Side B: CATL: The wealth-making movement behind the mega project

In 2018, regulators opened a "VIP channel" in the long queue of companies waiting for IPO approval. Three mysterious companies, dubbed as "super unicorns," passed the review in a flash: WuXi AppTec took 50 days, Foxconn Industrial Internet took 36 days, and CATL took 24 days.

At that time, CATL surpassed Panasonic to become the world's largest power battery manufacturer, and ternary lithium batteries became the mainstream of the new energy vehicle market. While setting a record for fundraising on the Growth Enterprise Market, it also led to the rise of a number of concept stocks, including Tianhua Super Clean , a company that started out as a textile company and mainly produces dust-proof clothing and anti-static gloves .

Before CATL went public, Tianhua Super Clean had always been a marginal company ignored by institutions. Its actual controller Pei Zhenhua was also quite low-key. He worked at Jiangsu Textile Research Institute in his early years and then started his own business.

Doing textile business is an old way to get rich in Jiangsu and Zhejiang. Hengli created the richest man in Jiangsu in the past, and Shenzhou International, the "TSMC of textile industry", came later. With CATL bravely reaching new highs, the secondary market once rewarded Tianhua Super Clean for seven consecutive days.

This inevitably raises a question: How did a " small " company that mainly deals in anti-static business get connected with CATL, the leader in power batteries ?

Pei Zhenhua (right) makes one of his rare public appearances

The relationship between the two companies is not as simple as the battery factory needing dustproof clothing - dating back to 2011, when the "Foreign Investment Industry Guidance Catalogue" was issued, foreign investment in power battery production in China was limited to 50%. CATL, the predecessor of CATL, was in an awkward position due to its Japanese background.

Zeng Yuqun then founded CATL, a Chinese company that uses the same name. The extra "C" stands for "Contemporary," but to the outside world it looks more like "China."

In 2015, ATL transferred its 15% stake in CATL to a company called Ningbo Lianchuang at a bargain price of RMB 89 million , which completely separated CATL from ATL and made it a purely Chinese-owned company. Pei Zhenhua is the major shareholder of Ningbo Lianchuang.

In 2018, Tianhua Super Clean and CATL jointly invested in Tianyi Lithium in Jiang'an County, Yibin City . In less than a year, they built a 20,000-ton lithium hydroxide production line, acquired a stake in AVZ, the parent company of Manono, the world's largest lithium deposit, and tied up the supply of spodumene concentrate from Pilbara Minerals, an Australian lithium miner, entering the upstream of the lithium battery industry.

Pei Zhenhua has been constantly demonstrating the art of capital maneuvering. In November 2020, he first merged Tianyi Lithium into a listed company, turning Tianhua Super Clean, a "sunset textile stock", into a rising lithium battery stock; in April this year, CATL participated in Tianhua Super Clean's private placement, and in just four months, Tianhua Super Clean's stock price nearly tripled.

On the one hand, he acquired 15% of CATL's shares at a bargain price, and on the other hand, his own company entered CATL's supply chain. Based on CATL's latest stock price, this low-key tycoon made a profit of at least 100 billion yuan in this capital operation that killed two birds with one stone .

Pei Zhenhua's skyrocketing net worth is not an isolated case, and Zeng Yuqun's title of Hong Kong's richest man is probably just a footnote.

From the light-speed IPO three years ago to the global leader in power batteries today, the participants include industrial capital, asset management giants, and overseas giants. The era of electric vehicles, the maneuvering of national strategies, and the fragments of the capital market have complemented each other and presided over the coronation ceremony of CATL.

It is a pioneer commissioned by the national will, a super project nurtured by industrial policy, and a feast shared by global capital. It has created the most spectacular wealth-making movement in the new energy field so far.

The rapid rise of CATL is due not only to Zeng Yuqun's well-known "strong gambling nature" and more than ten years of industrial layout at the central level, but also to another crucial role: industrial capital .

If you look at the equity financings of CATL before its IPO, you will find that in the long list, there are not only old giants in the primary market such as Legend Capital, Yunfeng Fund, and Shenzhen Capital Group, but also financial giants such as Ping An and CMB International , as well as traditional industry veterans such as Septwolves and Huaxicun that have relied on investment to rejuvenate themselves, and even the foundry giant Foxconn has participated.

In 2018, Yunfeng Fund simultaneously acquired two unicorns, WuXi AppTec and CATL, and "Xixi Morgan" made a strong presence. Legend Capital and Boyu Capital also acquired WuXi AppTec and CATL during the same period. Both funds have a close relationship with Lenovo, which has been caught in a whirlpool of public opinion recently.

Ma Xuezheng, one of the founders of Boyu Capital, once served as CFO of Lenovo and was also the translator of the chief designer. She is best known for her operations, having presided over Lenovo's acquisition of IBM's PC business. It is said that when Yang Yuanqing went to Hong Kong in his early years, Ma Xuezheng took him to Central to pick out clothes.[2]

Another famous case that Ma Xuezheng handled was the split of Lenovo Shenzhou. At that time, Yang Yuanqing was in charge of Lenovo Group and Guo Wei was in charge of Shenzhou Digital. Both of them wanted to recruit Zhu Linan, the general manager of Shenzhen Lenovo at that time, but they were both rejected by the latter.

Later, Zhu Linan was in charge of Legend Capital, the predecessor of Legend Capital. At that time, there was a saying within Lenovo: the $35 million that Liu Chuanzhi entrusted to Zhu Linan was almost all the profits accumulated by Lenovo's PC business in the previous 10 years.

Since then, Junlian's investment has been smooth sailing. Junlian appeared in Ningde's first round of financing, one step ahead of Yunfeng. As early as 2003, Junlian began to study new energy, but the investment was in electric bicycle batteries.

After gaining experience in "two wheels", Legend Capital began to get involved in automobile investment. From CAR Inc. and Bitauto in the field of automobile services, to various suppliers in the electric vehicle industry chain, to Byton, which makes complete vehicles, Pony.ai, which makes autonomous driving, and Pioneer Intelligent, which makes lithium battery equipment, Legend Capital did not miss any link.

When researching lithium battery material company Putailai, Legend Capital discovered the company’s largest customer, CATL. At the time, Legend Capital’s managing director Li Jiaqing excitedly described it as follows: “ If the leading company in autonomous driving in the future is the Microsoft of consumer electronics, then CATL is the Intel, the heart of new energy power[3].”

CATL lived up to Li Jiaqing's expectations. It first separated from ATL and switched from consumer electronics to new energy vehicles, then seized the olive branch from BMW and became famous, and then entered the Yutong and King Long bus industry chains. In 2015, after policy subsidies tilted towards high energy density, CATL entered the passenger car market with ternary lithium batteries, hitting almost every key node. In 2017, CATL surpassed Panasonic with an installed capacity of 11.84GWh , becoming the global champion.

In 2018, CATL went public, and the traditional industrial capital that was anxious about changing its name also reaped the benefits. For example, in the list of shareholders, the three words "Huaxi Village" are quite contemporary, and it is needless to say that they have switched to investment. As for the company Septwolves, there is something to talk about.

Before Septwolves entered the market, the public criticized it for not doing its job properly, but this actually underestimated the investment and research capabilities of this well-known belt brand. It should be noted that Septwolves' investment cases include AI upstarts such as Royole and SenseTime, as well as e-commerce gems such as JD Logistics.

Another company whose investment level is underestimated is TCL: in 2019, Li Dongsheng divested the precarious home appliance business from the listed company, leaving two businesses: panels (CSOT) and investment (TCL Venture Capital), which were later incorporated into Zhonghuan Semiconductor.

As early as the end of 2014, TCL Ventures judged that new energy vehicles were on the eve of an explosion. By analyzing the industry landscape, it set its sights on the technologically intensive field of batteries. Ma Hua, vice president of TCL Ventures, once recalled the scene of the first negotiation in Ningde : "There were nearly 20 institutional investors sitting in a conference room, and TCL eventually defeated 30 or 40 institutions to become an investor[4]."

Looking back, TCL did not miss any of the three top tracks in 2021: photovoltaics, new energy vehicles and Mini LED.

At that time, the new energy industry was just emerging, and as Li Jiaqing of Legend Capital described, “investors had to do things that seem unclear today.” Tang Weiqing, chairman of West China Holdings, also admitted that the early investment in CATL was “accidental”[5]. To grab a small share, one must rely on both desk work for forward-looking research and capital background.

Perhaps in the primary market, most participants could not foresee CATL's future success, let alone the role they themselves would play in it.

Perhaps it is for this reason that the one who made the most profit from CATL is neither the top-tier giants like Yunfeng and Legend, nor the old industrial players like TCL and Septwolves. Instead, it is the seed player of the financial team, China Merchants Bank .

According to a rough estimate, excluding CMB International’s own funds, the two products, CMB Power and CMB No. 3, made a combined profit of more than 80 billion yuan from this investment in CATL.

Many investment institutions bet on CATL before its listing. On the one hand, CATL is already a well-known superstar in the field of new energy. On the other hand, this "Ning Wang" that will dethrone Moutai in the future is not well-known in the field of mass communication.

In June 2018, CATL was listed on the Growth Enterprise Market (GEM) of the A-share market. What awaited CATL at this time point in 2018 was not only the flowers of the GEM leader surrounded by thousands of people, but also an industry crisis caused by the decline of subsidies and the abolition of the "white list".

In 2018, the entire A-share market can be described as "quiet". But what made the first-tier giants breathe a sigh of relief was that the enthusiasm of the second-tier giants to take over was unprecedentedly high - only one and a half months after listing on the ChiNext, CATL's stock price rose by more than 200%.

Being able to have the courage to scratch the lottery ticket of Ningde in such an environment also means that their identities are not simple. The first batch of Ningde's top ten circulating shareholders are luxurious, among which Gaoyi Assets Deng Xiaofeng , who alone occupies three seats.

In 2015, Deng Xiaofeng joined private equity to start the second half of his investment career. He tirelessly researched new energy vehicles and discovered that copper was a key raw material, which also laid the groundwork for his subsequent bottom-fishing in Zijin Mining.

After several years of in-depth research, in 2018, Deng Xiaofeng began to gradually deploy new energy industry chains such as Hongfa Holdings, Yinlun Holdings and Foster, and concentrated sufficient ammunition on CATL, which had just gone public.

At the 2017 Gaoyi Asset Management Fireside Chat, Deng Xiaofeng had a very thorough understanding: " The new energy industry is the industry with the largest space in the next five to ten years. New energy vehicles will first go to electrification and then to intelligence. "

When Deng Xiaofeng began to study new energy in depth, Li Xiaoxing, who had just started his public fund career at Yinhua Fund , had already fully invested in new energy, with heavy positions in Tianqi Lithium and Sungrow Power Supply.

Li Xiaoxing once worked for ABB, a Fortune 500 company in automation. His investment is characterized by his ability to capture the prosperity of the market, and he will naturally not miss the opportunity of new energy. After CATL went public, Yinhua Shengshi Select became the ninth largest shareholder, becoming the public offering that bought the most when CATL went public.

However, Li Xiaoxing's "most" did not last long. Liu Gesong, who managed GF Small Cap , entered CATL and became the public fund manager with the most holdings in CATL outside the index. Also late to the party were the capitalist financial giants represented by JP Morgan, Merrill Lynch and Princeton University, who bought more than Liu Gesong.

But what surprised many institutions was that the CATL's interim report showed a nearly 50% year-on-year drop in net profit for the first half of the year, so much so that the government had to use the disposal income from the transfer of Pride's equity to comfort the market. In just over a month, CATL's stock price fell by 30%, which clearly exposed a number of asset management giants and overseas tycoons.

The sharp correction of CATL, in addition to the apparent decline in performance, is more due to the impact of the decline in new energy vehicle subsidy policies and the relaxation of entry restrictions for foreign-funded enterprises.

Before 2019, Japanese and Korean giants such as Panasonic, Samsung SDI, and SK Innovation were blocked from the Chinese market by the "white list", which gave domestic power batteries a good opportunity to develop on a large scale. However, the white list was abolished in June 2019, and the China Automobile Association issued new regulations. The core idea shifted from industrial protection based on subsidies to introducing foreign "first rich" to force domestic "later rich", opening the door to overseas manufacturers.

This also means that CATL has to not only face the beachhead competition from Japanese and Korean powers, but also face the downward pressure in the new energy vehicle industry after the subsidy reduction.

At the beginning of 2019, UBS, the QFII that bought the most CATL when it went public, conducted an evaluation. Compared with Panasonic, Samsung SDI, and LG Chem, CATL's battery cost is about RMB 1.03 per watt-hour, the highest cost. In terms of energy density, Panasonic's 21700 battery cell density can reach 340wh/kg, which is also better than CATL's 300wh/kg.

Under the subsidy withdrawal environment, electric vehicles will inevitably choose high-quality batteries with low cost and high density. As expected, BAIC, Ningde's largest customer, turned against it and announced the establishment of a joint venture with South Korea's CT&T, whose batteries are provided by SK Innovation.

During the same period, the decline in subsidies also dealt a heavy blow to the entire new energy vehicle industry: LeTV was suffocating and waiting to be delisted, Ms. Dong's Yinlong's sales were halved, Zotye suffered a loss of 11.2 billion and its employees demanded their wages, Watma Battery declared bankruptcy, and NIO's Li Bin became the most miserable man in 2019.

NIO, which was already struggling, had to recall 4,308 ES8s due to three battery fires in two months, accounting for about 30% of NIO's deliveries in 2018. Robin Zhu, an analyst at Bernstein, also lowered NIO 's target price to $0.9 after the fact.

Deng Xiaofeng, who has experienced multiple cycles of A-shares, missed out on Liu Gesong. After reaping a wave of listing dividends, he sold at least 10 million shares of CATL in a large amount and completely disappeared from the top ten circulating shareholders in the third quarter.

The industry outlook is becoming increasingly confusing. Li Xiaoxing, who pursues investment based on business trend, and Liu Gesong, who makes comparisons based on meso-industries, will naturally not be loyal. Seeing that the situation is not right, they disappeared from Ningde's annual report and the first quarter report of the following year respectively.

For a time, the three most important indicators of batteries: safety, economy, and battery life seemed to be questioned. Ningde also received the soul-searching question from Zeng Yuqun two years ago: When a typhoon comes, can pigs really fly?

Under the national will that forces battery factories to grow from big to strong, CATL launched CTP (Cell To Pack) technology at the 2019 Frankfurt Motor Show, which directly integrates battery cells into the battery pack, eliminating the module link, improving energy density while reducing the number of parts, and achieving cost reduction and efficiency improvement.

On the other hand, Ningde cooperated with Honda and Toyota to develop new technologies, provided batteries for Volvo and Daimler, won a 56.9 billion yuan order from BMW, and opened a factory in Germany, no more than 300 kilometers away from the local Tesla factory[6].

An industry crisis and a sudden turn of events have drawn three diverging paths for three star fund managers:

Li Xiaoxing made a comeback in the second quarter of 2019, and CATL became the largest holding of Yinhua Small and Medium Cap in the third quarter.

When the market rebounded violently in early 2019, Deng Xiaofeng did not increase his holdings in time, but in the second half of the year he bought 2.3 billion yuan of Zijin Mining, an upstream new energy company.

Liu Gesong, who arrived late at CATL, transformed himself into General Liu and switched to semiconductors, winning the public offering championship in 2019.

Interestingly, these three fund managers who were "blessed" by Ningde later became the face of Yinhua Fund, Gaoyi Asset and GF Fund in the minds of investors.

In 2019, when the new energy vehicle market was confusing, compared with the dormancy of the primary market giants, the maneuvers of secondary investors constituted another exciting footnote to new energy vehicles.

At the end of 2019, the domestically produced Tesla Model 3 officially received national subsidies. CATL stood out as a top student in power batteries, and the big year for new energy kicked off amid the epidemic.

On January 7, 2020, Elon Musk took off from Los Angeles on his private plane Gulfstream G650, overtook a Boeing 777 on the same route, and made an emergency landing on the "Dreadnought" at Lianggang Avenue West in the Lingang Industrial Zone in Shanghai. In front of the densely packed robots and automatic production lines on the ship, Musk danced striptease to celebrate the large-scale delivery of Model 3. The first thing he said was:

Thanks to the Chinese government!

Musk was accompanied by top investors from the US market who came to China.

In 2020, mainstream players in new energy vehicles solved the production capacity problem almost at the same time: Tesla's super factory opened in Shanghai, and NIO's headquarters officially settled in Hefei. Hefei state-owned assets brought 10 billion yuan (later finalized to 7 billion yuan) to rescue it, pulling it out of the ICU and earning it the reputation of the strongest venture capital city.

The recovery of downstream demand is of great significance to CATL. Similarly, the global capital market has also deeply felt the shock of the surging tide of the times after Tesla's production and sales breakthrough opened up the valuation ceiling.

Mature investors in the US stock market are more sharp than those in the A-share market in grasping the trend of the times. After the Dow Jones was cut in half by circuit breakers, Tesla was launched into the sky. In less than three months, its market value surpassed Toyota, the automotive giant. With a heavy position in Tesla, the five ARK ETFs managed by "female Buffett" Catherine Wood have almost doubled in value, and the speed of scale expansion is no less than that of Liu Gesong, who was at the peak of the A-share market at that time.

ARKK shows abnormal growth, source: YAHOO FINANCE

Not all overseas investors in new energy are "evil spirits", there are also century-old Scottish companies like Baillie Gifford.

There is a slogan hanging on the signboard of Baillie Gifford's Edinburgh headquarters: " Real investors think in decades, not quarters. " Based on this philosophy, they adopt a global long-term growth investment strategy (Long Term Global Growth, LTGG). In layman's terms , it is to find companies with disruptive innovations around the world and then hold them for up to 5-10 years.

James Anderson, the head of BG, calls himself "Charlie Munger No. 2" and manages BG's flagship Scottish Mortgage Fund. Unlike Wood, who buys more as the market falls, Anderson buys less and less, focusing on a few outstanding companies that can double their revenue within five years.

As early as 2013, BG built a position in Tesla worth $89 million at an average cost of $38.7, and subsequently continued to increase its holdings until it held 14 million shares in 2017[7]. In 2020 alone, it made $200 billion from Tesla[11].

Subsequently, BG's investment focus shifted to China, and it completed the private placement registration of "Baiji Investment" in Shanghai last year. The same operation will be replicated in CATL - BG 's China Growth Trust holds a large position in CATL, accounting for 2.6% of the position in the third quarter.

Tom Slater, another manager at BG SMIT who made a fortune at Tencent and Meituan, praised Chinese entrepreneurs: “When you talk to some of the founders in China, you have to suspend your skepticism[8].”

To some extent, CATL and Tesla have very similar characteristics, not only in terms of business connections, but the key point is that they are the core of the current round of new energy market rise in A-shares and US stocks respectively.

On February 3, thousands of A-shares fell to the limit, but Ningde's intraday increase was as high as 9.79% at one point, because Ningde batteries will be strongly integrated into Tesla's supply chain. On the other hand, after the spontaneous combustion incident of Wei, the friendship with Ningde did not fall, and Ningde Times, which consolidated the basic base of domestic new car-making forces, continued to exceed expectations in production capacity planning. The entire logic of new energy vehicles has been completely transformed from policy-driven to demand-driven.

In May 2020, Zhou Yingbo, who was in charge of China Europe Times Pioneer, entered the Ningde era. The big brother Zhou Yingbo, who was described by Liu Jianping, the general manager of China Europe, as "very smart and quick to react", became the public fund manager who bought the most shares of Ningde era. The only thing missing was to issue a name change announcement, changing "China Europe Times Pioneer" to "Ningde Times Pioneer".

According to Zhou Yingbo's logic, "I think model 3 is the iPhone 4 of 2010, and 2020 will also be the first year of smart and electric car phones." Subsequently, Hillhouse Capital invested 10 billion yuan in CATL's private placement at a price of 161 yuan. The market generally believes that this price is not cheap.

Facts have proved that everyone's vision is too narrow. In September 2020, China clearly proposed the goals of "carbon peak" in 2030 and "carbon neutrality" in 2060. Soon after Biden took office, he announced the restoration of full electric vehicle tax breaks and achieved zero emissions in 2050. Japan and South Korea also announced the goal of achieving carbon neutrality in 2050.

The world has reached a consensus on reducing carbon emissions. To a certain extent, CATL's shareholders can say that their holdings are closely related to the fate of all mankind.

At the end of the year, Lu Bin of HSBC Jinxin topped the list of stock funds with a return of 134%, and Zhao Yi of ABC-Huarong Fund Management managed four active equity funds and dominated the top four of the list, repeating the scene of Liu Gesong occupying the "top three" in 2019. Their common feature is that they are heavily invested in new energy stocks, mainly CATL. This seems to prove that the stock trading skills of young talents in domestic public funds are not much worse than those of the "female version of Buffett" and "Charlie Munger No. 2".

Amid the carnival in the name of new energy, the boiling waves have reached the most exciting chapter: the battle between Prince Ning and Prince Mao.

In 2020, the media once divided public offerings into the "Mao School" headed by Zhang Kun and Liu Yanchun, and the "Ning School" headed by Zhao Yi and Lu Bin. The two were evenly matched and advanced side by side. However, after the overwhelming rise of new energy targets in the first quarter of this year, the outcome was very different.

This also means that Kweichow Moutai's hegemony over the A-share market, which has lasted for five years, has been challenged for the first time. Similar to fuel vehicles, domestic public value investment has also ushered in its own "Nokia" moment, and investment in the boom track has become very popular.

After Yang Dong, the "conscience of the industry", warned of the risks of new energy, Ningde's unreasonable growth doubled this year. Similarly, Yang Hao, the manager of Bank of Communications Fund, who clearly stated in the first quarter report that "electric vehicles are overvalued", was assigned as a fund manager; Wu Chuanyan of Hongde Fund, whose performance was also passive, was directly blocked by the company from trading rights. What they have in common is that they all under-allocated to the new energy track.

In sharp contrast, young talents Lu Bin and Zhao Yi continue to perform strongly by heavily allocating to new energy; Zhou Yingbo, who called for "new energy to increase tenfold in ten years" , and his partner Liu Weiwei have gained a return of 51.53% so far this year; Cui Chenlong, the fund manager of Qianhai Kaiyuan Utilities, who has been in office for more than a year, has gained a return of 152.89% in the past year due to style drift, and was even in high spirits when interviewed in June:

“New energy sources today are like the 5,000-yuan housing price in Shenzhen[9].”

The divided performance of fund managers implies a layer of division in the macro environment: last year's Mao Index stood out from the crowd, mostly because of the downward trend in risk-free interest rates and the market's pursuit of certainty; this year's logic has evolved into the valuation constraints of traditional leading stocks derived from inflation expectations, while the Ning portfolio, which is in a highly prosperous period, can use growth to digest valuations.

Therefore, if you hear someone talking about "penetration rate" or "future space" this year, there is a high probability that he has made a lot of money.

On August 5, CATL handed in its semi-annual report, with its energy storage business growing 727.36% year-on-year, far exceeding expectations. The secondary market was jubilant, with Guosen Securities promoting it the most. A report titled "CATL Series II - Energy Storage: Discussion on the Final Game of the Second "Growth Curve"" directly calculated the revenue in 2060, which made CATL also doubt it. After the report was released, the stock price remained green for four consecutive days.

It is undeniable that as the market value of CATL rises, the gradual deepening of the money-making effect will form feedback, which will in turn affect the operations of fund managers. This is understandable. After all, in the domestic public offering market, what fund managers are most worried about is not following the crowd and then finding out they are wrong, but breaking away from the crowd and being themselves, and then everyone is right, and whoever is missing will be embarrassed.

The coronation of King Ning also gave rise to a term for the fund industry: style drift . Translated, it means that there is no hope for one’s own industry, and there is no need to rest on one’s laurels: Zhang Yufan of ICBC Logistics Industry was heavily invested in highways and railways in the first quarter, and half of his holdings became new energy in the second quarter; except for Offcn Education, all other holdings of Southern Education were new energy. Fund manager Xiao Jiaqian made a coquettish move and changed positions before the “double reduction”.

Of course, in addition to the game of massive capital, CATL's fundamentals are indeed strong. When battery manufacturers such as BYD and Guoxuan High-tech were collectively raising prices due to anxiety about rising upstream raw material prices, CATL reduced costs by controlling the entire industrial chain. Even though the battery prices did not increase, CATL's gross profit margin did not decrease but increased.

During the same period, CATL launched sodium-ion batteries that do not contain lithium or cobalt and have costs 30% to 40% lower than lithium batteries. This has opened up new cost possibilities outside the second growth curve of energy storage.

The third quarter report of domestic funds showed that a total of 1,225 funds had heavy holdings in CATL, with a holding value of up to 117.1 billion yuan, exceeding the 109.2 billion yuan holding in Kweichow Moutai.

During the same period, the capitalist giants continued to make outrageous moves: Capital Group Europe Asia Pacific Growth Fund, the fund with the largest holdings of Kweichow Moutai in the world, has been continuously reducing its holdings of Moutai, while Allianz Shenzhou A-Share Fund, the fund with the largest holdings of CATL in the world, has recently been violently reducing its holdings.

However, as a power battery giant created by national will, industrial policy, industrial capital and entrepreneurial spirit, CATL's significance to China's manufacturing industry should obviously not stop here.

On August 12, 2021, CATL raised 58.2 billion yuan in a private placement, leaving all institutions stunned. The last time it raised so much was in 2018 when Agricultural Bank of China raised 100 billion yuan. As soon as the news came out, Industrial Securities held a telephone conference overnight, with more than 2,000 investors participating, an unprecedented event.

It took CATL three years to go from a highly anticipated IPO to becoming an important indicator of the A-share market. In those three years, China went from being a witness to the new energy vehicle wave to a participant and then a leader.

Therefore, the review of the mighty wealth-making movement behind this super project should not be limited to the swordplay of the secondary market and the chaos of the capital world. The rise of CATL is essentially a microcosm of the rise of China's new energy vehicle industry:

First, CATL is the fruit of the Chinese government's policy gamble in the field of new energy vehicles: from comprehensive subsidies for terminal products, to targeted poverty alleviation for power battery manufacturers, to opening the country's doors to welcome catfish, and guiding companies from big to strong. CATL's growth rhythm keeps pace with the policy layout, and finally established its dominant position in power batteries.

Secondly, CATL is a very rare high-end manufacturing sample that was chosen by the capital market in market competition: power batteries are a field that is highly dependent on large-scale capital expenditures. Whether it is Panasonic, LG Chem, SK Innovation and other Japanese and Korean giants, or domestic pursuers represented by BYD, they often rely on the revenue of their main business to continuously provide blood transfusions for the research and development of power batteries. CATL can only rely on the capital market.

Looking back at the history of the domestic capital market, the combination of real industry and finance has been unprecedentedly close. Whether it is the list of big names in investment before listing or every high-standard private placement after listing, they are all blood transfusions from the capital market for the upgrading of the power battery industry.

CATL has also given back to the capital parties involved through its own growth, thereby creating this massive new energy wealth-making movement.

Finally, the rise of CATL condenses China's comprehensive breakthrough in the new energy vehicle industry chain: compared with the consumer electronics industry in mainland China, which is mostly OEM and lacks R&D, and has the embarrassment of only market share but no high profits, the domestic new energy vehicle industry chain has completed a comprehensive breakthrough from top to bottom - upstream mineral resources are being scrambled, midstream power batteries are gaining a foothold, and downstream automobile brands are flourishing.

On the one hand, CATL has its own all-round layout in the upstream and downstream of new energy vehicles: in the upstream, it holds a stake in Tianyi Lithium, competes with Zijin Mining for New Lithium Company, and competes with Ganfeng Lithium for Millennium Lithium; in the midstream, it subscribes to Pioneer Intelligent at a high price and expands energy storage with the help of Yongfu Shares; in the downstream, it invests in Nezha Automobile, acquires a stake in Avita Technology, and invests in Horizon in the field of autonomous driving.

On the other hand, with CATL's position in the core component of power batteries, the entire lithium battery industry chain has also achieved an "institutional breakthrough". Battery components represented by electrolytes, diaphragms, positive and negative electrodes have all completed the research and development process in China, breaking through the blockade of the old powers of Japan and South Korea in terms of technology.

Therefore, the value of CATL is far more than just partying with the first rich in the capital market, but also lies in its role in promoting the "common prosperity" of the entire upstream and downstream industries:

In the era of consumer electronics, the mainland's industrial chain is characterized by a bunch of assembly plants relying on "imported equipment + processing of supplied materials", hurting each other in an industry with a gross profit margin of less than 10%. In many tracks of the new energy vehicle industry chain, the mainland has a class representative who firmly holds the high value-added links.

Ultimately, the biggest winner in this game is China's new energy vehicle industry chain.