Doubling energy storage, accelerating commercial vehicles, AIDC positioning: CATL's second growth curve is taking shape

CATL’s first-quarter results far exceeded market expectations, but what’s more noteworthy is that multiple new growth curves supporting its next phase are accelerating and taking shape simultaneously.

According to a quarterly report review by Huatai Securities released on April 16, CATL achieved revenue of 129.131 billion RMB in Q1 2026, up 52.45% year-on-year; net profit attributable to shareholders was 20.738 billion RMB, up 48.52% year-on-year, about 33% above Huatai’s previous forecast of 15.6 billion RMB.

The main drivers of the beat stem from higher power per passenger vehicle, rapid electrification of commercial vehicles, and the company’s sustained expansion of market share, all contributing to battery shipment volumes significantly exceeding expectations. Huatai maintains a “Buy” rating for CATL A-shares and H-shares, and raises target prices to 583.94 RMB and 766.60 HKD, respectively.

In addition to the earnings surprise, storage battery shipments doubled year-on-year, commercial vehicle partnership agreements were intensively landed, and the company entered the AIDC track by investing in Zhongheng Holdings—these moves are outlining CATL’s second growth curve, distinct from its traditional power battery main business. Huatai raises its net profit forecasts attributable to CATL shareholders for 2026-2028 by 3.16%, 3.80%, and 5.27%, respectively. The core logic lies in rapid multi-scenario demand growth and rising market share.

First-quarter volumes up, profits stable, over 30% earnings surprise

Huatai estimates CATL's total battery sales in Q1 2026 were approximately 200GWh, up more than 60% year-on-year. Of this, power batteries were about 150GWh, up around 50%; energy storage batteries about 50GWh, up approximately 100%. The surge in shipment volumes is the main source of this season’s exceeded performance.

As for profitability, amidst rising prices for raw materials such as lithium carbonate, the company’s net profit margin showed strong resilience. Q1 2026 net margin was 17.61%, up 0.06 percentage points year-on-year; net profit per Wh was 0.104 RMB, maintaining steady unit profitability. Gross margin was 24.82%, up 0.41 percentage points year-on-year, down 3.40 percentage points quarter-on-quarter, with the qoq drop largely due to rising raw material prices and changes in product mix.

Huatai believes the company offsets raw material pressure via supply chain layout, economies of scale, product design, and price transmission, expecting unit profitability to remain stable throughout the year.

In terms of cash reserves, ending monetary funds and financial assets totaled 412.3 billion RMB, indicating abundant financial strength. The expense ratio for the period was 7.26%, up 0.18 percentage points year-on-year, and down 0.50 percentage points quarter-on-quarter.

Energy storage shipments doubled, global market share keeps expanding

Market share data confirms CATL’s leading position is strengthening. According to SNE statistics, January-February 2026 global power battery installations by the company reached 56.9GWh, up 13.7% year-on-year, with global market share rising to 42.1%, up 3.4 percentage points. According to China Automotive Power Battery Industry Innovation Alliance, Q1 2026 domestic power battery installations by the company reached 59.5GWh, up 3.5% year-on-year, with domestic market share rising to 47.7%, also up 3.4 percentage points year-on-year.

Energy storage is the most eye-catching incremental business this season. Huatai expects energy storage battery shipments for the year to reach 225GWh, up 87% year-on-year, with corresponding revenue growth of 81.49%. In terms of the proportion of gross profit, energy storage batteries' share in overall gross profit is expected to jump from 14.98% in 2025 to 21.49% in 2026, becoming an important source for profit structure improvement.

For industry chain security, on April 15, the company announced plans to establish a wholly-owned subsidiary—Era Resources Group. Huatai believes this move will help centralize management of raw material supply and further ensure industry chain security.

Commercial vehicles accelerate, intensive signings open new market

Commercial vehicle electrification is another incremental market CATL is accelerating penetration into. Since 2026, the company has signed intensive cooperation agreements with Minyun Group, Suqian Bus, Fuzhou Bus Group, Sanming Transport Group, Yiyun Shares, Shentong Express, Chongqing Logistics Group, Guangzhou Bus Group, Jianlong Group, etc., covering bus, logistics and various commercial scenarios.

Huatai’s prediction model shows power battery shipments will grow from 541GWh in 2025 to 675GWh in 2026, up about 25% year-on-year, with accelerated commercial vehicle electrification being a key driver. Meanwhile, the company continues to promote large-scale mass production and market launch of sodium-ion products, which are suitable for passenger vehicles, commercial vehicles, and energy storage applications, potentially broadening commercial vehicle market penetration.

Positioning for AIDC, upgrading to system solutions provider

Beyond energy storage and commercial vehicles, CATL is laying out a new track with greater imagination. On April 8, Zhongheng Electric announced that CATL intends to invest into its controlling shareholder, with both parties to strategically cooperate in green ICT infrastructure, transportation electrification, and new power systems (computing-power synergy).

Huatai believes this demonstrates CATL is actively positioning in the AIDC (AI Data Center) field and may upgrade from a battery supplier to a system solutions provider, creating a new growth pole. As AI computing infrastructure construction speeds up, demand for energy storage supporting data centers continues to expand. CATL, backed by its storage technology and scale advantages, has first-mover conditions to enter this scenario.

Based on rapid multi-scenario demand growth and rising market share, Huatai raises CATL’s net profit forecasts attributable to shareholders for 2026-2028 to 95.184 billion RMB, 116.182 billion RMB, and 140.578 billion RMB, respectively, for a CAGR of 25% and EPS of 20.86 RMB, 25.46 RMB, and 30.80 RMB.

In valuation, Huatai references the 2026 Wind consensus PE averages for comparable A/H-share companies at 23.78x and 24.63x, respectively. Given CATL’s steady net margin, continued global share enhancement, and the scarcity premium for leading new energy names in Hong Kong, a PE of 28x and 32x for A/H-shares is given, and target prices raised from previous 525.62 RMB / 639.64 HKD to 583.94 RMB / 766.60 HKD.

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