CATL down 44% from its peak: the Chinese bet that divides investors

CATL plunges 44% from its highs, putting the 'Chinese Nvidia' thesis to the test

Is it worth buying the company that makes the sodium batteries expected to replace lithium? On paper, CATL has it all: it mass-produces sodium cells that, according to the company, promise to cost **10 euros per kilowatt hour**, last between 8 and 15 years —with 20 in sight—, withstand deep discharges without degrading, avoid catching fire and endure extreme temperatures. The problem, as always in China, is not the product. It's the share price.

The Hong Kong listing has accumulated a **44% drop since the investment thesis was first laid out**, and in a single recent session it lost **11%**. Behind the collapse, it is claimed, are the short positions JP Morgan and Goldman Sachs reportedly peine against the stock. The company is good; the timing, a disaster.

Sodium batteries: the product that justifies the hype

The business makes industrial sense. Sodium cells are no good for smartphones or high-end cars because of their **low energy density**, but they fit stationary storage like a glove, where weight matters little and price is everything. There would also be room in cheap electric cars. The raw material, salt, is laughably cheap compared to lithium.

Some go further and argue that these batteries will be to energy storage what VHS tapes were to home video: the format that popularizes a technology until a better one arrives. The next stop would be solid-state, still without a date.

Why is CATL falling on the stock market if the business is doing well?

This is where the rift opens. One side argues that the Chinese don't invent anything —the chemistries are old— but they perfect and deploy at scale with state backing. BYD and CATL would be state-owned companies in disguise: nobody puts 10,000 engineers to work without a state behind them. That muscle explains both the product and the risk.

The other side looks at the twenty-year chart and sees red. Low P/E ratios, juicy dividends, net cash… and constant declines. The intervention of the Chinese government, which can strangle a company if it loses its favor, adds a risk premium that the Western investor doesn't always price in. The opportunity cost of having money there instead of elsewhere weighs heavily.

Chinese dividends as a safe haven

Against the panic, a cooler current: the Chinese stock market is good for collecting stable income. Companies with cash and mandated payouts that keep paying even as the index plummets. When the US market has its own long bear market —and it will—, many will discover who was swimming naked. The discussion, at its core, is the usual one: growth versus income, casino versus dividend.

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In the end, the question is not whether CATL is good. It is. The question is how many more times you have to buy cheap before it stops falling.