Goldman Sachs China Battery Initiation: ESS Drives the Cycle, Quality Wins the Cycle; Buy CATL A/H, Zenergy
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Key Views
On supply, effective capacity doubles to 4.60TWh by 2028, with capital expenditure peaking at roughly RMB 140 billion in 2027. Post-2028, as supply catches up with normalizing ESS demand, utilization rates may decline. The ESS market remains fragmented, with roughly 30% share held by 22 long-tail suppliers, but quantifiable performance differences could accelerate consolidation toward leaders. CATL is positioned to better sustain utilization and margins through quality, dual-chemistry capability, and integration.
Recommended Securities
Goldman Sachs assigns Buy ratings to CATL-A (300750.SZ), CATL-H (3750.HK), and Zenergy (3677.HK); Sell ratings to Gotion (002074.SZ) and Farasis (688567.SS); and Neutral ratings to EVE Energy (300014.SZ), CALB (3931.HK), and Rept (0666.HK).
Key exhibits
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