Analysis of Monopoly Risks in the Rumored Acquisition of Huawei Digital Energy by CATL

Based on the collected data and information, I will compile a systematic analysis report on the monopoly risks associated with the rumored acquisition of Huawei Digital Energy by CATL.

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In late December 2025, the news that “CATL will acquire Huawei Digital Energy” spread rapidly and continued to ferment in the photovoltaic and energy storage industries[1]. The news was first disclosed by industry media “PV Information”, which subsequently attracted widespread market attention. According to reports, insiders revealed that the two parties have been in negotiations “for some time”[1].

However, as of now (January 2026), neither party has issued an official response to this rumor. When industry media sought confirmation from an executive of a product line at Huawei Digital Energy, they received the reply “I don’t know, it’s most likely a rumor”, and another Huawei insider also stated that they had not heard of it[1]. This ambiguous attitude leaves significant uncertainty regarding the authenticity and progress of the rumor.

Huawei Digital Energy is one of the fastest-growing business segments under Huawei. In 2024, this business segment achieved revenue of RMB 68.678 billion, representing a year-on-year growth of 24.4%[1]. In terms of business layout, Huawei Digital Energy covers the following core areas:

• Smart Photovoltaics
  : Its smart string inverters have ranked among the top in global shipments for many years
• Energy Storage Systems
  : It has become a top global player, ranking among the top 10 in global energy storage system shipments in the first three quarters of 2025[1]
• Charging Infrastructure
  : Together with Infinergy, it holds a 42% share of the charging equipment market[2]
• Digital Energy Management Platform
  : It possesses leading system integration capabilities, power electronics technology, and digital platforms

It is worth noting that Huawei has a history of divesting non-core businesses, including Huawei Electric, H3C, Honor, and Hyperfusion[1]. These historical cases indicate that Huawei has strong flexibility in strategic adjustments, which provides a certain basis for the credibility of this acquisition rumor.

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As an absolute leader in the global power battery and energy storage battery sectors, CATL has an extremely prominent market position:

Indicator	Data	Data Time
Global Power Battery Market Share	38%	2025
Global Energy Storage Battery Market Share	36.5%	2025
Market Share of Power Battery Installations in China	45.1%	2024
Market Capitalization	RMB 1.54 trillion	January 2026

In terms of financial data, CATL achieved revenue of USD 10.419 billion (approximately RMB 75 billion) in the third quarter of 2025, with earnings per share of USD 4.10, exceeding market expectations[0]. The company’s gross profit margin has remained stable above 25% for a long time, demonstrating strong profitability[3].

However, CATL has obvious shortcomings in the field of energy storage system integration. Data shows that the company has not yet entered the top 10 in global and domestic energy storage system shipments, and there is a gap with industry-leading enterprises in system integration, software algorithms, and after-sales service capabilities[1]. This is the key logic behind the potential complementarity between the two parties in the rumor.

China’s power battery market presents a highly concentrated competitive landscape:

Concentration Indicator	2020	2024	Trend
CR3	71.3%	76.1%	↑ 4.8pp
CR5	82.1%	84.1%	↑ 2.0pp
CR10	91.8%	95.6%	↑ 3.8pp

• The CR3 of the power lithium battery market increased from 71.3% in 2020 to 76.1% in 2024, and CR5 increased from 82.1% to 84.1%[4]
• The market presents a “one super, one strong” pattern: CATL (45.1%) and BYD (24.7%) together account for more than 65% of the market share[3]
• There is a significant profit gap between leading enterprises and second-tier manufacturers: CATL’s profit per Wh is RMB 0.09-0.12, while that of second-tier manufacturers is only RMB 0.02 or lower[3]

According to industry analysis, China’s power battery enterprises can be divided into three echelons[4]:

Echelon	Enterprises	Market Share
First Echelon	CATL, BYD	>20%
Second Echelon	CALB, Gotion High-Tech, EVE Energy, SVOLT Energy, Sunwoda, REPT BATTERO	2%-10%
Third Echelon	Farasis Energy, Do-Fluoride, Zenith New Energy, LG Energy Solution, etc.	<2%

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According to the Anti-Monopoly Law of the People’s Republic of China, notifications for operator concentrations must meet the following standards[5]:

Notification Criteria	Standards
Total annual turnover of participating operators	Exceeding RMB 2 billion
Annual turnover of individual participating operators	Exceeding RMB 400 million

• The calculation of turnover shall include the global turnover of the participating operators and their affiliated enterprises in the previous fiscal year
• For newly established joint ventures, the turnover of the participating parties in the relevant market shall also be considered

2025 was a landmark year for China’s antitrust enforcement, as the State Administration for Market Regulation (SAMR) issued a series of important policy documents[5][6]:

On December 15, 2025, SAMR officially issued the Guidelines on the Review of Non-Horizontal Operator Concentrations, which marks an important upgrade of China’s antitrust enforcement from “horizontal regulation” to “full-chain regulation”[6]. The guidelines:

• It consists of 9 chapters and 82 articles, with 34 interspersed cases
• It elaborates in detail the analysis ideas for unilateral effects (such as input foreclosure, customer foreclosure) and coordinated effects in vertical and mixed concentrations
• It explicitly mentions for the first time in review scenarios the competition concerns that may be triggered by “self-preferencing” behaviors

In 2025, there were multiple ex officio review cases[5]:

Case Type	Quantity/Case
Ex officio review and prohibition cases	Case of Y Pharmaceutical Co., Ltd. (first pure vertical acquisition prohibited)
Ex officio review with conditional approval cases	Case of X Technology’s acquisition of equity in A Technology (EDA sector)
Total number of closed cases in the first three quarters	528 cases (15.8% year-on-year increase)
Unconditionally approved cases	514 cases

• For the first time, regulatory authorities took the initiative to intervene in the review of transactions that did not meet the notification standards[5]
• Breaking the practice of “closing the barn after the horse is stolen”, the first case of retrospective review and restoration of the status quo occurred[5]
• A zero-tolerance attitude is adopted towards “killer acquisitions”

At the end of 2025, the vertical monopoly agreement “safe harbor” system was officially clarified[6]:

Type of Agreement	Safe Harbor Standards
Fixed resale prices, minimum resale price maintenance	Respective market share <5%, annual turnover <RMB 100 million
Distribution region division, exclusive distribution	Relevant market share <15%

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Based on the above analysis, we conduct a multi-dimensional assessment of the monopoly risks of CATL’s acquisition of Huawei Digital Energy:

Although CATL’s main business is battery cell manufacturing and Huawei Digital Energy’s main business is system integration, there is potential horizontal overlap between the two parties in the field of energy storage systems:

1. Trend of Blurred Business Boundaries
   : With the development of the energy storage industry, battery cell manufacturers are expanding into the field of system integration (e.g., CATL has launched energy storage system solutions), while system integration manufacturers are also developing upstream self-supply of battery cells (e.g., Sungrow has laid out battery cell production capacity)
2. Energy Storage Business of Huawei Digital Energy
   : In the first three quarters of 2025, Huawei Digital Energy ranked among the top 10 in global energy storage system shipments[1], and has direct competition with CATL in the terminal market
3. Market Definition Consideration
   : If the relevant market is defined as the “energy storage system market”, the combined market share of the two parties will increase significantly, which may trigger antitrust concerns

The acquisition is essentially a vertical integration, but even so, there are significant risks:

1. Market Foreclosure Effect
   : As the world’s largest supplier of energy storage battery cells, if CATL acquires Huawei Digital Energy, it may impose input foreclosure on other energy storage system integrators
2. Customer Foreclosure Effect
   : Huawei Digital Energy has an extensive customer network (including large power companies, data centers, etc.), and after the acquisition, it may restrict these customers from purchasing battery cells from competitors
3. Self-Preferencing Risk
   : The Guidelines on the Review of Non-Horizontal Operator Concentrations explicitly focuses on “self-preferencing” behaviors[6], meaning that the merged entity may prioritize supplying its own system integration business

1. Merger of Leading Enterprises Reduces Innovation Competition
   : Both CATL and Huawei Digital Energy are technology leaders in their respective fields, and the merger may reduce the overall innovation vitality of the industry
2. Risk of Technology Route Convergence
   : Currently, there are multiple technology routes competing in the energy storage industry (e.g., LFP vs NMC, liquid cooling vs air cooling, etc.), and the merger of leading enterprises may lead to the convergence of technology routes
3. Widening R&D Investment Gap
   : CATL’s R&D investment in the first three quarters of 2025 reached as high as RMB 15.1 billion[3]. After merging with Huawei Digital Energy, its R&D resource advantage will further expand

1. Supply Chain Security Concerns
   : The phenomenon of “automakers’ executives rushing to secure orders” has emerged in the current automotive industry[7], reflecting downstream customers’ anxiety about battery supply. If CATL further integrates system integration capabilities, it may exacerbate concerns about supply chain concentration
2. Squeezed Survival Space for Competitors
   : Under the “two superpowers and multiple strong players” pattern, second-tier battery manufacturers are already facing severe survival challenges[3], and the acquisition may further compress their market space
3. Risk of Weakened Price Competition
   : A highly concentrated market structure may weaken the motivation for price competition, ultimately harming consumer interests

1. 2025 Enforcement Trend
   : In July 2025, the acquisition case of Y Pharmaceutical Co., Ltd. became the first prohibited pure vertical acquisition case[5], indicating that regulatory scrutiny of vertical integration has significantly intensified
2. Focus on High-Tech Fields
   : In 2025, ex officio reviews have been launched in multiple high-tech fields such as semiconductors, pharmaceuticals, and AI[5]. As a strategic emerging industry, energy storage may also face key attention
3. Triggering Notification Standards
   : CATL’s 2024 revenue was approximately RMB 400 billion, and Huawei Digital Energy’s revenue was RMB 68.678 billion[1], far exceeding the RMB 2 billion notification standard, so it will face a complete antitrust review process

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• Y Pharmaceutical Co., Ltd. acquired 50% equity of H Pharmaceutical Co., Ltd.
• The turnover of the participating operators did not trigger the mandatory notification standard
• The transaction involved the raw material market of papaverine hydrochloride and the downstream preparation market

• SAMR took the initiative to intervene and made a prohibition decision on a case that did not meet the notification standards for the first time[5]
• The first case of retrospective review of a concentration that had been implemented for many years[5]
• The first prohibited pure vertical operator concentration case since 2008[5]
• The fourth operator concentration case to be prohibited in history[5]

Even if a transaction does not meet the turnover standard, as long as it involves key technical fields or highly concentrated industries, regulatory authorities still have the right to intervene in the review ex officio.

Conditional Approval[5]

• Continue to comply with existing contractual obligations and commercial terms with Chinese customers
• Supply products to Chinese customers in accordance with the principles of fairness, reasonableness, and non-discrimination
• In the event of major supply changes, make every effort to ensure supply to Chinese customers
• Maintain independent competition and shall not exchange restricted information that affects market decisions

For transactions that may trigger competition concerns, approval can be obtained by attaching restrictive conditions (such as maintaining supply commitments, opening interfaces, etc.).

Case	Jurisdiction	Outcome	Insight
Standard Oil Breakup Case	United States, 1911	Split into 34 independent companies	A classic case in antitrust history, breaking the monopoly
Microsoft Browser Bundling Case	United States, 1998	Settled, with open technical interfaces required	A milestone in antitrust regulation for the technology industry
Google Monopoly Case	European Union, 2017-2019	Total fines exceeding RMB 60 billion	Antitrust enforcement lasting for many years
Booking Price Clause Case	Spain, 2024	Fined EUR 413 million	Stricter regulation of the platform economy

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Risk Dimension	Risk Level	Comprehensive Score
Horizontal Overlap Risk	High	4.2/5
Vertical Integration Risk	Medium-High	3.8/5
Technical Barriers and Impact on Innovation	High	4.0/5
Market Foreclosure Effect	Medium-High	3.6/5
Regulatory Review Risk	High	4.0/5
Comprehensive Monopoly Risk	High	3.9/5

Based on the following factors, the acquisition faces high antitrust review risks:

1. CATL’s Dominant Market Position
   : Its 45.1% market share in China’s power battery market already constitutes a dominant market position
2. Extremely High Market Concentration
   : CR3 reaches 76.1% and CR5 reaches 84.1%, so any acquisition involving leading enterprises may trigger competition concerns
3. Prominent Vertical Integration Risks
   : Regulatory scrutiny of vertical acquisitions significantly intensified in 2025
4. Regularization of Ex Officio Reviews
   : Even if the notification standard is not met, regulatory authorities may still take the initiative to intervene

Referring to historical cases, if the acquisition is to be approved, it may need to meet the following requirements:

1. Business Divestiture
   : Divest part of CATL’s battery cell business or part of Huawei Digital Energy’s system integration business
2. Open Commitments
   : Guarantee fair supply of battery cells to competitors and keep interfaces open
3. Interoperability
   : Ensure compatibility between Huawei Digital Energy’s platform and third-party battery cells
4. Maintenance of Service Levels
   : Maintain the existing customer service level without reduction
5. No Bundling Prohibition
   : Prohibit the bundled sale of battery cells and system integration services

1. No Official Response
   : Neither party has officially confirmed or denied the rumor as of now
2. Precedent of Huawei Divesting Businesses
   : Huawei does have a history of divesting non-core businesses (e.g., Honor, Hyperfusion, etc.)
3. Business Complementarity
   : From a purely commercial perspective, there is indeed strong complementarity between the two parties’ businesses
4. Time Window
   : Considering that US sanctions against Huawei are still ongoing, it cannot be ruled out that Huawei has strategic considerations of obtaining funds by divesting its digital energy business

If the acquisition becomes a reality, it may have the following impacts on the industry:

• Build a world-leading provider of energy storage system solutions
• Enhance the international competitiveness of China’s energy storage industry
• Promote the full-chain integration of energy storage technology from battery cells to systems

• Further increase the concentration of the power battery market
• May trigger a survival crisis for second-tier battery manufacturers
• Reduce the motivation for technological innovation in the industry
• Exacerbate downstream customers’ concerns about supply chain security

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1. Closely Monitor Transaction Dynamics
   : Given that the rumor involves industry leaders, preparations for antitrust review should be made in advance
2. Clarify Review Focus
   : Focus on reviewing the market foreclosure effect, impact on innovation, and the survival space of competitors
3. Learn from International Experience
   : Refer to the review experience of the European Union and the United States on technology company acquisitions
4. Balance Innovation and Competition
   : Consider the potential impact of the transaction on energy storage technology innovation during the review

1. Second-Tier Manufacturers Need to Plan in Advance
   : If the acquisition becomes a reality, second-tier battery manufacturers need to formulate response strategies
2. Automakers Need to Diversify Suppliers
   : Reduce dependence on a single supplier and enhance supply chain resilience
3. Monitor Policy Dynamics
   : Closely track antitrust enforcement dynamics and adjust business strategies in a timely manner

1. Short-Term
   : The rumor may trigger market attention to changes in the competitive landscape of the energy storage industry
2. Mid-Term
   : Regardless of whether the acquisition becomes a reality, regulatory scrutiny of acquisitions by leading enterprises will continue to intensify
3. Long-Term
   : The energy storage industry may face structural adjustments, shifting from dispersed competition to concentration among leading enterprises

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[1] Tiger Finance - CATL to Acquire Huawei Digital Energy? The “Hidden Agenda” Behind the Rumor
[2] Caifuhao - Opportunities for Leading Power Equipment Enterprises Under the RMB 4 Trillion Investment Dividend of State Grid
[3] Caifuhao - Second-Tier Battery Manufacturers Living in the Shadow of Giants
[4] GuanYan Report Network - China’s Power Lithium Battery Market Presents a “One Super, One Strong” Competitive Pattern
[5] Lexology - Highlights of China’s Antitrust Law Practice in 2025
[6] Lexology - Establishing Rules, Enforcing Strictly, Embarking on a New Chapter: A Panoramic Summary of Antitrust Work in 2025
[7] Zhihu Column - Batteries Become a “Hot Commodity”, Automakers’ Executives Rush to Secure Orders
[8] Gilin API - Company Profile of CATL

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Gilin AI Financial Analysis Team
January 21, 2026

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