CATL bought back RMB800 million as shares fell 11.41%; a 2% battery tax lifts its tax bill to RMB2.21 billion
The world's largest battery maker bought back RMB800 million of its own shares on October 21, into an 11.41% fall, and lost 4% more the next day. The cause, a 2% battery tax CATL cannot yet pass on to carmakers, has one month booked; gross margin is already the lowest since 2022.
Vincent Jiang · 3 min read
A buyback into a 17% fall
Two trading sessions took about 17% off CATL−3.29% — CATL, down 3.29 percent today (HKEX: 3750, Shenzhen: 300750), the maker of 39.4% of the world's electric-vehicle batteries 2, after third-quarter profit missed every published forecast and a new tax the company cannot yet pass on took its first bite 1. The Hong Kong-listed shares fell 6.58% on October 20 and 11.41% on October 21, closing at HK$364.80 1.
On that second day CATL bought back 3.49 million of its Shenzhen-listed shares, about RMB800 million at RMB227.51 to RMB231.38 each 3; the stock fell another 4%, to HK$350.40, on October 22 3. On September 11 it had paid RMB330.15 to RMB331.61 for its own shares, so even the buyback price has dropped roughly 30% in six weeks 4. Founder, chairman and chief executive Robin Zeng has watched $14.9 billion leave his net worth this year 5.
Record revenue, 2022 margins
Third-quarter revenue rose 58.58% year on year to a record RMB165.22 billion, but net profit rose only 14.54%, to RMB21.25 billion 1: the slowest growth in nearly two years against a consensus expecting 41.2% 2, and below Bernstein, Goldman Sachs−1.04% — Goldman Sachs, down 1.04 percent today and CLSA 1. Gross margin fell to 20.69%, from 23.15% in the second quarter and 25.80% a year earlier, the lowest since the fourth quarter of 2022 1. Management put most of the drop on a quarter heavy in low value-added products, ahead of tax and rebate cuts 16.
Q3 profit came in below every published broker forecast
- Estimate
Data
| Value | |
|---|---|
| Reported | RMB21.25B |
| Bernstein (estimate) | RMB22.9B |
| Goldman Sachs (estimate) | RMB24B |
Gross margin has slid five points in a year to its lowest since Q4 2022
Data
| Gross margin | |
|---|---|
| Q3 2025 | 25.8% |
| Q2 2026 | 23.15% |
| Q3 2026 | 20.69% |
One month of tax, no way to pass it on
Beijing restored a 2% consumption tax on lithium-ion batteries on September 1, ending an 11-year exemption; the statutory rate returns at 4% in September 2027 7. The value-added-tax rebate on exported batteries, cut from 9% to 6% in April, ends on January 1 17.
One month of the new tax still nearly quadrupled the quarterly bill for taxes and surcharges, to RMB2.21 billion from RMB597 million 1. Chief financial officer Zheng Shu told the earnings call the tax sits inside the product price, so CATL cannot pass it on until contracts are renegotiated 1; in a stock exchange filing it said it hopes "we can shoulder the costs together" with customers 5.
A profit fight JPMorgan has already called
Carmakers ran a 3.6% profit margin in the first seven months while CATL booked RMB45.7 billion in the first half, more than 85% of the battery industry's profit 8. Rival cell makers EVE Energy and Lishen put the 2% on customer invoices; the customers pushed back, and the talks continue 78.
JPMorgan cut CATL's Hong Kong-listed shares to neutral, target HK$500 from HK$725, and called the squeeze a redistribution of profit along the chain, with CATL hit first and smaller cell makers harder 1. Rival CALB fell 3.57% and battery-equipment maker Lead Intelligent 9.58% alongside 1.
Ming Lee, head of Greater China automotive and industrial research at BofA−0.26% — BofA, down 0.26 percent today Securities, still expects the costs to be shared 8, and management sees 20–30% global demand growth as achievable in 2027, with China's storage battery sales up 111.8% to 595.4 GWh in nine months 1.
The quarter that decides it
The fourth quarter is the first to carry the tax in full 1. Watch the margin line against 20.69 and the cash line: nine-month operating cash flow fell 23.6% while prepayments to suppliers rose 85.26% 1, the float shift our September piece on CATL's suppliers flagged. The export rebate ends on January 1 17, and the tax is already scheduled to double, to 4%, in September 2027 7.
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