Five FAQs on demand, competition and CATL

This report addresses five frequently asked questions on China's EV/ESS battery sector, focusing on demand, competition and CATL. Slowing battery growth is not the biggest concern; ESS demand visibility is the key swing factor. China's ESS battery sales grew 84% y-o-y in 8M26 (exports +42%, domestic +98%), yet domestic ESS installations rose only 29%, and the divergence between strong sales and slower installations raises questions about demand sustainability. Domestic ESS tenders grew 86% y-o-y in 8M26 but slowed to 15% in September; slower ESS growth in 2027 is reasonable, though expectations of outright market contraction look premature. ESS capacity restrictions are tightening supply gradually, mainly targeting unfilled new capacity, with limited near-term impact on CATL. CATL's competitive edge is not yet lost: its domestic EV battery share rose to 44.6% in 8M26 and overseas share stood at 34%. Battery tax policy changes are known factors;