Falling sales to widen profit gap between China’s EV makers and battery suppliers

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Carmakers’ profit margin stood at 3.2 per cent in the first quarter, versus 6 per cent for downstream industrial firms, according to CPCA

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Daniel Renin ShanghaiPublished: 9:00am, 7 May 2026Updated: 11:31am, 7 May 2026Profit trajectories between automotive assemblers and electric vehicle (EV) battery producers in China are set to diverge further due to lacklustre car sales and buoyant demand for energy-storage systems.

Leading players, including China’s EV battery king Contemporary Amperex Technology Ltd (CATL), would continue to attract buying interest in their shares, spurred by improved profitability, according to analysts.

They added that flat vehicle prices, coupled with a dip in new car sales, had exacerbated concerns about Chinese carmakers’ already fragile earnings outlook.

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“A gap between car assemblers and suppliers’ business performance is widening as the global automotive industry accelerates its pace of electrification,” said Qian Kang, who runs a vehicle circuit board factory in Zhejiang province. “But only suppliers like battery and semiconductor makers will stand to benefit from the electrification drive, while carmakers will still pass profit pressure to other vendors.”

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The profit margin of the automotive industry – mainly car manufacturers – on the mainland stood at 3.2 per cent in the first quarter of 2026, compared with an average of 6 per cent for downstream industrial companies, according to the China Passenger Car Association (CPCA).

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