Ningwang’s performance is stunning, Wall Street collectively optimistic: Limited impact from lithium price increase, expansion expected to accelerate this year

CATL delivered an unexpectedly strong performance. Net profit attributable to shareholders in the fourth quarter of 2025 reached 23.167 billion yuan, a year-on-year surge of 57.1% and a quarter-on-quarter increase of 25%, far exceeding market expectations of around 19.6 billion yuan—marking the largest year-on-year growth in two and a half years. For the full year, net profit attributable to shareholders hit 72.2 billion yuan, up 42.28% compared to last year, with profit growth significantly outpacing revenue growth of 17%.

After the results were announced, major institutions like HSBC Qianhai, Nomura, and Jefferies collectively raised their target prices and maintained “buy” ratings. Wall Street’s confidence in “Ning Wang” has never been so aligned.

The market’s biggest previous concern—profit erosion from rising lithium prices—has basically been dispelled by the management’s earnings call. JPMorgan directly quoted management in their report: "Unit net profit in 2026 is expected to remain stable, with no significant changes barring major surprises." CATL has already established upstream lithium mining hedging mechanisms, contract pricing uses a lithium carbonate linkage model, and cost increases can be smoothly passed on to customers, making preparations far more sufficient than in the previous lithium price cycle. HSBC Qianhai also points out that the Yichun lithium mine project is accelerating the resumption approval process, and once approved, it will further strengthen the company’s cost hedging capability.

Capacity expansion is the main investment theme to watch in 2026. Capacity utilization for the full year of 2025 was 97%, reaching a historical high of 103% in the second half—this means the company actually lost some orders due to capacity bottlenecks. By the end of 2025, capacity under construction reached 321GWh. JPMorgan explicitly states that capacity under construction in 2026 is expected to surpass the level at the end of 2025, which is also confirmed by equipment suppliers, as tenders for new equipment have increased year-on-year. As new capacity comes online, the company is expected to recover previously lost orders due to capacity limitations.

Capacity utilization at record highs, order overflow becomes a moat

CATL’s capacity utilization in 2025 was as high as 97% (76% in 2024), and ran at an ultra-high load of 103% in the second half. Such high utilization means the company actually proactively gave up some market share due to insufficient capacity—a "happy headache."

By the end of 2025, effective capacity reached 772GWh, with 321GWh of capacity under construction. Management stated during the earnings call that capital spending will continue to grow in 2026 and the scale of "capacity under construction" may further surpass the year-end level of 321GWh. Based on this, HSBC Qianhai analysts have raised shipment forecasts for 2026–2027, raising net profit forecasts for those two years by about 7% each and introducing a 2028 earnings forecast.

JPMorgan also notes that CATL lost some orders in 2025 due to capacity constraints, but as new capacity ramps up in 2026, these orders are expected to be fully recovered.

Market share: Full-scale comeback, Europe shines brightest

In 2025, CATL’s global EV battery market share rose from 38% to 39%, and energy storage battery share remained stable around 30%.

Even more noteworthy is the structural change behind the data: While domestic passenger car market share growth is under pressure, the European market share soared from 37% in 2024 to 43% in 2025, becoming the main driver of global share growth.

In January 2026, domestic EV battery market share rebounded to 50%, a new 18-month high. HSBC Qianhai forecasts energy storage battery shipments to grow by 65% year-on-year in 2026, which could become the largest growth driver for the year. By business segment, the increased penetration of domestic commercial vehicles and European EV batteries is expected to partially offset the slowing growth in domestic passenger cars, leading to more balanced sources of growth.

Rising lithium prices: Market panic dispelled with a single sentence from management

Since 2026 began, spot lithium carbonate prices have jumped nearly 26%, prices of LFP cathode materials are up about 16%, and other key materials such as electrolytes have seen even more significant gains.

However, CATL’s management was remarkably calm in their earnings call:

First, after the last round of raw material price hikes, the company pushed for upstream resource integration and hedging, handling this round more calmly than before;

Second, most cost increases can be passed on to customers via "friendly negotiations," and the effect of export tax rebate reductions can be similarly passed on (when the tax rebate dropped from 13% to 9% in 2024, this was already accomplished);

Third, if lithium prices continue to rise sharply, the sodium-ion battery route will provide extra buffer, and Changan Auto plans to roll out sodium-ion batteries across all its brands.

The company also stated that the resumption process for the Yichun lithium mine project is accelerating, and once approval is completed, cost hedging capability will be significantly enhanced.

Wall Street raises targets collectively, significant valuation upside remains

After the earnings report, Wall Street is collectively optimistic about the company’s outlook:

HSBC Qianhai: A-share target price 467 yuan, current price 357.50 yuan (as of March 9, 2026), implying about 31% upside; H-share target price 648 HKD, current price 503 HKD, implying about 29% upside.

JPMorgan: H-share target price 640 HKD, based on 29x 2026 forecast PE, maintains overweight rating. 4Q25 results exceeded JPMorgan’s forecast by about 20%, reaffirming CATL as a top recommendation.

Nomura: A-share target price raised from 465 yuan to 476 yuan.

Jefferies: A-share target price raised to 522 yuan, 2026–2028 earnings forecasts up by 5%–6%, emphasizing high visibility for long-term growth.

Institutions generally believe that sustained profit realization, expanding market share, and continued high capacity utilization in Q2 2026 will be short-term catalysts for the company’s stock price.

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