Shares of CATL, the world's largest electric-vehicle battery maker, fell more than 10% on Wednesday, Oct. 21, 2026, after its third-quarter profit came in well short of expectations. CATL said on Tuesday that Q3 net profit attributable to shareholders rose 14.54% year over year to 21.25 billion yuan (about $3.16 billion), but fell 5.77% from the second quarter. Revenue climbed 58.58% to 165.22 billion yuan.

Its Hong Kong shares were down 10.64% at HK$368, their lowest since July 2025, and its Shenzhen shares fell about 12%, CnEVPost reported.

How big was the miss?

  • Reuters: analysts expected profit to rise 41.2%, based on LSEG SmartEstimate data. The 14.5% gain is CATL's slowest profit growth in nearly two years, after a 36.5% rise in Q2. Revenue also undershot a forecast 60.2% increase.
  • Bloomberg (via Edaily): the average forecast was 26 billion yuan of net profit.
  • Gross margin: 20.69%, the second straight quarterly decline (CnEVPost).

Why margins slipped

On its earnings call, CATL blamed lower profit per unit on product mix, a consumption tax on lithium batteries and a cut in battery export tax rebates, CnEVPost reported. China resumed a consumption tax on lithium-ion batteries on Sept. 1, 2026 at a transitional 2% rate, rising to 4% on Sept. 1, 2027. The export VAT rebate for batteries was cut from 9% to 6% on April 1 and will be scrapped on Jan. 1, 2027.

CFO Zheng Shu said the tax is built into product prices, so CATL can't pass it on without renegotiating with customers, and those cost-sharing talks are still under way. The tax covered only September in Q3 but will apply for all of Q4. JPMorgan downgraded CATL's Hong Kong shares to Neutral, according to 21jingji via CnEVPost.

Losing ground at home, gaining abroad

CATL's share of China's power-battery installations fell to 40.9% in September from 49.8% in January, while BYD's rose to 21.1% from 17.4%, Reuters reported, citing industry data. Globally, CATL's share of EV battery usage rose to 39.4% in the first eight months of the year. Edaily notes that Xiaomi has launched a battery platform with CALB and Xinwangda, and Li Auto plans to put its own batteries in all its models.

CATL still expects 20% to 30% growth in global power and storage battery demand in 2027, and wants energy storage to reach half its revenue by 2030, up from about a quarter now. On Tuesday it also unveiled a new battery system for heavy-duty trucks and said it would expand its battery-swap network.

For more on China's battery and EV price war, see BYD's second-generation Seagull and Japan's EV subsidy cut.