China’s battery producer giant CATL on Friday, April 29, reported a 23.6% year-on-year decrease in the first-quarter profit this year. CATL stands for Contemporary Amperex Technology Company Limited.

As Reuters reported from a filing on the Shenzhen Stock Exchange, its net profit for the first three months of 2022 was 1.49 billion yuan (more than 226 million dollars). This is a fall from 1.95 billion yuan during the same period last year and the first profit drop for the firm in two years.

CATL’s electric vehicle batteries had a gross profit margin of 22% in 2021, down from 26.56% in 2021.

The dent in CATL’s profit is attributable to increasing raw material prices.

According to Trading Economics, the costs for lithium nearly doubled through the first quarter of this year, climbing to an all-time high of nearly 500,000 yuan per tonne in March. Lithium is a prime component of EV batteries.

As a result, the company said last month that it hiked the prices of some battery products.

CATL is China’s biggest maker of electric-car batteries. China Automotive Battery Research Institute provided that the firm supplied 51% of the nickel-cobalt-manganese (NCM) batteries in the first three months and 49% of the lithium phosphate (LFP) batteries used in China’s EVs.

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