(Yicai Global) Feb. 11 -- Shares in Contemporary Amperex Technology slid as much as 5 percent today following a week of losses that has seen CNY220 billion (USD34.5 billion) wiped off the Chinese battery giant’s market capitalization. The rout is unlikely to be due to the firm's performance and probably has more to do with tightening global liquidity conditions and growing competition, analysts said.

CATL’s share price [SHE:300750] was trading down 3.49 percent at CNY500.02 (USD78.50) as of 1:15 p.m. China time today, giving it a market capitalization of CNY1.16 trillion (USD182.2 billion). Earlier in the day it had sunk to CNY491. The stock has slid 17.6 percent since Monday.

Certainly, the company’s fundamentals remain strong. It was the world’s biggest maker of electric car batteries for the fifth year running last year, according to South Korean market research firm SNE Research. The firm held a 32.6 percent share of the world’s market with an installed capacity of 96.7 gigawatt hours. It is expecting net profit to as much as triple last year to CNY16.5 billion (USD2.6 billion), its best profit haul ever.

But the tide might be changing. Central banks around the world have raised interest rates, and the overseas macro environment is facing a turning point in liquidity, which is putting great pressure on high-valued companies, said Li Meicen, strategic analyst at Cai Tong Securities. Other EV giants, such as Tesla, have also seen a sharp drop in their share price. California-based Tesla’s stock has lost more than 20 percent so far this year.

There is also growing competition from automakers that have started to make their own batteries. China’s BYD and FAW Group, for instance, set up a joint venture last month to build a battery factory with an output of 45 gigawatt hours a year. Tesla, Volkswagen and GAC Aion are among those following suit.

As carmakers start to make their own batteries and more battery manufacturers hike capacity, the battery sector may change from a seller’s market to a buyer’s market, an auto company executive told Yicai Global.

Editor: Kim Taylor