$320B in Cash, $550B in Debt Overhead: CATL’s Two-Sided Story of Relentless Fundraising

On December 10, CATL (SZ: 300750) announced that it plans to register and issue up to RMB 10 billion (inclusive) in bonds, with a maturity of up to five years (inclusive). The proceeds will mainly be used for project construction, working-capital replenishment, and repayment of interest-bearing liabilities, among other purposes.

This planned bond issuance immediately drew strong attention from the capital markets. Notably, CATL only recently completed a Hong Kong listing in May this year, raising net proceeds of approximately HKD 35.331 billion (about RMB 31.9 billion).

Yet CATL is hardly short of cash. According to observations highlighted by Huaxia Energy Network (WeChat public account: hxny3060), as of the end of the third quarter, CATL’s monetary funds reached RMB 324.242 billion—dozens of times higher than many peers. Its cash management and investment performance has also been solid: in the third quarter, trading financial assets surged 202.9% versus year-end to RMB 43.261 billion, while investment income for the first three quarters hit RMB 5.237 billion, up 67.46% year-on-year.

With numbers like these, CATL looks not only well-funded—but exceptionally so. That raises the obvious question: if it has so much cash, why does it keep financing?

Leading the domestic capacity race, with construction-in-progress up nearly 50% in Q3

Even as the “king” of batteries, CATL is feeling mounting pressure from increasingly aggressive competitors. Its response has been a rapid and broad capacity expansion plan—one that requires massive, sustained capital.

Data from the China Passenger Car Association (CPCA) shows that in the third quarter of 2025, CATL’s power-battery market share was 41.7%. That’s down 3.6 percentage points from 45.3% a year earlier, and down 3.2 percentage points from 44.9% in the first quarter of 2025. CATL remains the global leader, but its share has fallen to the lowest level in five years.

Meanwhile, second-tier players are accelerating. EVE Energy (SZ: 300014), for instance, has been expanding rapidly. In the first three quarters of this year, its power-battery shipments reached 34.59 GWh, up 66.98% year-on-year, with market share rising from 3% to 4.6%. Its energy-storage battery shipments were 48.41 GWh, up 35.51%, and total revenue for the first three quarters reached RMB 45.002 billion, up 32.17%.

The more formidable pressure comes from a broader wave of challengers expanding at full speed. According to incomplete statistics from Shanghai Securities News, in the third quarter alone the lithium-battery industry signed 19 capacity-expansion projects, with announced investment exceeding RMB 74.7 billion.

In August, BYD (SZ: 002594) unveiled new expansion projects in Zhengzhou—including a power-battery production line expansion and a liquid-cooling plate production line for Zhengzhou Fudi Battery—within the Zhengzhou Airport Economy Zone. The power-battery line expansion alone carries a total investment of RMB 5 billion.

That same month, Gotion High-Tech (SZ: 002074) announced it is advancing two major projects in parallel: a new lithium-ion smart manufacturing base in Nanjing, Jiangsu, and a new energy base in Wuhu, Anhui. Each project represents a planned investment of RMB 4 billion, aimed at building 20 GWh-class production capacity along with supporting facilities.

Hithium Energy Storage has also stated it is steadily ramping new bases in Chongqing and the United States while accelerating construction of its Shandong plant. Meanwhile, the “dark horse” Chuno New Energy broke ground on a 70 GWh lithium-battery project in Xiangyang on October 28, noting that its current capacity under construction exceeds 400 GWh, with plans to reach 500 GWh within three years across both energy storage and power-battery segments.

Faced with this wave of expansion from “younger rivals,” CATL has stepped up with an even more forceful pace of its own.

Since the beginning of the year, CATL has essentially launched new build-outs month after month. Bases have broken ground or entered production in Shandong (Dongying, Jining and other locations), Luoyang, Xiamen, and more. The 40 GWh Luoyuan-era new energy battery industrial base officially started construction in April; the Dongying lithium-battery project was announced in March and began construction in July.

CATL’s third-quarter report shows construction-in-progress reached RMB 37.366 billion, up from RMB 25.2 billion a year earlier—an increase of 48.27%. Such a jump inevitably demands significant funding, making continuous financing a near-constant requirement.

Overseas expansion is an even bigger cash burner, with three projects totaling RMB 136.7 billion in investment

With intense price and capacity competition at home, CATL has accelerated overseas expansion in recent years—creating another major funding need.

In fact, overseas competitors have seen their market share weaken over the past few years. According to the latest data released by South Korea-based market research firm SNE Research, from January to October 2025, the combined market share of South Korea’s three major battery firms (LG Energy Solution, SK On, and Samsung SDI) fell to 16%, down 3.5 percentage points year-on-year, and far below their peak in 2021 (31.7%). CATL has ranked No.1 globally in market share for eight consecutive years, and has surpassed LG Energy Solution in overseas markets.

Now CATL is pressing its advantage internationally to further strengthen its leadership.

Earlier this year, CATL announced a joint venture with Stellantis to build a power-battery plant in Spain, with a groundbreaking ceremony held on November 26. As one of China’s largest investment projects in Spain to date, the project carries a total investment of EUR 4.1 billion (about RMB 34.0 billion) and is scheduled to begin production by the end of 2026.

On September 5, CATL signed a land pre-purchase agreement in Debrecen, eastern Hungary, officially launching its Hungary plant project.

This factory will be CATL’s second battery plant in Europe, located near multiple European OEM manufacturing sites. Mercedes-Benz is expected to be the first customer. The project is planned for 100 GWh of battery capacity, with total investment expected not to exceed EUR 7.3 billion (about RMB 60.5 billion) and an overall construction period of up to 64 months. According to CATL’s latest updates, construction has been completed, Industry 4.0 equipment has been installed, and cell production is planned to start in early 2026.

Huaxia Energy Network also noted that from CATL’s Hong Kong listing proceeds on May 20, about 90% (roughly RMB 28.7 billion) is intended for the Hungary project. But compared to the project’s estimated RMB 60.5 billion total investment, that amount would cover only around 47%.

Beyond Spain and Hungary, CATL’s Indonesia power-battery industrial chain project also began construction in June this year. The project’s total investment is expected to approach USD 6 billion (about RMB 42.2 billion). It is designed to support battery output for 200,000–300,000 electric vehicles annually, with plans to expand further into the energy-storage segment.

If these overseas projects are completed smoothly, they would further cement CATL’s leading position in global markets. But the combined investment for just these three projects totals roughly RMB 136.7 billion—no surprise, then, that CATL is extremely cautious about keeping its funding “ammunition” well stocked.

Financing dependence is hard to ignore, with total liabilities likely to exceed RMB 600 billion this year

Beyond domestic and overseas expansion, CATL has other capital-intensive needs—most notably raw material procurement. According to incomplete media statistics, CATL has signed supply-chain orders totaling more than RMB 100 billion this year.

In May, CATL signed an agreement with Wanrun New Energy (SH: 688275) to purchase approximately 1.3231 million tons of lithium iron phosphate (LFP) products between May 1, 2025 and May 1, 2030. Based on the LFP price at the time of RMB 35,500 per ton (with the latest market quote reportedly rising to RMB 39,100 per ton), the order value reaches RMB 47.0 billion—described as the largest LFP procurement order in China to date.

CATL has also been making large purchases across other material categories. For example, on September 15 it signed a 157,500-ton cathode material order with Lopal Tech, with an agreement value of RMB 6.0 billion. On the evening of November 5, it signed procurement agreements with Jia Yuan Technology (SH: 688388) covering copper foil, anode current collector materials, and more. For the three-year period from 2026 to 2028, the supply volume is stated to be no less than 626,000 tons, while spot copper foil prices are around RMB 110,000 per ton.

With so many large cash outlays, financing becomes necessary. For CATL, borrowing is not only easy—it’s also cheap.

Take CATL’s 2019 issuance of RMB 10 billion in corporate bonds: the coupon rate was 3.68% for the first three years, and 2.55% for the last two years. With overall interest rates trending lower today, corporate bond yields have also declined (roughly around 2%). Given CATL’s credit profile and influence in the industry, its financing costs can be even lower.

In the first half of 2025, CATL’s interest expense was RMB 1.558 billion. That implies an estimated blended average borrowing rate of about 2.2%. During the same period, its interest income reached RMB 5.125 billion—implying a cash management yield of about 2.9%.

In other words, even after paying interest, CATL can still come out ahead—because the returns on its cash management and investments exceed the cost of borrowing.

Still, “easy to borrow” does not mean “easy to repay.” Every additional layer of debt ultimately accumulates risk. Over the past several years, CATL appears to have developed a growing reliance on financing, and its rising leverage warrants attention.

Huaxia Energy Network noted that since 2014, CATL’s asset-liability ratio has remained elevated—often above 60%, at times above 70%, and even exceeding 80% in 2014 and 2015. In the third quarter of 2025, CATL’s asset-liability ratio stood at 61.27%. While that is lower than 64.33% a year earlier, it remains above the industry average of 48.67%.

Over the past five years, CATL’s total liabilities have climbed sharply. Liabilities were RMB 87.424 billion in 2020, jumping to RMB 215.045 billion the following year. In 2024, CATL’s liabilities surpassed RMB 500 billion for the first time, reaching RMB 513.2 billion. By the first three quarters of this year, liabilities had risen further to RMB 549.07 billion, making it highly likely that full-year liabilities will exceed RMB 600 billion.

A high-debt, high-leverage strategy can significantly lift return on assets during boom years—when new energy vehicles and energy storage markets are strong and profits are easier to earn. But if market conditions deteriorate, repayment pressure can quickly tighten the company’s liquidity.

Some may argue that such a downturn is unlikely. Yet it is worth remembering the cautionary lessons from the real estate sector: the swing from booming demand to cooling markets, from easy financing to debt distress, can be far shorter than expected.