathway CATL has historically leveraged from delivering complete battery system solutions. This marks a structural adjustment to its existing business model.

Where the Definition Power Shifts, Manufacturing Stays Central

It's worth clarifying what automakers are actually doing. They are not building comprehensive cell manufacturing plants. Instead, they are retaining authority over product definition—battery chemistry, fast-charging logic, BMS strategies, and vehicle integration standards—while delegating cell production to battery suppliers. For instance, Xiaomi's "Dragon Armor Battery" is defined and co-developed by Xiaomi, with CALB and Sunwoda producing cells to Xiaomi's specifications. Li Auto's battery self-development involves in-house design and manufacturing of battery packs, with cells outsourced to Sunwoda and CALB. XPeng has brought the entire battery pack chain back in-house, retaining only the purchased cells. This strategy strikes directly at the core of CATL's high-margin business.

Previously, CATL delivered a complete "battery solution plus exclusive supply" package, extracting value from technology, system integration, and premium pricing enabled by sole-source contracts. With automakers now taking command of chemistry, architecture, and vehicle integration, and only sourcing custom cells, CATL's ability to monetize the full battery pack is under significant pressure. Financial data reflects this trend. In the first half of 2026, CATL's primary revenue stream—power battery systems—saw its gross margin fall to 20.63%, down 1.78 percentage points year-over-year.

The rise of second-tier battery makers is also becoming clearer. Beyond their own technological advances, their key advantage lies in adapting to automakers' product definitions and embracing deep customization. Li Auto invested 2.65 billion yuan in Sunwoda, becoming its second-largest shareholder, while CALB has grown into XPeng's main supplier. In the current supply chain landscape, manufacturers capable of delivering custom cell solutions aligned with automaker specifications stand to capture incremental share released by CATL.

Making Cars Doesn't Guarantee Making Batteries

Automakers reclaiming definition power is fundamentally a profit redistribution. Over recent years, substantial profits in the new energy vehicle supply chain have concentrated in the battery segment. In the first half of 2026, CATL's net profit attributable to shareholders reached 43.284 billion yuan. In comparison, 15 major listed automakers—including BYD, SAIC, Geely, and Chery—posted combined net profits of 21.048 billion yuan, less than half of CATL's figure. As early as 2022, Zeng Qinghong, then-chairman of GAC Group, publicly complained: "If batteries account for 60% of vehicle costs, aren't we just working for CATL?"

The current wave of automaker self-development and multi-supplier strategies is precisely aimed at compressing the battery segment's excess profits and channeling more value back to vehicle manufacturing. The lithium battery industry may transition from historically high-margin periods to a more standard manufacturing-level profitability. However, concluding that CATL will be replaced is premature. Automakers face natural limits in battery self-development. He Xiaopeng clarified in an interview that XPeng does not intend to produce cells in-house; investing in cell production would ultimately remain an external endeavor. Automakers excel at vehicle product definition and system integration, but they encounter high barriers in large-scale cell manufacturing, including yield rates, consistency, and cost control. Cell production is asset-intensive; only sufficient scale can amortize costs. If sales fluctuate, heavy capital expenditure could strain automakers' balance sheets.

Ni Jun, CATL's chief manufacturing officer, has publicly stated: "Those who make cars don't necessarily know how to make batteries—specialists should handle specialized tasks." Definition power is contestable, but the barriers to scale manufacturing are not easily transferable. In the first half of this year, CATL's battery system capacity utilization reached 94.86%, with 764 GWh under construction. Its German plant has turned profitable, while facilities in Hungary, Spain, and Indonesia are progressing. According to data from SNE Research, a Korean market research firm, CATL's global power battery market share surpassed 40% for the first time from January to May 2026, reaching 40.2%.

CATL is even moving to counter-offer on definition control. It has introduced a 75# standardized battery swap block for heavy trucks and is developing integrated smart chassis, bundling "battery plus chassis" as a standardized package available to automakers. This moves CATL back into the position of "setting the standard." On premium models priced above 300,000 yuan, its Qilin and Shenxing ultra-fast charging technologies remain mainstream choices for performance and safety. While automakers are widely adopting second and third suppliers to diversify their supply chains, most flagship high-end models still keep CATL on their vendor lists.

The industry is unlikely to see simple substitution. In the domestic power battery arena, a dual-balance dynamic is more probable: automakers will secure product definition rights, pulling more supply chain profits back to the vehicle side, while CATL maintains its core capabilities in high-end manufacturing. Challenges, however, remain concrete. If more high-end models take deep control of battery definition, and CATL's product performance edge gradually becomes a generic industry standard, its existing product premium could face sustained compression. Confronted with competitive pressure in the domestic market, CATL hasn't bet everything on domestic automaker power battery operations. Overseas markets and energy storage have become vital growth pillars. In the first half, energy storage revenue reached 53.261 billion yuan, up 87.54% year-over-year. Overseas revenue hit 87.129 billion yuan, a 42.35% increase, with a gross margin of 29.97%—notably higher than the domestic business's 21.16%. For CATL, the genuine risk isn't complete displacement by automakers; rather, it's adapting to thinning domestic gross margins while continuing to generate reasonable returns through manufacturing strength, global expansion, and energy storage operations.