If the Ford-CATL model is replicable, CATL could become the "shadow king" of the U.S. battery market

Overview

This report centers on Contemporary Amperex Technology Co. Ltd. (CATL, 3750.HK) and its partnership with Ford in the U.S. energy storage battery market. Its core view is that the value of the Ford-CATL model lies not only in the single 20GWh ESS project, but in its potential to validate a scalable and replicable technology licensing framework. Morgan Stanley believes that if this model proves viable, CATL could tap into growth in U.S. energy storage and AI-related power demand through advanced battery technology, manufacturing efficiency, and licensing-fee sharing without directly bearing U.S. local ownership and geopolitical constraints.

Core views

The bull case includes the following points: first, Ford ESS products use 512Ah LFP prismatic cells and a 20-foot containerized standard design, which may correspond to CATL's new technology for 20-year performance; second, the AMPC tax credit provides a significant economic incentive for Ford ESS expansion in the U.S.; third, even without policy support, U.S. local ESS prices as high as US$225/kWh, together with CATL's extreme manufacturing efficiency, high yields, and system cost-reduction capabilities, may still preserve meaningful profitability; fourth, if the licensing model is replicated across larger capacity, CATL could obtain a high-margin, recurring, and not yet fully priced revenue stream.

Analysis framework

The report evaluates the opportunity using event-driven analysis, project economics, technology licensing fee estimates, policy subsidy sensitivity, and a relative valuation framework. On valuation, Morgan Stanley uses an EV/EBITDA approach consistent with the valuation methodology used for global battery peers covered by analysts, and applies a 17x EV/EBITDA multiple to 2027E EBITDA.

Methodology notes

• Valuation methodsEV/EBITDA

  Using 2027E EBITDA and applying a 17x EV/EBITDA multiple, implying a 2027E P/E of 25.4x, and assigning CATL H-shares a 20% H/A premium.

  This approach is used to stay consistent with global battery peer valuation methodology and focuses on enterprise value relative to operating cash earnings power.

• scenario_analysisBull case

  The Ford-CATL licensing model can be replicated and drive continued expansion of U.S. energy storage capacity.

  The bull-case scenario emphasizes the scalability of technology licensing and asset-light globalization, rather than the one-time contribution of a single 20GWh project.

• policy_economicsAMPC sensitivity

  An AMPC of US$45/kWh provides clear support for the economics of the Ford ESS project.

  The report also discusses both subsidized and unsubsidized scenarios, and believes CATL's cost advantage may keep the economics meaningful even without subsidies.

Asset mapping & comparison

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

• Contemporary Amperex Technology Co. Ltd. (3750.HK)

  Research target and primary beneficiary

  Strengths

  World-leading battery technology, LFP and ESS product capabilities, extreme manufacturing efficiency and high yields, and potential high-margin technology licensing income.

  Weaknesses

  Expansion in the U.S. market depends on whether the partnership model is replicable; licensing fees and project terms have not been disclosed.

  Comparison

  The report uses global battery peer EV/EBITDA valuation multiples and assigns CATL H-shares a 20% H/A premium.

  Risks

  Geopolitical decoupling, competitor threats, EV and ESS penetration below expectations, and market share gains below expectations.

• Ford ESS partnership

  Key catalyst and model-validation project

  Strengths

  Standardized 20-foot containerized energy storage system, 512Ah LFP prismatic cells, and strong economics under AMPC support.

  Weaknesses

  The initial setup may mainly be a conversion of an existing EV battery project, and scale and profit allocation still need validation.

  Comparison

  The report argues that the key issue is whether the Ford-CATL model can be replicated, rather than the single 20GWh project itself.

  Risks

  Changes in policy support, U.S. local supply chain constraints, and political signals affecting the partnership.

Key data

• RatingOverweightMorgan Stanley's equity rating on 3750.HK.
• Target PriceHKS815.00Approximately 25% upside versus the May 12, 2026 closing price of HKS651.50.
• Current PriceHKS651.50Closing price on May 12, 2026.
• 52-Week RangeHKS745.00-288.51Disclosed in the table on the report cover.
• Implied Licensing FeeAbout US$7/kWhMorgan Stanley's estimate, roughly equivalent to half of CATL's dollar net margin.
• AMPC Tax CreditUS$45/kWhAssumed advanced manufacturing production tax credit for Ford ESS.
• U.S. Local ESS PriceUp to about US$225/kWhUsed in the report to show that the project may remain economically viable even without policy support.
• Valuation Multiple17x 2027E EV/EBITDAUsed for the base-case valuation, implying a 2027E P/E of 25.4x.

Impact & implications

If the Ford-CATL model is validated and replicated, CATL's investment narrative could expand from a pure battery manufacturer to a global battery technology licensing platform. This model would help CATL avoid geopolitical constraints associated with direct ownership in the U.S. market while sharing in battery demand growth from AI data centers, energy storage, electric vehicles, and embodied AI applications through its technology, processes, and cost advantages.

Risks

• Other battery manufacturers pose a potential threat.
• Geopolitical risks could lead to decoupling in the battery supply chain.
• EV penetration and ESS application growth may fall short of expectations.
• Market share gains may be lower than expected.
• The Ford-CATL licensing structure, licensing fees, and replicability have not yet been disclosed or validated by either side.

What to watch

• Whether the Ford-CATL ESS partnership expands from a 20GWh project to more U.S. local capacity.
• Whether the AMPC tax credit policy is extended, and whether the project economics still hold without subsidies.
• Whether CATL can turn the roughly US$7/kWh technology licensing fee into stable, recurring high-margin income.
• Growing battery reliability and cost demand from AI data center power usage, robotaxis, eVTOLs, and humanoid robots.
• Policy signals and supply chain constraint changes related to advanced battery technology cooperation between the United States and China.