Fitch Upgrades Contemporary Amperex Technology's Ratings to 'A'; Outlook Stable

About this update from Contemporary Amperex Technology Co., Limited Class A

Fitch Ratings has upgraded China -based Contemporary Amperex Technology Co., Limited's ( CATL ) Long-Term Foreign-Currency Issuer Default Rating (IDR) and senior unsecured rating to 'A' from 'A-'. The Outlook on the IDR is Stable. The upgrade reflects CATL 's strengthened business profile, underpinned by robust long-term sector growth, deepening global market leadership, and broadening end-market diversification. It also reflects a sustainably strong financial profile with high profitability, healthy free cash flow (FCF) generation and a deep net cash position. The Stable Outlook reflects our expectation that CATL can navigate industry cycles and the complex regulatory environment through strong technology leadership and its dominant value-chain position. We expect CATL to maintain sound profitability despite volatile upstream costs and changing tariff regimes. Its substantial net cash position and strong financial access provide sufficient capital to fund expansionary capex, strategic M&A and high shareholder returns. Key Rating Drivers Structural Demand Acceleration: Fitch has substantially raised our revenue forecasts for CATL over 2026-2028, reflecting strong structural tailwinds across the power and energy storage system (ESS) battery markets. CATL 's strong relationships with global automakers, deep ESS order backlogs and early-mover position in AI data-centre (AIDC) energy storage reinforce our expectation of volume and revenue outperformance relative to the industry through the forecast period to 2028. Fitch forecasts global battery shipments to rise by over 35% in 2026, sustaining a roughly 20% industry CAGR through 2030, underpinned by global electric-vehicle (EV) adoption, rising e-truck electrification, robust ESS demand and accelerating AIDC investment. These diversified drivers reduce battery demand's earlier dependence on EV policy cycles, supporting stronger and more durable long-term growth. Market Leadership Extended: CATL reinforced its dominance in key lithium battery segments in 2025 with 39% and 30% of global EV and ESS shipments, respectively, according to SNE Research . CATL 's technology leadership, product range and global manufacturing footprint position it to capture structural demand shifts and sustain its leadership. Fitch expects CATL 's global EV battery share by installation to exceed 40% in 2026, driven by a domestic shift to higher-end models favouring its premium nickel-cobalt-manganese (NCM) product lineup and global automakers' adoption of cost-competitive lithium-iron-phosphate (LFP) chemistry. CATL is also likely to gain ESS market share in 2026-2027, as it ramps up dedicated capacity to ease earlier bottlenecks. Diversifying Application Landscape: Power and ESS batteries account for 80%-90% of CATL 's revenue, which means diversification beyond these two segments will remain limited over the medium term. However, the company's end-market applications continue to broaden, supported by booming AIDC demand and nascent segments, including electric vertical take-off and landing (eVTOL)aircraft, robotics and marine vessels. CATL is also expanding into downstream services through its battery-swapping and fast-charging infrastructure, widening its consumer reach. Resilient Profitability: Fitch expects CATL 's Fitch-defined EBITDA margin to remain robust above 20% through 2028 (2025: 23.9%), despite upstream cost inflation and the phasing out of export VAT rebates. Fitch expects a high single-digit rebound in average selling prices in 2026 to pass through most cost increases to customers, supported by CATL 's cost-linked price adjustment mechanism and strong order pipeline. Gross margin is likely to moderate from its 2025 peak of 26.3% on a higher revenue base and lower unit gross profit. Operating leverage from high-capacity utilisation (2025:96.9%), economies of scale and rising mining profit should support total profit. Healthy FCF: Fitch expects CATL to sustain an FCF margin above 3% through its intensive 2026-2028 investment phase, as a larger EBITDA base covers working capital needs and elevated capex. Fitch forecasts modest working capital outflows due to longer inventory and receivable days amid rising overseas and ESS system sales, and capex of CNY50 billion-60 billion a year (2025: CNY42.3 billion ) for domestic capacity expansion, overseas factories and new mining projects. We believe management retains the flexibility to reduce its dividend payouts should capex exceed expectations, supporting post-dividend FCF generation. Deep Net Cash Cushion : CATL 's large net cash position (EBITDA net leverage of -1.7x at end-2025) provides a substantial buffer to fund expansionary capex, strategic M&A and high shareholder returns. Fitch-defined net cash rose to CNY170 billion by end-2025, from CNY119 billion at end-2024, driven by strong FCF and net proceeds of CNY38.7 billion from CATL 's Hong Kong IPO. A subsequent HKD39.2 billion H-share placement in April 2026 reinforces an already robust balance sheet. Managed Regulatory Risk: CATL 's technology leadership, deep customer relationships and multi-regional manufacturing footprint mitigate rising global regulatory risks. Operational plants in Germany and upcoming sites in Hungary and Spain ensure it is among the few non-European makers compliant on local capacity once the EU's stricter local content requirements take effect. CATL has also moved to an asset-light licence-royalty-service model with local partners in the US, preserving revenue while minimising the risk from restrictions against 'prohibited foreign entities'. Peer Analysis CATL 's EBITDA scale surpasses that of most Fitch-rated 'A' category diversified industrial and capital goods companies. However, CATL is less geographically diversified by production than peers at the higher end of the 'A' category, such as Caterpillar Inc. (A+/Stable) and Atlas Copco AB (A+/Stable). CATL faces execution risk from its global capacity expansion to maintain leadership in the fast-growing battery market. Its substantial capex may also result in a lower FCF margin than some higher-rated peers in more mature sectors. Midea Group Co., Ltd. (A/Stable), the largest Chinese home-appliance manufacturer with global leadership, has a more diversified market than CATL , with a good balance between consumer and industrial applications, and a global procurement, manufacturing and sales network. CATL 's market has higher entry barriers, greater technological content and stronger structural growth. Both maintain robust financial profiles with deep net cash and strong financial flexibility, though Midea's profitability is weaker given its exposure to the more competitive home-appliance industry. Fitch's Key Rating-Case Assumptions About 40% revenue growth in 2026, followed by a CAGR of 15%-20% in 2027-2028; 2026-2028 EBITDA margin above 20%; 2026-2028 annual capex of CNY50 billion-60 billion; Dividend payout ratio of 50% in 2026-2028; M&A cash outflow of CNY15 billion-20 billion per annum in 2026-2028. Corporate Rating Tool Inputs and Scores Fitch scored the issuer as follows, using our Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP): Business and financial profile factors (assessment, relative importance): management (bbb+, lower), sector characteristics (a, moderate), market and competitive positioning (a, higher), diversification and asset quality (bbb+, moderate), company operational characteristics (a-, moderate), profitability (a, moderate), financial structure (a+, higher), and financial flexibility (a, moderate). The quantitative financial subfactors are based on standard CRT financial period parameters: 20% weight for the latest historical year 2025, 40% for the forecast year 2026 and 40% for the forecast year 2027. The governance assessment of 'good' has no impact. The operating environment assessment of 'bbb' has no impact. The SCP is 'a'. To derive the Long-Term IDR: Fitch made no adjustments to the SCP, resulting in an IDR of 'A'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Material market share deterioration in key markets and/or margin erosion; FCF margin consistently below 3%; Material change in financial policy on the net cash position; Negative rating action on the Chinese sovereign. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Positive rating action is unlikely until CATL can achieve higher geographic diversification without a material deterioration in its financial profile. Liquidity and Debt Structure CATL's Fitch-defined unrestricted cash balance of CNY356 billion was more than sufficient to cover short-term debt obligations of CNY104 billion at end-2025, including off-balance-sheet factoring of bills receivable. The company also held uncommitted, unused bank facilities of CNY365.5 billion. CATL maintains strong access to global equity and credit markets, with diversified financing methods for expansion and operations. The company completed a new round of H-share placements in April 2026 to raise HKD39.2 billion and has issued onshore five-year bonds at a cost of 1.5%-1.7% year to date. Issuer Profile CATL is a China-based new-energy technology company with a dominant global market position in battery manufacturing. Its core businesses include manufacturing of batteries and systems for transportation and energy storage, and battery material mining and recycling. Summary of Financial Adjustments Fitch adjusts off-balance-sheet bank bill factoring by adding debt on the liability side, adding receivables on the asset side and reversing working capital movements in cash flow. Fitch also applies a 30% haircut on wealth management products and structured deposits in the readily available cash calculation. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Click here to access Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. Climate Vulnerability Signals The results of our Climate.VS screener did not indicate an elevated risk for CATL. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores . RATING ACTIONS Entity / Debt Rating Type Rating Rating Action Prior Contemporary Amperex Technology Co., Limited LT IDR A Upgrade A- senior unsecured LT A Upgrade A- Page of 1 VIEW ADDITIONAL RATING DETAILS Additional information is available on www.fitchratings.com PARTICIPATION STATUS The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure. APPLICABLE CRITERIA Corporates Recovery Ratings and Instrument Ratings Criteria (pub. 03 Aug 2024) (including rating assumption sensitivity) Corporate Rating Criteria (pub. 10 Jan 2026) (including rating assumption sensitivity) Sector Navigators - Addendum to the Corporate Rating Criteria (pub. 10 Jan 2026) Country-Specific Treatment of Recovery Ratings Criteria (pub. 21 Feb 2026) APPLICABLE MODELS Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s). Corporate Monitoring & Forecasting Model (COMFORT Model), v8.2.0 (1) ADDITIONAL DISCLOSURES Dodd-Frank Rating Information Disclosure Form Solicitation Status Endorsement Policy ENDORSEMENT STATUS Contemporary Amperex Technology Co., Limited EU Endorsed, UK Endorsed DISCLAIMER & DISCLOSURES All Fitch Ratings (Fitch) credit ratings are subject to certain limitations and disclaimers. Please read these limitations and disclaimers by following this link: https://www.fitchratings.com/understandingcreditratings . In addition, the following https://www.fitchratings.com/rating-definitions-document details Fitch's rating definitions for each rating s Read More Solicitation Status The ratings above were solicited and assigned or maintained by Fitch at the request of the rated entity/issuer or a related third party. Any exceptions follow below. Fitch's solicitation status policy can be found at www.fitchratings.com/ethics. Endorsement Policy Fitch's international credit ratings produced outside the EU or the UK, as the case may be, are endorsed for use by regulated entities within the EU or the UK, respectively, for regulatory purposes, pursuant to the terms of the EU CRA Regulation or the UK Credit Rating Agencies (Amendment etc.) (EU Exit) Regulations 2019, as the case may be. Fitch's approach to endorsement in the EU and the UK can be found on Fitch's Regulatory Affairs page on Fitch's website. The endorsement status of international credit ratings is provided within the entity summary page for each rated entity and in the transaction detail pages for structured finance transactions on the Fitch website. These disclosures are updated on a daily basis. (C) 2026 Electronic News Publishing, source ENP Newswire

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