Chinese battery manufacturer CATL has imposed restrictions on working hours for some positions within its facilities since the end of last year, according to an August 4 report by Chinese news magazine China Entrepreneur, as demand from the country’s booming EV sector starts to stall. Since November last year, CATL has been cutting salaries, curtailing night shifts, and enforcing an eight-hour workday structure for select positions, an employee at CATL’s production base in Sichuan province told the outlet.

Why it matters: CATL has been actively expanding its battery production capacity in recent years, with the battery giant operating more than 10 production bases across nine Chinese provinces. However, the Chinese EV market has been experiencing a slowdown in the pace of battery demand growth leading to overproduction concerns at the Ningde headquartered firm.

Details: Prior to CATL’s recent moves, a number of workers at the company’s battery plants were reportedly on duty 11 hours a day to earn higher performance-based salaries, amid strong demand for batteries in the electric vehicle (EV) market. 

  • In June and July of 2022, when battery orders surged for CATL, workers were able to earn a monthly salary ranging from RMB 7,000 ($973) to RMB 8,000 ($1,112), China Entrepreneur reported, based on conversations with a CATL employee.  But during the first half of this year, those salaries have been cut by RMB 1,000 to RMB 2,000, the employee stated.
  • From 2014 to 2019, CATL began constructing production bases in four Chinese provinces, Qinghai, Jiangsu, Fujian, and Sichuan, with a combined investment of RMB 49.4 billion.
  • In 2020 and 2021, the company unveiled plans for the construction of six new production bases, with a total investment of RMB 67.5 billion, along with four extension projects budgeted at RMB 58 billion, according to calculations by a TechNode reporter.
  • In 2022, CATL decided to build three new plant bases in China’s central Henan province, eastern Shandong province, and southeastern Fujian province, with a combined investment of RMB 41 billion.
  • From January to June 2023, the total power of battery shipments in China reached 152.1 GWh, accounting for 51.8% of the full production capacity of 293.6 GWh, a significant drop from 54% in 2022 and 70% in 2021.
  • CATL’s surplus stock of batteries has surged more than twelvefold in the past five years. According to the company’s annual financial reports, its battery stock was 5.55GWh, 10.53GWh, 14.17GWh, 40.19GWh, and 70GWh from 2018 to 2022. 

Context: The largest battery maker in China is experiencing a decline in domestic market share, amid both excessive battery capacity and fierce competition from other domestic battery manufacturers. 

  • Sales of new energy vehicles (NEVs) surged to 374.7 million units in the first half of 2023, marking a year-on-year growth of 44.1%, according to data from the China Association of Automobile Manufacturers. However, the year-on-year increase rates for NEV sales were substantially higher in 2021 and 2022, at 160% and 93.4% respectively. Notably, in these two years, cumulative sales figures reached 352.1 million units and 688.7 million units.
  • By 2025, China’s battery production capacity is projected to reach 3,000 GWh, far exceeding the expected demand of 1,200GWh, according to Chinese media outlet The Paper, which cited data from Tsinghua University’s Professor Ouyang Minggao, an expert on new energy vehicles.
  • In the first half of 2023, CATL held a market share of 43.4% with a power battery shipment of 66.03GWh in China. This represented a decrease from 48.2% in 2022 and 52.1% in 2021, according to statistics from China’s battery industry association CABIA.