Gasgoo Munich- By the end of October, China's major battery manufacturers had finished releasing their third-quarter earnings reports.
CATL, EVE Energy, Gotion, and Sunwoda all posted revenue gains, with growth rates ranging from 45.78% to 63.08%. Yet their income statements painted a different picture.
EVE Energy saw net income attributable to shareholders jump 86.11%, while CATL's growth slowed to 14.54% in the third quarter. Meanwhile, Gotion's net income plunged 66.48%, and Sunwoda dropped 56.37%.
Behind the universal revenue growth and diverging profits lies a common thread: going global.
In September, China's power and energy storage battery exports totaled 44.0 GWh—a 64.5% surge from a year earlier, accounting for 19.7% of that month's sales. But selling batteries abroad and building factories overseas are two very different calculations.
As regulatory hurdles like the EU's carbon footprint labeling and battery passport requirements take effect, the gap between "selling products" and "moving the supply chain" is widening.
Viewed together, these four earnings reports suggest that going global is no longer just a growth story—it is a bill that must be paid in advance.
Revenue is rising, so why aren't profits keeping pace?
First, consider the source of this growth.
Growth in domestic power battery installations has slowed. The incremental gains now come primarily from two directions: energy storage and overseas markets.
In the first half, cumulative exports of power and energy storage batteries reached 181.3 GWh, up 42.5% year-on-year, making up 18.5% of total sales. That means for every five or six batteries sold, roughly one goes abroad. Data from the General Administration of Customs also shows lithium battery exports climbed 37.6% in the first six months.
Structurally, energy storage batteries are contributing more to this export surge. While power batteries still dominated exports in the first half, energy storage grew faster. This is driven by a wave of energy storage projects coming online in Europe, the Middle East, and Australia. For battery makers, storage orders are large and delivered in concentrated cycles, making revenue recognition more volatile as it hinges on project timelines.
The rising share of exports is reshaping the revenue structure of battery companies. Exports accounted for 18.5% of sales in the first half, rising to 19.7% in September alone—a trend that is gaining momentum. This means demand fluctuations, policy shifts, and currency swings in Europe are feeding directly into the financial reports of Chinese battery makers with increasing force.
Image Source: EVE Energy
The revenue boost from going global is real, but it is also a capital-intensive business.
Take Gotion as an example. Revenue grew by over 50% in the first three quarters, yet net income attributable to shareholders fell by 66.48%. The company is pushing multiple projects in Europe simultaneously: its plant in Goettingen, Germany, is already in mass production. It has also formed three joint ventures with Volkswagen Group's PowerCo in Valencia, Spain; Surany, Slovakia; and Kenitra, Morocco, to build lithium battery and cathode material bases. The total investment for these projects is about 32.22 billion euros, or roughly 246.2 billion yuan.
During construction, these projects are cash drains with no inflow. Depreciation, financial costs, and upfront investments weigh heavily on current profits. Additionally, Gotion recorded a floating loss of about 891 million yuan on financial assets in the third quarter, which significantly impacted its net income.
Sunwoda faces a similar dynamic. Revenue rose 45.78% in the first three quarters, while net income dropped 56.37%. The company is spreading its footprint across Thailand, Hungary, Vietnam, and Morocco. The first phase of its Thai battery base is operational, and the second phase has launched. Meanwhile, its power battery plant in Hungary and consumer battery cell plant in Vietnam are still under construction.
By contrast, EVE Energy delivered the strongest profit growth among the four. Net income rose 86.11%, and recurring net income surged 111.38%. Power battery shipments reached 66.17 GWh, a 91.30% jump. This shows that going global doesn't inevitably drag down profits; the key lies in the pacing of capacity rollout, the stability of the customer base, and cost control capabilities.
CATL presents a different case. Its revenue of 442.14 billion yuan in the first three quarters far outstrips its peers, yet third-quarter net income growth was just 14.54%—well below the 58.58% rise in revenue.
Analysts point to rising raw material costs and ongoing price competition as main factors. For the world's largest battery maker by installations, the capital expenditure for overseas expansion is equally massive. CATL is investing roughly 7.3 billion euros in its Debrecen, Hungary, plant, which has a planned capacity of 100 GWh.
The timeline for this plant offers a reference point. Module production lines started in autumn 2024, with 537,000 modules produced to date. Trial production of battery cells won't begin until September 2026, preceded by equipment and process debugging, optimization, and verification. Full production will only commence once all facilities are ready.
From modules to cells, and from trial runs to full output, every step requires re-verification of equipment, processes, and personnel. This is why the commissioning cycle for overseas plants is universally longer than for domestic ones.
Reading through these four reports, a clear verdict emerges: going global is already a primary driver of revenue growth, but it is also a bill paid in advance. Building capacity in Europe requires spending money now, while orders are only realized after production starts. That time lag explains the divergence in battery makers' current income statements.
To understand where this "upfront payment" is going, we need to shift our gaze from the income statement to the map of European capacity.
European Capacity Map: Why Hungary?
If the third-quarter reports show where the money is going, the disclosed capacity layouts show where the factories are being built.
Mark the European locations of Chinese battery companies on a map, and a clear cluster emerges: Hungary.
CATL's plant in Debrecen, eastern Hungary, will officially launch trial production of battery cells in September 2026. With a planned capacity of 100 GWh, it is the largest power battery production base invested in by a Chinese company overseas. Module production began there in autumn 2024, reaching a cumulative output of 537,000 units. Once fully completed, it will become CATL's largest manufacturing base outside of China.
Sunwoda Power's first European production base is also located in Hungary. It plans to produce power batteries and energy storage cells, covering the manufacturing and assembly of cells, modules, and packs. CALB is also building capacity in Hungary.
Why Hungary? Three reasons converge: its central location radiates out to major European auto markets; labor and land costs are lower than in Western Europe; and the government offers policy support for foreign investment. Crucially, it sits close to the industrial clusters of German automakers.
Germany is another landing point, but with a different logic. Gotion's Goettingen plant is already in mass production, and according to reports, CALB's German factory has turned profitable. Building factories right on the doorstep of German automakers serves clients with the strictest demands on delivery radius and response speed.
Southern Europe is becoming a new hotspot. CATL and Stellantis are building a joint battery plant in Zaragoza, Spain, with a planned annual capacity of 50 GWh and production expected by the end of 2026. Gotion and PowerCo's joint venture in Valencia, Spain, plans 29.1 GWh, with Gotion holding 49% and PowerCo 51%. Spain's advantages include abundant green energy, lower land costs, and proximity to southern European automakers.
There are also two more extreme trajectories—one further east, one further west.
Gotion is set to break ground in October 2025 on a 20 GWh LFP storage battery plant in Slovakia, targeting the Central and Eastern European storage market—the third of its joint ventures with PowerCo. CALB is laying out a 15 GWh project in the Sines industrial zone of Portugal to serve Western European automotive and storage clients. AESC's plant in Douai, France, is dedicated to supplying Renault's mainstream EV models and includes a planned recycling system. Morocco represents another type of foothold—Gotion and PowerCo are building a cathode material base in Kenitra, moving the upstream supply chain to North Africa.
Connecting these dots, Europe's battery capacity layout is unfolding along three lines: "German automaker clusters," "Central and Eastern European cost havens," and "Southern European green energy resources." Each location corresponds to a different customer structure and cost logic.
Behind these locations lie two distinct factory-building models.
One is the wholly-owned, self-controlled model. CATL's plants in Thuringia, Germany, and Debrecen, Hungary, are both wholly-owned projects, managing the entire process from cells to modules and negotiating client resources independently. The benefit is strong control and high profit retention; the cost is bearing all capital expenditure and operational risks alone.
The other is binding with automakers, trading equity for orders. Gotion's partnership with Volkswagen is the classic case: among the three joint ventures, PowerCo holds 51% in the Spanish project, while Gotion holds 51% in the Slovak project. The equity structure directly mirrors the allocation of decision-making power. The advantage is guaranteed orders and deeply tied customer relationships; the price is ceding some equity and profit.
Amid the EU's tightening scrutiny on localization ratios and supply chains, the pros and cons of these models regarding compliance are shifting. Joint ventures, tied to local automakers, often enjoy more flexibility in supply chain reviews and localization recognition. However, ceding control means giving up corresponding profits and say. Wholly-owned models retain full control and profit retention but require facing increasingly complex compliance hurdles alone.
Neither model is absolutely superior; the choice depends on the company's customer structure and risk appetite.
But one point is common: regardless of the model, Chinese battery companies have moved from "selling batteries to Europe" to "making batteries in Europe."
Beyond these four, CALB's German factory is already profitable, while its Hungarian plant is progressing. AESC's French plant in Douai supplies Renault. BYD's capacity layout in Brazil and Thailand represents another path: "vehicles bringing batteries."
Going global is not a single path; the divergence among these four is just one slice of the story.
The real battle begins after the factories are built
Building cell plants overseas is just the first step. Once a factory lands, new questions arise immediately: Where do the cathode materials come from? How are retired batteries recycled? Can the surrounding support infrastructure keep up?
Judging by this year's moves, the migration of the entire supply chain has begun.
The clearest signal is at the material level. Gotion and PowerCo's layout in Morocco is not a cell plant, but a cathode material base. This choice has a clear policy background: the EU is demanding higher local content and supply chain transparency for batteries. Simply moving cell capacity over still leaves a compliance gap if raw materials rely heavily on imports. Building material plants in North Africa allows for nearby supply to Europe while utilizing local phosphate resources.
Image Source: CATL
CATL's layout in Indonesia goes further, forming an integration from nickel mines and precursors to batteries, grasping the upstream resources. This "resource-material-cell" vertical integration is becoming standard for leading companies expanding overseas.
The second signal is localized recycling. EU battery regulations require batteries to be recycled within the market and mandate the use of recycled materials: starting in 2031, power and industrial batteries must contain specific proportions of recycled cobalt, lithium, and nickel, increasing annually thereafter.
This means that in the future, retired batteries won't need to be shipped back to China. Instead, they will be dismantled, regenerated, and resupplied to local factories in Europe.
For battery makers, passport data must not only state "how much recycled material was used" but also trace it back to the specific recycling plant and batch of retired batteries. CATL, Gotion, and Sunwoda are all planning recycling networks in Europe. Once this loop is closed, Chinese battery companies in Europe will transform from "manufacturers" into "part of a circular ecosystem."
The third signal is the formation of industrial clusters. Around Hungary, Chinese cathode material companies, equipment suppliers, and logistics providers are already gathering—where the cell plant goes, the supporting infrastructure follows. This follows the same logic as the formation of battery industrial clusters in China years ago, only now it is happening in Europe.
Judging by current progress, CATL's nickel-precursor-battery integration in Indonesia is leading the resource front. Gotion's cathode base in Morocco extends the material chain to North Africa. Sunwoda is spreading its footprint across Thailand, Hungary, Vietnam, and Morocco, but its recycling network is still in the planning stage. No company has fully run the "material-cell-recycling" loop yet, but CATL and Gotion's progress on materials has already created a gap with followers.
But this model comes with costs and risks.
First is profit pressure. Gotion's 66.48% drop and Sunwoda's 56.37% drop in net income for the first three quarters show that overseas expansion dilutes profits in the short term. Capital expenditure during construction, capacity ramp-up at the start of production, and efficiency losses from cross-cultural management all weigh on financial reports.
Second is management complexity. Labor laws, union systems, and environmental requirements in Europe differ vastly from those in China, making it hard to replicate domestic operational efficiency. Several executives at battery companies building plants in Europe have told Gasgoo that for the same production line, the debugging cycle and personnel run-in time in European factories are much longer.
Finally, there is policy uncertainty. The EU welcomes Chinese battery companies to build locally, yet it is tightening localization ratios, carbon footprint thresholds, and supply chain scrutiny. This tightening is already taking effect: since August, power batteries exported to Europe must carry carbon footprint performance ratings; from 2027, a battery passport will be mandatory; and related supply chain due diligence requirements are phasing in. Furthermore, the EU's anti-subsidy investigation into Chinese batteries continues, and the Net Zero Industry Act's requirements for local manufacturing ratios are gradually being implemented. Companies design plants based on current rules, but by the time production starts, the rules may have changed, requiring continuous addition of compliance costs. Policy uncertainty is a variable that globalizing companies must face for the long haul.
In summary, the globalization of China's battery industry is passing through three stages. Initially, it was "Made in China, delivered globally"—selling batteries abroad. Then came "close to customers, local factories"—moving capacity overseas. Now, it is entering a third stage: moving materials, recycling, and supporting industries together to form a complete closed-loop supply chain overseas.
These stages are not replacements but layers building upon one another. Whoever is first to run the full "material-cell-recycling" loop overseas will transform from a "Chinese battery company" into a "global battery company." The profit divergence in the third-quarter reports is just a financial snapshot of one stage in this long marathon; the real competition lies ahead.
