Core Insights - CATL's production capacity utilization rate was close to 90% in the first half of the year and has approached full capacity by October [1] - Several Chinese automakers are rushing to secure battery supplies from CATL before the reduction of new energy vehicle purchase tax subsidies in January [2] - The current supply constraints are primarily focused on high-nickel battery products, which are used in mid-to-high-end vehicles priced above 300,000 yuan [2] Group 1 - The surge in demand for energy storage batteries has further squeezed the production capacity for power batteries, with energy storage battery shipments accounting for over 20% in October [3] - CATL has increased its procurement of lithium iron phosphate materials in response to the rising demand for energy storage, which began to escalate around mid-year [3] - CATL is expanding its production capacity across various locations, including domestic bases and international projects in Hungary, Spain, and Indonesia, with completion dates extending to 2026 [3] Group 2 - The competition for battery supplies has intensified, with some second-tier battery manufacturers reaching 110% capacity utilization due to pre-ordered high-quality production lines [3] - Automakers are proactively securing battery orders to mitigate risks associated with the upcoming subsidy reduction, leading to a "battery war" among companies [2] - CATL is more inclined to offer guarantees and discounts to automakers with high shipment volumes [2]

Core Viewpoint - The article highlights the current supply constraints in the battery market, particularly focusing on CATL's high-nickel battery products, which are in high demand due to the upcoming reduction in subsidies for new energy vehicles in China. Group 1: Supply and Demand Dynamics - Several Chinese automakers are rushing to secure battery capacity from CATL before the subsidy cuts take effect in January 2024, leading to a competitive environment for battery procurement [4][9] - Unlike the battery shortages experienced in 2021-2022, the current supply limitations are primarily on high-end products used in mid to high-end vehicles priced above 300,000 yuan [4] - CATL's battery system capacity utilization rate was close to 90% in the first half of the year and has further increased by October [4] Group 2: Market Trends and Production Challenges - The surge in demand for batteries is driven by several factors, including the unexpected high sales of certain vehicle models and the preemptive actions of automakers to secure batteries ahead of subsidy reductions [4] - CATL is prioritizing large-volume orders from major automakers, which has led to some second-tier battery manufacturers reaching over 110% capacity utilization [9] - In October, over 20% of CATL's shipments were for energy storage batteries, with significant demand emerging from South America and the Middle East [9] Group 3: Future Expansion Plans - CATL is expanding its production capacity across various locations in China and is also developing facilities in Hungary, Spain, and Indonesia, with the Hungarian plant expected to be completed by the end of 2025 [9] - However, these long-term expansion plans do not address the immediate supply issues, and there is a risk of overexpansion if the market cools down after the current demand surge [10]