Lithium battery startup files for IPO in Hong Kong

CALB Co. Ltd. 卡尔吧, one of China’s largest electric vehicle battery makers, has filed for a Hong Kong IPO on the back of soaring electric vehicle sales in China. According to CALB’s IPO prospectus, the proceeds will go to expand equipment research and testing facilities for battery trials.

• In 2021, CALB controlled 5.9% of China’s battery installation market, making it the country’s third-largest domestic supplier.
• The Jiangsu-based enterprise has dug its way out of a loss in recent years. In 2020, CALB posted a total loss of 18.3 million yuan ($2.8 million). However, last year, the company garnered profits to the tune of 111.5 million yuan ($17.5 million), increasing total revenue by 141% year-on-year.
• CALB already ranks in the top 10 in the world by manufacturing capacity. Forecasts predict that by 2025, the company could move up a notch to become China’s second-largest supplier.

The context: As a top battery supplier for EVs, CALB’s success parallels the explosion of China’s electric vehicle market. Over 70% of CALB’s soaring 2021 revenue came from battery sales to Xpeng Inc., Aiways, and GAC, among others.

• China sold a total of 3 million electric vehicles last year, compared with 800,000 in the U.S. Part of the reason for China’s enormous EV sales volume is its domestic market price range. For instance, low-end electric vehicles start around $4,000, making them affordable for most Chinese consumers.
• China is expanding its electric vehicle operations globally. Currently, about a dozen Chinese EV makers have operations in Europe. Regardless of Europe’s 10% car import tariff, many Chinese firms still maintain price competition with European manufacturers.

However: CALB has an Achilles heel. Until 2015, the firm was tied to the state-owned Aviation Industry Corp. of China, a supplier of defensive military equipment. As battery technological capabilities expand and geopolitical tensions continue to escalate, CALB may be caught in the crossfire.