De-CATLization Debate Draws Warning From Chinese State Media

Chinese State Media Challenges the De-CATLization Narrative

A Chinese state media commentary has pushed back against the growing “de-CATLization” narrative in the electric vehicle industry, warning that portraying supply chain adjustments as attempts to move away from leading suppliers could weaken collaboration. CNII, a media outlet under China’s Ministry of Industry and Information Technology, said adding suppliers and developing capabilities internally are normal business practices. The commentary argued that these activities should not automatically be characterized as confrontation between automakers and battery producers. It also emphasized that encouraging additional companies to develop capabilities should not undermine established industry leaders that have contributed to China’s global competitiveness in core automotive components.

Battery Sourcing Changes Raise Competitive Questions

The commentary comes as Chinese automakers diversify their battery sourcing and expand efforts to develop battery technologies internally. These changes have prompted market discussion about the competitive position of CATL, while the commentary argued that supplier diversification itself should not be interpreted as an effort to remove leading companies. It said broader sourcing can strengthen supply chain resilience and give automakers additional options. At the same time, the commentary cautioned against excessive focus on short-term procurement costs, particularly if purchasing decisions reduce attention to battery technology, product quality, safety, and long-term reliability.

Low-Price Competition Raises Quality Concerns

CNII also warned that price competition in the new energy vehicle industry is spreading upstream into the battery supply chain. The commentary said companies can compete through price and efficiency, but safety and quality should not be sacrificed in pursuit of lower prices. It specifically noted that low prices do not necessarily indicate low production costs. The concern is that procurement decisions driven primarily by immediate savings could place greater pressure on suppliers and potentially weaken incentives to maintain technological capabilities and consistent quality. The commentary therefore framed competition as compatible with stronger industry standards when cost reductions do not come at the expense of safety or reliability.

In-House Battery Development Has Different Levels

The commentary acknowledged that automakers bringing some battery capabilities in-house can differentiate products and improve supply chain resilience. However, it argued that public claims about internal development should accurately reflect the underlying technical capabilities. Some automakers may concentrate their internal work on battery pack design, system integration, battery management systems, or product definition rather than developing cells themselves. CNII distinguished those activities from cell development and the ability to manufacture cells consistently at commercial scale. The distinction is important because different stages of battery development require different technical capabilities, manufacturing expertise, investment levels, and supply chain resources.

Li Auto Expands Its Internal Battery Work

The article did not identify a specific automaker as the target of its criticism, but the discussion comes as companies including Li Auto Inc expand their battery activities and relationships with suppliers. Li Auto said on September 7 that its internally developed batteries were already being used in the Li L8, Li L6, and Li i8, with plans to gradually extend them across its lineup. The company said its internal cell development began in 2020 and covers 5C cells, battery packs, and battery management systems. A joint venture established with Sunwoda Electronic Co Ltd in 2025 manufactures the batteries.

Chinese Automakers Continue Diversifying Battery Suppliers

Xiaomi Corporation has also expanded its battery supplier lineup to include CATL, FinDreams, CALB, and Sunwoda. The broader supplier mix reflects efforts among Chinese automakers to diversify sourcing while developing selected capabilities internally. The commentary argued that joint development should not be presented as entirely independent research and that supplier manufacturing should not be described as proprietary production when those descriptions do not accurately reflect the underlying arrangement. It warned that overstating internal capabilities could mislead consumers and potentially hinder technological innovation by obscuring the actual roles played by automakers, battery developers, and manufacturing partners.

CATL Retains a Leading Position in China

Despite the changes in sourcing strategies, CATL remained the leading company in China’s power battery market according to the cited August installation data. The China Automotive Battery Innovation Alliance reported that CATL accounted for 41.45% of battery installations in August, compared with 42.33% in July. The figures show that its share declined slightly month over month while remaining substantial. The commentary also placed CATL alongside BYD Company Ltd and other battery producers as participants that should compete openly for customers. It said consumer choice and market competition should remain central to the industry.

Supply Chain Diversification Versus Redundant Investment

CNII also cautioned that efforts to bring every capability inside an automaker could create redundant capacity and lead to inefficient resource allocation. Duplicating investments throughout the supply chain may increase resilience in some areas, but the commentary argued that internalization should be based on actual technical requirements rather than a goal of controlling every stage of production. It similarly distinguished diversification from removing industry leaders and independent innovation from performing every activity internally. The broader message was that automakers can expand their technical capabilities and supplier networks while continuing to work with established battery producers through competitive and collaborative arrangements.

Industry Impact & Outlook

The commentary could reinforce a more nuanced view of battery supply chain diversification in China, where automakers are balancing resilience, technical differentiation, cost control, and relationships with established battery producers. For suppliers and automakers, the distinction between cell development, pack engineering, system integration, and manufacturing scale may become increasingly important as companies communicate their capabilities and sourcing strategies. The immediate competitive landscape remains shaped by established battery leaders alongside automakers expanding internal development and supplier options. Further changes are likely to depend on how companies balance internal capabilities with external partnerships while maintaining the safety, quality, and manufacturing consistency emphasized in the commentary.

Frequently Asked Questions

What is the de-CATLization debate in China’s EV industry?
The de-CATLization debate concerns Chinese automakers diversifying battery suppliers and developing selected battery capabilities internally, rather than relying on a single leading supplier. CNII argued that adding suppliers and expanding internal engineering are normal business practices and should not automatically be portrayed as efforts to eliminate established battery companies. The commentary also emphasized that internal battery development can involve different activities, including pack design, system integration, battery management systems, and cell development. It said companies should accurately describe their technical capabilities while maintaining competition, safety, quality, and supply chain resilience.