Detailed explanation of 2023 CATL annual report.

The following introduces the situation of CATL in 2023 from the aspects of business, competitiveness, operation and other aspects.

Business introduction

CATL is the world's leading new energy innovation technology company. It is mainly engaged in the research, development, production and sales of power batteries and energy storage batteries to promote the replacement of fixed fossil energy and mobile fossil energy, with electrification + intelligence as its core to promote integrated innovation in market applications.

CATL has core technological advantages and forward-looking R&D layout in battery materials, battery systems, battery recycling and other industrial chain fields, and is committed to providing first-class solutions and services through material and material system innovation, system structure innovation, green extreme manufacturing innovation and business model innovation for global new energy applications

1. Battery system

(1) Power battery system

CATL's power battery products include battery cells, modules/battery containers and battery packs. The company can provide a variety of chemical system product series covering different energy density ranges such as condensed matter batteries, NCM high nickel batteries, NCM high voltage medium nickel batteries, M3P batteries, LFP batteries and sodium ion batteries, which can meet a variety of functional needs, such as fast Charging, long life, long battery life, high safety, wide temperature adaptability, etc. According to the application fields and customer requirements, the company designs personalized product solutions through customization or joint research and development to meet customers' different needs for product performance.

In the field of passenger car applications, CATL's products can be used in different market segments such as BEV, PHEV, and HEV, and are widely used in private cars, commercial vehicles, and other fields; in the field of commercial applications, the company's products can be used in road passenger transportation, urban distribution, and heavy-duty vehicles. It is used in the field of passenger cars and commercial vehicles for transportation and road cleaning, the field of construction machinery such as forklifts, loaders, and excavators, the field of electric ships such as cruise ships, tugs, and cargo ships, and the field of electric commercial aircraft. In addition, the company's products can also be used in drones, vacuum cleaners, power tools, electric two-wheeled vehicles, pan-robots and other fields, with the characteristics of high energy density, high power and high safety.

(2) Energy storage battery system

CATL provides energy storage product solutions such as battery cells, battery cabinets, energy storage containers and AC side systems. The products provided by the company are mainly targeted at the power generation side, transmission and distribution side and user side fields.

In terms of battery products, based on various application scenarios and the economy of the entire product cycle, the company has developed a variety of dedicated batteries for energy storage on the power generation side, transmission and distribution side, and a series of battery cells suitable for the user side, with ultra-long life, high safety, wide temperature adaptability and other characteristics.

In terms of system integration, in the application fields of power generation and transmission and distribution sides, the company combines intelligent liquid cooling temperature control, high group CTP, no heat diffusion and other technologies to launch a product with high charge and discharge efficiency, long cycle life, high integration and high safety. Featured outdoor water-cooled power cabinets EnerOne, EnerOne Plus and energy storage containers EnerC, EnerC Plus and EnerD for all-climate scenarios; CATL launches zero auxiliary source light storage DC coupling solution, which can improve power station output characteristics, power quality, energy time shift efficiency.

In the field of user-side applications, the company can provide home energy storage solutions that are highly safe, low-temperature resistant, long-cycle, and easy to install, and are suitable for a full range of application scenarios from low-voltage, medium-voltage to high-voltage platforms.

2. Battery materials and recycling

CATL's battery material products mainly include lithium salts, precursors and cathode materials. CATL also uses recycling methods to process, purify, synthesize and other metal materials such as nickel, cobalt, manganese, lithium, phosphorus, iron and other materials in used batteries to produce NCM precursors and LFP precursors, lithium carbonate and other materials, and the collected metal materials such as copper and aluminum are recycled to achieve effective recycling of key metal resources required for battery production.

In addition, in order to further ensure the supply of upstream key resources and materials required for battery production, CATL participates in the investment, construction and operation of battery mineral resources and related products such as lithium, nickel, cobalt, and phosphorus through self-construction, equity participation, joint ventures, etc.

Core competitiveness

(1) Advanced R&D system

CATL's research and development scope covers various fields such as material research and development, product research and development, engineering design, test analysis, intelligent manufacturing, advanced equipment, information systems, project management, recycling and other fields. During the reporting period, the company continued to increase investment in research and development and continuously improved and upgraded its research and development platform. Based on an in-depth understanding of electrochemistry and materials science, CATL uses multi-physics, multi-scale, and multi-parameter process modeling and simulation based on powerful computing power, advanced algorithms, and massive data, and improves performance through digital and intelligent research and development methods. R&D efficiency, carry out material and material system innovation, system structure innovation, green extreme manufacturing innovation, and lead the technological development of the industry.

CATL owns the National Engineering Research Center for Electrochemical Energy Storage Technology, the Fujian Provincial Lithium-ion Battery Enterprise Key Laboratory, a testing and verification center certified by the China National Accreditation Service for Conformity Assessment (CNAS), the 21C Innovation Laboratory, and the Future Energy (Shanghai) Research Institute, Xiamen Research Institute, Jiangsu Research Institute and other distinctive R&D institutions, and have established "Postdoctoral Research Workstation" and "Fujian Academician Expert Workstation".

CATL has carried out in-depth cooperation with many well-known universities and research institutes such as Shanghai Jiao Tong University, Tsinghua University, Fudan University, and the Chinese Academy of Sciences in joint talent training and scientific and technological research. As of the end of the reporting period, the company had 20,604 R&D technicians, including 361 with doctoral degrees and 3,913 with master's degrees. The company has 8,137 domestic patents and 1,850 overseas patents, and is applying for a total of 19,500 domestic and overseas patents.

(2) Leading extreme manufacturing

CATL is committed to building a green and efficient extreme manufacturing system, continuously improving battery manufacturing capabilities from aspects such as product quality, production efficiency, and safety assurance, using advanced analysis, digital twin simulation, 5G+, 3D printing, edge computing/cloud computing, etc. technology, innovatively promote the intelligentization of design, process, and testing, and continuously improve quality and efficiency. During the reporting period, the company's new generation of super cables began to be fully applied; the Liyang factory was awarded the title of "Lighthouse Factory" by the World Economic Forum (WEF) in Davos.

At present, there are only three "lighthouse factories" in the global lithium battery industry, all of which are from the company. CATL won the "Industry 4.0 China Award" and "Industry 4.0 Global Award" issued by ROI-EFESO Management Consulting Company (ROI-EFESO) .

(3) The supply chain system is resilient

CATL is actively building a resilient supply chain that is efficient, agile, technologically innovative, continues to reduce costs, and is green and low-carbon. CATL has carried out in-depth cooperation with high-quality suppliers in important upstream links such as cathode materials, anode materials, separators, electrolytes and other materials and equipment through technology licensing, long-term agreements, joint ventures, etc., to ensure the safety of the supply of important raw materials and equipment, while keeping costs under control, we will work with suppliers to promote new technology research and development and jointly build a supply chain system with sustainable global competitiveness.

At the same time, CATL has further improved the layout of high-quality battery mineral resources such as lithium, nickel, cobalt, and phosphorus. Among them, the Indonesian nickel iron project, Jiangxi Yichun project, and Hubei Jiangjiadun project have been put into operation.

(4) Comprehensively deepen customer cooperation

CATL has the broadest customer base coverage. In addition to product sales, it also carries out comprehensive cooperation with customers through equity participation, joint ventures, technology licensing and other methods to help customers build world-leading competitiveness.

In terms of power batteries, CATL has deepened global cooperation with overseas car companies such as BMW, Daimler, Stellantis, VW, Ford, Hyundai, Honda, and Volvo; it continues to cooperate with domestic car companies such as SAIC, Geely, NIO, LIXIANG, Yutong, Xiaomi, and BAIC Strengthen cooperative relationships.

In terms of energy storage batteries, CATL has carried out in-depth multi-regional and multi-field business cooperation with leading overseas customers in the new energy industry such as Fluence, W?rtsil?, Flexgen, Sungrow, and Hyosung; it has also cooperated with China Energy Group, State Power Investment Group, China Huaneng, and China Huadian , China General Nuclear Power Group, China Three Gorges Corporation, China Energy Construction Group and other domestic customers have reached strategic agreements on cooperation in the field of new energy.

(5) Sustainable development is recognized

CATL attaches great importance to sustainable development and fulfillment of social responsibilities, and continues to improve ESG governance in accordance with world-class standards. During the reporting period, CATL's MSCI rating maintained its A rating, S&P's ESG rating continued to improve, and Morningstar Sustainalytics assessed it as low risk, all ranking among the best in the industry.

In addition, CATL focuses on carbon reduction for itself and the entire value chain. CATL released a zero-carbon strategic goal in 2023, which is to achieve carbon neutrality in core operations by 2025 and carbon neutrality in the value chain by 2035. It is committed to becoming the first global leading battery company to achieve zero carbon.

Business operations

(1) Increase investment in research and development and continue to launch new products

R&D investment in 2023 will reach 18.356 billion yuan, a year-on-year increase of 18.35%. Based on advanced R&D methodologies, CATL relies on its rich experience, technology accumulation and massive data in the lithium battery industry, and through intelligent product R&D and design platforms, it continues to launch new products with high specific energy, ultra-fast charging, high safety and long cycle life.

In terms of power batteries, during the reporting period, CATL released high specific energy and high safety condensed matter batteries, ultra-fast charging Shenxing batteries, first-generation sodium-ion batteries, and M3P batteries that combine the advantages of ternary and lithium iron phosphate. The model has been mass-produced, and the Kirin battery with peak 5C fast charging has been mass-produced in cooperation with Ideal. The starting point of Shenxing Battery is to alleviate the public's anxiety about recharging energy. It can currently achieve 4C fast charging at normal temperature and is widely favored by customers. Avita, Nezha, Chery, BAIC New Energy, Dongfeng Lantu, GAC, etc. have officially announced that they will be equipped with it Shenxing battery.

In terms of energy storage batteries, during the reporting period, CATL released a zero-auxiliary source optical storage DC coupling solution that combines the advantages of long life, high safety, and high efficiency, and implemented it in super charging stations and other scenarios. The company upgraded its products EnerOne Plus and EnerD etc. Compared with the previous generation of products, the energy density and charge and discharge efficiency have been greatly improved.

(2) Leading the domestic market and continuing to explore the overseas market in the field of power batteries.

According to SNE Research statistics, during the reporting period, CATL’s domestic power battery usage was 171.9GWh, a year-on-year increase of 28.7%, ranking first for 7 consecutive years with a market share of 44.5%, assisting Ideal, Jikrypton, NIO, Wenjie, Customers like BMW build more competitive products.

In terms of overseas markets, CATL has won new appointments from many overseas mainstream car companies such as BMW, Daimler, Stellantis, VW, Hyundai, Honda, etc.; it has signed a strategic memorandum of understanding with Stellantis to supply lithium iron phosphate batteries to it in the European market to help electrify Europe. Transformation; reaching strategic cooperation with leading heavy truck companies such as Daimler and Volvo.

At the same time, thanks to the initial scheduled deliveries to overseas customers, CATL's overseas shipments continued to increase. According to SNE Research statistics, the company's overseas power battery usage market share will be 27.5% in 2023, an increase of 4.7 percentage points from the same period last year.

In the field of energy storage batteries, CATL has been shortlisted for the procurement of energy storage system equipment frameworks by several central power enterprises in China, and has reached strategic cooperation with CRRC Zhuzhou, China Power Construction, JA Technology, Chint Group, etc. to jointly promote energy storage applications and promote industrial innovation. In overseas markets, it assisted Nextera in realizing the world's largest single photovoltaic storage project with a scale of 1.8GWh and connected it to the grid; delivered the world's largest energy storage project group with a scale of 6.4GWh to the Italian national power company ENEL; delivered a 3.8GWh scale to the Western Australian power company Synergy. It is Australia's largest independent energy storage project.

According to SNE Research statistics, the company's global energy storage battery shipment market share will be 40% in 2023, ranking first in the world for three consecutive years.

(3) Leading in ESG ratings and releasing zero-carbon strategy

CATL attaches great importance to sustainable development and earnestly fulfills its social responsibilities. During the reporting period, CATL officially joined the United Nations Global Compact (UNGC) and pledged to support the UNGC's ten principles in the four fields of human rights, labor, environment and anti-corruption. CATL continues to optimize ESG governance, maintains its MSCI rating of A, continues to improve its S&P ESG score, and is assessed as low risk by Sustainalytics. Its performance is among the best in the industry.

At the same time, CATL has released the "Zero Carbon Strategy" goal and is committed to becoming the world's first zero-carbon battery leader, that is, achieving carbon neutrality in core operations by 2025 and carbon neutrality in the value chain by 2035. As of the end of the reporting period, the company had 4 zero-carbon factories and 3 lighthouse factories. CATL continues to promote green extreme manufacturing with the help of digital and intelligent means to improve production efficiency and reduce unit energy consumption.

(4) Explore regional zero-carbon ecological construction

In addition to the sales of power and energy storage batteries, the company also actively promotes zero-carbon ecological construction through business model innovation. Based on CATL’s product and technological advantages in the field of clean energy and its rich experience in reducing carbon emissions in itself and the value chain, during the reporting period, CATL signed strategic cooperation agreements with Beijing, Shenzhen, Ordos, Zhaoqing, Datong and other cities. According to the local government needs to provide zero-carbon city construction solutions and implementation support, jointly promote the development of green and intelligent manufacturing of new energy products, new energy investment and development, transportation electrification and infrastructure construction, battery recycling and secondary utilization, and promote green and low-carbon development in all fields.

Source: CATL announcement