China's carmakers casting a broader net for batteries

Automakers in China are widening their battery supplier pools and taking a more active role in setting battery specifications to manage costs and reduce supply risks as profit margins across the auto industry remain under pressure.

China's automotive manufacturing sector generated 5.19 trillion yuan ($767 billion) in revenue in the first half of 2026, up 1.8 percent year-on-year, according to the National Bureau of Statistics. Operating costs rose 2.8 percent over the same period, outpacing revenue growth, while total profits fell 19.5 percent to 195.4 billion yuan.

The figures cover the broader automotive manufacturing sector, including automakers and auto parts producers. Cui Dongshu, secretary-general of the China Passenger Car Association, said the sector's profit margin stood at 3.8 percent in the first half of 2026.

China's largest power battery provider, CATL, showcases its products at the 2026 Auto China Show in Beijing in April. WANG YUCHEN/CHINA DAILY

Battery procurement is one area where automakers are seeking tighter cost control. Industry estimates suggest battery packs account for 30 to 40 percent of an electric vehicle's component and material costs, depending on the model and configuration.

Data from the China Automotive Battery Innovation Alliance show that 335.6 gigawatt-hours of power batteries were installed in new energy vehicles in China in the first half of 2026, up 12 percent year-on-year.

Batteries from 40 suppliers were installed in new energy vehicles during the period, with the number of suppliers down by nine from a year earlier. The five largest suppliers accounted for 80.4 percent of installed capacity and the 10 largest for 93.7 percent. CATL alone held a 46 percent share.

Against this backdrop, CITIC Securities said automakers are moving from single-supplier arrangements toward dual — and multi-supplier battery sourcing as competition intensifies across the automotive supply chain. The securities firm expects diversified procurement to become a long-term industry trend.

Zhu Jiangming, founder and CEO of Leapmotor, said the company sources each type of battery cell from multiple suppliers.

The approach can strengthen the automaker's bargaining power in procurement, help balance production capacity among suppliers and maintain quality while keeping costs and supply risks under control, Zhu said.

Data from the Power Battery Application Branch of the China Industrial Association of Power Sources show that the installed capacity of power batteries in Leapmotor vehicles totaled 9.53 GWh in the first four months of 2026. Gotion High-Tech accounted for the largest share, at 32.2 percent, while seven other battery makers, including CATL, supplied the remainder.

Zhu said Leapmotor aims to absorb rising costs through closer coordination with suppliers and tighter internal cost controls rather than pass them on to consumers. He added that while price competition remains important in the short term, supply-chain capabilities will be more important over the long term.

Li Auto is pursuing a dual-brand battery strategy for 2026. Ma Donghui, president of Li Auto, said in March that vehicles across its model lineup would be equipped with either Li Auto-branded batteries or batteries supplied by CATL.

The L8, a range-extended SUV launched in June, uses a Li Auto-branded fast-charging battery.

Chinese battery maker Sunwoda manufactures the cells, while a joint venture between Li Auto and Sunwoda produces the battery pack.

Liu Liguo, a senior vice-president at Li Auto, said the automaker sets battery specifications and technical standards and oversees quality control, while working with partners on manufacturing. He said the approach allows Li Auto to tailor batteries to vehicle performance requirements and user needs.

Aito is a marque under Huawei's Harmony Intelligent Mobility Alliance, and its vehicles are manufactured by Seres. Seres signed a five-year battery supply agreement with CATL in 2022. Two CATL battery-pack production lines began operation at a Seres plant in Chongqing in June 2025.

The all-electric Aito M6 SUV went on sale in April with ternary lithium battery packs supplied by CATL. A catalog of approved vehicles issued by the Ministry of Industry and Information Technology in July listed Yichun Gotion Battery, a subsidiary of Gotion High-Tech, as the supplier of lithium iron phosphate cells and battery packs for a newly approved all-electric variant of the M6.

Pei Feng, president of battery maker Greater Bay Technology, said automakers need to consider both quality and production capacity when choosing battery suppliers. A multi-supplier strategy can help stabilize supply chains and give automakers access to products, offering a better balance between quality and cost, Pei said.

（China Daily）