China Battery: Is industry consolidation happening? Read-through from CATL's acquisition of Geely's battery assets

CATL has obtained approval to acquire Chongqing Yaoning, a Geely-affiliated battery manufacturer with a near-complete 24GWh battery project in Chongqing. We view the transaction as more than a simple capacity addition: it provides an early indication that China's battery industry may be entering a phase of consolidation, reinforces the challenges of OEM-led battery manufacturing, and highlights the increasing strategic value of approved battery capacity assets amid a potentially tighter regulatory environment. Chongqing Yaoning was originally developed within the Geely ecosystem as part of its battery self-supply strategy but appears set to be transferred to CATL (or a CATL-led JV) before commercial production, suggesting even leading auto groups may prefer partnerships with established battery manufacturers over fully independent cell production;