(Yicai Global) Feb. 28 -- China's largest car battery maker Contemporary Amperex Technology -- CATL for short -- gained total operating income of CNY29.6 billion (USD4.4 billion), up 48 percent yearly, but the annual net profit attributable to shareholders was CNY3.6 billion, down 7.7, the company said in its financial report for last year it released yesterday.

Rising demand in the power battery market brought about by the rapid growth of new energy vehicles is the main cause for the surplus, Ningde, Fujian province-based CATL said.

Even as China has lowered industry subsidies, increased technical requirements, set up standards for the sector and reformed the market, the company has still managed to sustain rising sales, further increase its market share, and cut costs by strengthening market development, raising production and controlling outgoings, it said.

The decline in profits stemmed from the disposal of the proceeds from its shares in Beijing-based Pride Power System Technology last year, which affected the company's annual net profit.

That the cost of lithium-ion batteries will keep going down and CATL, as China's leading power battery leader, with its own research and development and policy support, will greatly reduce expenditures is the prevailing industry view.

The firm will build the world's largest battery factory in Erfurt, Germany and expand its output sevenfold with a revised plan, Matthias Zentgraf, CATL's European regional president, said at an auto conference in Bochum in the middle of this month. The 82-hectare battery factory will cost about EUR240 million (USD273 million) and create 600 new local jobs, foreign media have projected.

Industry competition will inevitably electrify despite the big market as South Korea's Samsung, Japan's Matsushita and other power battery giants intensify their jockeying for positioning in China. 

CATL will face a severely compressed profit margin after next year when overseas battery factories join in the domestic furball, as well as confronting the issues of delayed solid-state battery industrialization and depreciation of its current lithium battery production assets.

Editor: Ben Armour