After an on-site inspection of CATL, Morgan Stanley concluded: the core competitiveness is very strong, production capacity will reach 1TWh next year, and there is great potential in energy storage.

After an on-site inspection of CATL, Morgan Stanley concluded: the core competitiveness is very strong, production capacity will reach 1TWh next year, and there is great potential in energy storage.

``` Morgan Stanley released a report after an on-site visit to CATL, stating that the company’s self-developed manufacturing lines have extremely high complexity and intelligence, and together with advanced molecular-level material science, will continue to build high barriers, forming quality premium and cost competitiveness. According to the Morgan Stanley report, the factory produces 2.2 million battery cells per day, with over 6,800 real-time quality control points, handling 340,000 data transactions per second, creating a smart factory. CATL currently has sufficient orders, a capacity utilization rate of over 90%, is building 250GWh of new capacity, and aims to reach 1TWh capacity next year. In the energy storage system (ESS) business, CATL’s products bring customers about a 14-percentage-point IRR (internal rate of return) premium in the global market and a 7–8-percentage-point premium in the Chinese market. Morgan Stanley believes CATL has great potential in energy storage. Morgan Stanley maintains its “Overweight” rating on CATL with a target price of 425 RMB, based on 15x EV/EBITDA valuation of expected 2026 EBITDA, representing a 20% upside from current levels. Intelligent Manufacturing Builds Core Barriers Morgan Stanley pointed out after their field visit that CATL’s manufacturing efficiency sets a high standard. The daily production capacity of 2.2 million battery cells combined with over 6,800 real-time quality control points ensures high yield rates and quality premium. The ability to process 340,000 data transactions per second results in a truly smart factory. The report emphasizes that this is the key difference between CATL and other manufacturers: while creating a cost advantage, it also has advanced molecular-level material science. When asked whether competitors could replicate CATL’s production lines via equipment suppliers, Morgan Stanley believes this would be extremely difficult, as the lines comprise more than 25,000 component units, are highly complex, and mostly self-designed. Capacity Expansion Locks in Future Orders CATL’s current capacity utilization rate exceeds 90%, with 250GWh of new capacity under construction. According to the Morgan Stanley report, the company’s target is to reach 800GWh capacity by 2025 and 1TWh by 2026. With this scale, the company is expected to meet order demand in the coming years. Overseas capacity expansion is progressing as planned, with projects in Hungary and Indonesia set to enter production in 2026, and a Spain project planned for 2027. Management indicates that profitability of overseas plants is comparable to or better than the domestic market. Additionally, the company expects to achieve small-batch production of solid-state batteries in 2027. Management is constructive on next year’s EV and ESS deployments. Energy Storage Business Welcomes Product Upgrade In the competitive landscape of energy storage systems, CATL’s products enhance project economics for customers with leading degradation control and energy efficiency. In the global market, they deliver about a 14-percentage-point IRR premium compared to other battery manufacturers, and 7–8 percentage points in the Chinese market. As system product distribution capability improves, the company plans to optimize the product mix of its energy storage business in the next few years, including higher-margin AC system products. ~~~~~~~~~~~~~~~~~~~~~~~~ The above content is from [Chasing the Wind Trading Desk](https://mp.weixin.qq.com/s/uua05g5qk-N2J7h91pyqxQ). For more detailed interpretation, including real-time analysis and frontline research, please join [Chasing the Wind Trading Desk · Annual Membership](https://wallstreetcn.com/shop/item/1000309). Risk Disclaimer The market involves risks, and investment should be made with caution. This article does not constitute individual investment advice and does not take into account the special investment objectives, financial situation, or needs of specific users. Users should consider whether any opinions, views, or conclusions in this article are appropriate for their particular circumstances. Investment is at your own risk. ```