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CATL shares fall over 10% in Hong Kong as tax changes add to profit pressure

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CATL shares fall over 10% in Hong Kong as tax changes add to profit pressure

CATL (HKEX: 3750), the world's largest electric vehicle battery maker, saw its shares tumble Wednesday after reporting a sequential decline in third-quarter profit, with tax policy changes adding to pressure on profitability.

At the time of writing, CATL's Hong Kong shares were down 10.64% at HK$368, their lowest since July 2025. Its Shenzhen-listed shares fell about 12%.

The company reported Tuesday that third-quarter net profit attributable to shareholders totaled 21.25 billion yuan ($3.16 billion), up 14.54% year-on-year but down 5.77% from the previous quarter.

Revenue rose 58.58% year-on-year and 11.8% sequentially to 165.22 billion yuan. Quarterly gross margin fell to 20.69%, marking its second consecutive quarterly decline.

The results highlight how growing battery demand and revenue have yet to halt weakening profitability, while reduced tax support is forcing the company to negotiate how to share costs with customers.

On its earnings call Tuesday, CATL attributed the decline in profit per unit to changes in product mix, a consumption tax on lithium batteries and a reduction in battery export tax rebates.

China resumed levying a consumption tax on lithium-ion batteries and other battery products on September 1 at a transitional rate of 2%. The rate will rise to 4% on September 1, 2027.

Meanwhile, the value-added tax export rebate rate for battery products was cut from 9% to 6% on April 1 this year and will be eliminated on January 1, 2027.

CATL CFO Zheng Shu explained that the consumption tax is included in product prices, making it difficult to pass the additional burden downstream without renegotiating prices with customers.


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