Source: CATL

In the fourth quarter of 2025, just before China’s new energy vehicle (NEV) purchase tax subsidy halves from January 2026, several Chinese automakers intensified efforts to secure battery capacity from Contemporary Amperex Technology Co. Limited (CATL) (SZSE:300750).

Procurement teams from multiple car manufacturers gathered at CATL’s headquarters to lock in limited production capacity, primarily for high-nickel battery systems used in premium models priced above 300,000 CNY (c. $41,600).

Supply constraints mainly affect high-nickel battery products destined for models such as NIO ES8, Li Auto i8, Xiaomi YU7/SU7 Ultra/Max, and AITO M7/M8/M9 electric variants.

Source: Xiaomi

An industry insider said, “This is a battery scramble. Each additional vehicle delivered in Q4 translates to extra revenue.”

China’s Ministry of Industry and Information Technology (MIIT) recently tightened tax exemption requirements for plug-in hybrid electric vehicles, mandating pure electric ranges over 100 kilometers (62 miles). This regulatory shift forces automakers to adopt larger or higher energy density batteries.

CATL’s battery system capacity utilization was near 90% in the first half of 2025 and approached full capacity by October.

Automakers face pressure to deliver vehicles before November 30, 2025, the cutoff for qualifying orders under the purchase tax guarantee policy. Cars delivered by December 31, 2025, benefit most from cost savings tied to the subsidy phase-out.

The battery shortage differs from prior lithium carbonate price-driven supply tightness; this wave is policy-driven, with automakers preemptively stockpiling batteries ahead of the subsidy reduction. Additionally, growing demand for energy storage batteries further strains CATL’s capacity.

Despite this, CATL prioritizes supply guarantees and preferential terms for OEMs that commit to fitting CATL batteries across their entire fleet and place stable, high-volume orders.