Strong shipments drive up CATL's 1Q26 earnings forecast

Overview

This report is Bernstein's preview of CATL's 1Q26 results. The report expects the company to release 1Q26 earnings after the market close on April 15, 2026, and to raise earnings forecasts and target price on strong shipment growth, rapidly improving ESS demand, and a higher market-share assumption.

Core views

The core view is that CATL remains the global battery leader, 1Q26 battery demand remains resilient, and revenue is expected to grow 35% YoY to RMB114.4bn, with net profit of about RMB18.1bn, up about 30% YoY, and full-year EPS expected to grow 34% YoY. Although China's EV sales and policy support have weakened in the near term, the report believes European demand, global ESS, electric commercial vehicles, and technology licensing opportunities can support medium- to long-term growth. On profitability, rising metal prices and price competition will create pressure, but the report views the pressure as short term and believes CATL has cost pass-through and scale-efficiency advantages.

Analysis framework

The report combines high-frequency monitoring of battery sales and installations, EV and ESS demand data, average selling prices, unit profitability, capacity utilization, customer mix, and the competitive landscape to make forecasts, and updates the target price using a DCF valuation framework.

Methodology notes

• Valuation methodsDCF

  Discounted cash flow valuation

  CATL(A) uses a 9.6% WACC and a 3% perpetual growth rate, while CATL(H) uses a 10.4% WACC and a 3% perpetual growth rate; the model is based on annual free cash flow forecasts and terminal value through 2050.

• Earnings ForecastHigh-Frequency Data Tracking

  Battery sales, installations, and pricing tracking

  The report uses high-frequency indicators such as EV battery installations, total battery sales, ESS battery output, and battery pack prices to validate the 1Q26 revenue and profit forecasts.

• Unit EconomicsUnit Profit Analysis

  US$/kWh unit profit

  The report treats unit profit per kWh as a key quarterly performance metric, expecting 1Q26 net unit profit of about US$15.2/kWh and unit operating profit of about US$14/kWh.

• Competitive AnalysisMarket Share and Cost Advantage Comparison

  Market share, capacity utilization, vertical integration, and scale effects

  The report raises the FY26 EV battery market share assumption from 36% to 38% and emphasizes CATL's cost and margin advantages versus second-tier Chinese battery makers and Korean battery makers.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 300750.SS / CATL(A)

  Core coverage name

  Strengths

  Global battery leader with a strong cost structure; market share assumption raised; unit profit stable; DCF target price raised to CNY620.

  Weaknesses

  China EV demand is slowing near term, and rising metal prices and price wars could compress unit profit.

  Comparison

  Compared with second-tier Chinese battery makers and Korean battery makers, CATL has higher operating margins, unit profit, and share of the profit pool.

  Risks

  Excess battery capacity in China, geopolitical restrictions on market-share expansion, and intensified competition from vertically integrated OEMs.

• 3750.HK / CATL(H)

  H-share listing of the same company

  Strengths

  Also benefits from global battery and ESS demand growth; DCF target price raised to HKD600.

  Weaknesses

  Rated Market-Perform, and the report does not provide clear upside.

  Comparison

  More neutral than the A-share, but driven by the same fundamentals.

  Risks

  Also faces excess capacity, geopolitics, and OEM competition; upside risks include better unit profit and stronger-than-expected EV battery demand.

• EV battery

  Core business driver

  Strengths

  Total 1Q26 battery sales are expected to grow 40% YoY, and the EV battery market share assumption is raised to 38%.

  Weaknesses

  China's passenger EV penetration is already high, policy support is fading, and near-term demand growth is slowing.

  Comparison

  CATL has a stronger customer mix, with Tesla, ChangAn, BMW, and others outperforming some peers' customers.

  Risks

  Price wars, demand volatility, and OEM self-supply through vertical integration.

• ESS battery

  Important growth business

  Strengths

  China and global ESS battery output both achieved around 115%+ YoY growth in 1Q26, and energy security demand is accelerating storage adoption.

  Weaknesses

  Industry capacity utilization and competition may fluctuate as demand shifts.

  Comparison

  As an ESS battery leader, CATL should benefit from structural global growth in storage.

  Risks

  Overseas policy, project timing, price competition, and supply-chain cost changes.

• Electric truck battery and swapping

  Potential mid-term growth area

  Strengths

  China's heavy-truck electrification penetration is rising rapidly, and CATL's battery-swapping technology can shorten charging downtime for commercial vehicles.

  Weaknesses

  Penetration overseas remains low, and infrastructure buildout and the business model still need validation.

  Comparison

  Compared with conventional charging, battery swapping can reduce operating downtime.

  Risks

  Slower-than-expected station rollout, commercial-vehicle demand volatility, and competition among technology routes.

Key data

• 1Q26 revenue forecastRMB114.4bn, up 35% YoYGrowth is driven by both total battery sales and ASP changes.
• 1Q26 net profit forecastRMB18.1bn, up about 30% YoYThe net profit forecast given in the main text; the front page also mentions earnings growth of about 34%.
• 1Q26 total battery sales168GWh, up 40% YoYBased on Bernstein's latest tracking data.
• 1Q26 unit net profitabout US$15.2/kWhThe report believes unit profit will remain relatively stable.
• 1Q26 unit operating profitabout US$14/kWhBasically flat YoY, with a decline QoQ due to seasonality and metal costs.
• FY26 revenue growth forecastup 43% YoYThe report says the 2026 revenue forecast is above Bloomberg consensus.
• FY26 EPS growth forecastup 34% YoYThe forecast is above Bloomberg consensus after the earnings estimate raise.
• FY26 EV battery market share assumption38%, previously 36%Raised because installation momentum is stronger than expected and competitiveness has improved.
• CATL(A) target priceCNY620, previous target price CNY600Target price raised by about 3%, rating is Outperform.
• CATL(H) target priceHKD600, previous target price HKD580Rating is Market-Perform.
• China LFP battery pack priceUS$77/kWh, up 1% YoY and 3% QoQ in 1Q26Higher battery pack prices support revenue growth.
• China NMC battery pack priceUS$101/kWh, up 2% YoY and 4% QoQ in 1Q26Reflects a modest increase in average battery pack prices.
• 2025 capacity utilization96.9%, above 100% in the second halfHigh capacity utilization is one of the margin support factors.
• 2025 operating margin16.7%The report says CATL is one of the most profitable cell manufacturers globally, about 10 percentage points above Chinese peers.

Impact & implications

The impact on CATL is positive: in the short term, the 1Q26 shipment and earnings forecast raises support valuation appeal; in the medium to long term, global electrification, storage growth, European orders, electric heavy trucks, and technology licensing models are likely to extend the growth curve. For the industry chain, CATL's cost advantage and rising market share may further reinforce the pattern of industry profits concentrating at the leader.

Risks

• Excess battery manufacturing capacity in China could compress prices and margins.
• Geopolitical factors may limit CATL's share expansion in some overseas markets.
• Intensified competition from vertically integrated OEMs may weaken third-party battery suppliers' bargaining power.
• Near-term slowdown in China's EV demand and the phase-out of purchase-tax incentives may further suppress end-demand.
• Rising lithium, copper, and other metal prices in 1Q26 may put pressure on short-term unit profit.
• Price wars in China's auto and battery industries may create downside risk to unit profit.
• Entry into the U.S. market is still affected by regulatory and policy uncertainty, and execution risk remains for technology licensing projects.

What to watch

• CATL's actual 1Q26 revenue, net profit, and shipment volume to be released after the market close on April 15, 2026.
• Whether unit profit can remain around US$15/kWh and whether metal costs are effectively passed through.
• Whether FY26 EV battery market share can reach the raised 38% assumption.
• China EV demand, the phase-out of purchase-tax incentives, and changes in industry price competition.
• European EV sales, European OEM orders, and LFP model penetration trends.
• Whether demand for ESS batteries in China and globally can continue to sustain high growth.
• Progress on the Ford Michigan project, Tesla's Nevada LFP plant, and other U.S. technology licensing partnerships.
• EV heavy-truck penetration, standardized #75 battery packs, and the pace of battery-swapping station construction.