Are they supposed to be growth stocks?
Well, Tesla does have new stories besides FSD -> AI chips (Dojo) + robots (Optimus), which sound to be pretty exciting.
What about CATL’s future strategy?
Is it like Intel?
Similarities: They are both the supplier for industry-leading products, and has in-house manufacturing (part of the edge is manufacturing. They can expand into other end markets: Intel also serves server market, while CATL serves energy storage market.
Differences: “Wintel” is amazing; however, auto industry hasn’t been winner take all, even for Tesla. Unless auto OEMs are willing to become PC makers and there is one superior EV structure (asset light) and uses CATL exclusively.. << a very unlikely picture. If Tesla had delivered FSD fast enough and good enough, there is a chance to be a layer that takes most market share, but that doesn’t have much to do with the battery layer.
Differences: Although CATL tech is very good and improves every year, it’s not like it created “Moore’s Law” / a long-term road map for the battery industry. It’s not just about visionary or “leadership”, but because the speed of improvements is fast enough – competitors are catching up instead of falling behind.
Is it like Qualcomm?
Similarities: Qualcomm’s SOC enables / provides a platform for smartphones and other IoTs. CATL enables lots of EV brands. Qualcomm faces competition from integrated player like Apple; CATL faces competition from integrated player like BYD.
Differences: similar to Intel, Qualcomm + Android is powerful and ubiquitous. CATL is lack of a powerful OS layer.
Differences: Qualcomm uses foundry for manufacturing and focuses more on design & licensing. CATL produces in-house, but doesn’t do licensing.
Is it like Denso?
Similarities: big player in auto parts.
Differences: Denso’s business lines is more mixed (no synergy), and centered around automakers. CATL focuses on batter-related products, and are supplying to non-auto customers.
Differences: Denso has ~15% gross margin and ~5% net margin. CATL has ~20% gross margin and ~10% net margin.