The Investor's Podcast 对 $CL 的判断变化

sure and CL is already the world's number one energy storage supplier and I think that two things make it even more attractive play. First is that the storage segment carries higher margins for CL than the core EV battery business because of the complexity and the durability requirements that we talked about.

And the second point which I find more interesting is that CL isn't just selling batteries to these data centers. It is now systematically assembling a full stack energy ecosystem for the storage through power distribution inside the data center. They are even buying into the power equipment makers and servicing the entire energy stack.

This I think uh has the potential to transform CL from just an energy storage supplier to a strategic infrastructure partner for the entire AI compute buildout. And the second potential growth engine which I think is still in the early stage that can have a huge upside for the company is the licensing model called LRS which stands for license royalty and service.

So CL is effectively locked out of owning a factory in the US for geopolitical reasons. So rather than fight it out, they have found a workaround where they get into a licensing deal with an American company and it's the American partner that builds, owns and runs the manufacturing plant while CL just provides the license of its technology and collects a royalty fee.

So CL and Ford recently did this licensing deal for the Ford's Michigan battery plant and in that Ford owns the plant land equipment and hires the workforce. CL has no equity and only offers battery chemistry and technology and gets a royalty fee in return.

CL hasn't disclosed the economics of the licensing fee. But if it is in the 3 to 4% range that these deals are typically u done at then that's a very high margin capital light income and that framework can extend beyond EV batteries to even data storage uh for the AI data storage compute that we talked about.

the important point here that I want to do highlight is that this is still in the early phase. The model is under scrutiny by the US lawmakers. So CL obviously feels that this is a win-win solution for both parties but the geopolitics has many dimensions and it's not yet a shortsh short win but if CL can scale this LRS framework in the US the high margin royalty revenue can provide a big boost to the stock price

I'm going to stop interrupting you except to say that the scrutiny by the US lawmakers is a big big butt. And I'll talk more about this later. For now, let's suffice it to say that a licensing deal of 3 to 4% of revenue would be wonderful, but it could easily get wiped out by the simple stroke of a pen.

like just here at the very top as we're looking at the income statement. I see the revenue was flat from 2023 to 2025. How did that happen? So starting with the revenue being flat from 2023 to 2025 that you mentioned stick. So the biggest cost for CL is the raw materials that go into the battery which currently is mostly lithium and lithium prices became dramatically cheaper over the last couple of years and CL passed those savings on as lower prices to its customers. So the company sold far more battery volume made more profits but the headline revenue barely moved.

And the second point that I want to highlight in the financials is that there is a big mismatch between their net income and the operating cash flows. So last year CL earned about 11 billion in profit but it generated close to about $20 billion in operating cash flows. So that's nearly double.

This high operating cash flow allows the company to spend on capex, margin acquisitions, return cash to shareholders through dividends and buybacks and the company still managed to have higher cash balance on their balance sheet.

After all of that, the reason why operating cash flow is so much higher than the profit is because CL has a large negative working capital, meaning that it sells through its inventory and collects money from customers months before it has to pay to its suppliers. So in effect its suppliers are its largest lenders funding the growth for CL almost interest free

but this is where the risk also resides there is a limit to how much you can stretch your payables and the Chinese authorities are asking large firms to start paying theme suppliers sooner. So for CL that likely means that part of their interest free float might unwind and a period of readjustment in how it funds its growth. I don't think it will break the model because much of CL's payables are to large suppliers which are outside the theme rule that the authorities are pushing for. But I would say it's still a real headwind to watch out for.

So basically the wind stopped and CL still holds a leading global share in the EV battery market and they earn margins which are above the best of the industry.

So I think the first one which I think is the biggest for CL is the geopolitical risk. So CL is effectively world out of the US market which is the second largest market for EV batteries. The company is on the Pentagon's list of companies that work for the Chinese military. This is something that the company has contested hard. Robin Zang has sent executives to Washington to make the case but so far without success.

So CL counter to this restriction is the licensing model that I talked about and as an example that the Ford partnership in Michigan where CL licenses its technology rather than owning a manufacturing facility and in return collects a fees on that license. I think it's a clever way to circumvent the restriction and it's a template that CL could repeat with other partners but having said that as I mentioned it's still in the early stage and it's not a done deal yet so the risk is still very real and something investors need to watch out for

LRS is often been spun as an asset like growth. In reality, it may be better spun as a defensive capitulation. By surrendering direct ownership and customer relations to Ford and GM, CL is admitting that direct Chinese ownership is politically toxic under the US Inflation Reduction Act. Accepting a mere 3 to 4% royalty fee turns that invisible king you mentioned into a low rent IP landlord. This model makes CL what I would call a ghost in the machine vulnerable to a stroke of the pen where the US regulators can sever the IP at any time and leave CL with zero physical assets to reclaim.

Not only a stroke of the pin loss by handing over the blueprint for highdensity packs to Ford and GM, not only are you handing over the blueprint, CL is training the very competitors who seek to exclude it. Let's call it LRS leakage.

So, it's definitely possible for us manufacturers to learn from CL. Although uh with the high R&D focus that CL has, they are constantly moving up the technology curve, but then training competition can still be a threat to watch out for.

I would say the second risk that I want to put on the table is the price war at home. So, China's battery and EV sector has seen a brutal brutal price war. So much so that Robin Zang himself has publicly asked the industry to stop computing purely on price.

The counter here is that the growth in the energy storage segment especially the AI data center demand that we discussed. It is a new higher margin faster growing segment where CL is number one and the company is moving into a full stack power storage solution where the competition is less intense.

Again, storage is not immune to price pressure and it's per unit prices are falling too, but it's a higher margin than the EV batteries business and it's still in the early stage of the growth curve.

And the third risk that I would talk about is the technology disruption risk. Now, battery technology is improving at a very high rate. As a rough rule, u every two years the energy density in the battery packs climbs by about 20%. And to add to that, there is faster charging, longer battery life, better cold weather performance, and the innovation spans battery chemistry materials, cell designs, etc.

So the danger here is that the new chemistry such as the solid state or the sodium ion batteries or something else leaprogs the existing LFP and the NMC batteries that CL is dominant today.

And the counter here is that CL spends more on R&D than anyone in the industry. The company isn't relying on any single chemistry. It is already developing and scaling sodium ion batteries in parallel. So the bet here is that whatever the next innovation is, CL is likely working on it too. So the risk is real. But my view is that the disruptor and the incumbent may just turn out to be the same company here.

CL is running exponentially faster to stay in the same place financially. So it's surrendering its pricing power to maintain utilization. Also, the recent 15 12% profit margin expansion achieved while the revenue was shrinking is a mathematically temporary windfall. It's not a new baseline. It doesn't indicate technological superiority. Rather, call it a cost wedge profitability flu. What an investor will likely see is that 15 12% net profit will regress to a tighter 11 to 12% historical bands.

Although yours truly believes that the energy storage system is a cyclical buffer to slowing EV sales, the ESS, the energy storage system, is sensitive to utility capital budgets, to global interest rates, and to AI spend. This ESS buffer can be viewed as a high beta on the global micro environment.

uncontested expansion may slow. Being the largest, they're the biggest target for all the competitors. They may be the slowest mover towards solid state disruption. And they have the most to lose from the next generation chemistry, unless of course they invent it.

With subsidies from the Chinese government gone, recall the pig in the win, CO faces a gravitational pull not seen since 2011. Some of those gravitational pulls include one a utilization risk with new plants in Hungary and Germany. CL has a massive fixed overhead. Any minor slowdown in European EV adoption due to subsidy cliffs will leave this capacity unabsorbed turning growth assets into margin anchors.

commodity concentration. Despite the vertical integration, CAT remains a shadow commodity trading house. Its stock price may be viewed by bears as a proxy for lithium and nickel volatility, not a reflection of R&D prowess.

The European protectionist wall, the EU carbon border adjustment mechanism, CBAMP, acts as a targeted tax on Chinese cells and a key founder, key man. CL is inextricably tied to Robert Zing's personal standing with a 22% ownership, deep ties to Beijing. Any shift in his political standing represents an existential unhedable risk for shareholders.

so the first one is the utilization risk linked to the fixed overheads at these overseas plants in Hungary and Germany so it is true that a slowdown put on in the European EV industry will have some impact on CL. But I would also say that being the lowest cost producer, CL might be better placed in managing the downturn compared to the competition. I mean we have seen subsidies getting removed in China resulting in overall EV slowdown but the dominance of CL in China has continued.

Now with regards to your point about commodity price volatility linked to the lithium prices basically so the company is actively developing new battery chemistries such as the sodium ion batteries as a response to this very risk. So sodium as opposed to lithium is widely available. The issue currently with sodium batteries today is that the energy density is

Well, with regards to your point about storage market growing faster than CL's storage shipment, that is true. Even though CL is the number one player in energy storage space and the segment grew installations by roughly 30% last year, but that was below the overall industry growth rate of close to about 80% if I'm not wrong.

I believe one key reason why this segment did not grow at a faster rate for CL last year was because of capacity constraints. So CL's utilization rate last year was around 97%. Meaning that they sold pretty much what they could produce.

Now this year some of those constraints should ease up as new manufacturing capacity comes online. So it will be important to see if CL can start regaining market share in this segment.

In fact, if you look at the latest quarterly result, CL's energy storage sales for the first half of 2026 grew by about 88% year on year and the storage volume nearly doubled year on year. So this gives some data point around the CL's potential market share position in the energy storage space.

And I guess what I found interesting as an investor is how this could potentially change CL's business model. They stop being a company that sells your battery once and instead the battery stays in the pool at CL and his partners own and operate and they never lose the battery. It comes back. It gets checked, get reused and eventually recycled and so CL owns the whole lifetime of the asset

So battery swapping is popular in China and CL has close to 2,000 stations and growing. The company builds modular battery packs that are co-developed with major Chinese automakers. So it basically locks in the customers and the cost of setting up the network is shared with various partners. So it is not CL alone taking the entire cost up front.

And I think this is where the scale of CL both in battery packs and charging network can help them to provide a faster payoff for these stations.

Now man, you talked to us about CTL trading at around 18 times operating profit. How do you treat these 150 plus stakes? Did you give them any value and should investors see CL as a battery maker with a side portfolio or is the portfolio even a part of the mode?

getting into something like CL and speaking about this and learning about it just really excites me.

which like Robin at CL I mean he's giving back to his community. He wants his the people in his community to to thrive and grow.