How To Buy CATL Stock: ETF and Brokerage Options

Most electric car batteries are made in China, but it can be challenging for U.S.-based investors to buy Chinese stocks. Chinese EV battery maker and Tesla supplier CATL is a great example. It is the largest EV battery supplier in the world, but it is only listed in mainland China. Learn how you can add CATL stock to your portfolio.

David Dierking   Updated April 27th, 2022

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What Is Contemporary Amperex Technology Co (CATL)?

Contemporary Amperex Technology Co Limited or CATL is the world’s leading manufacturer of lithium-ion batteries. In 2021, it produced nearly one-third of lithium batteries globally. Headquartered in China’s Fujian province, the company was spun off from its parent Amperex Technology Limited (ATL) in 2011. ATL focused primarily on consumer electronics, but CATL was established to develop EV battery technology.

CATL operates ten production facilities and five R&D centers, mostly in China. But it has also expanded globally by launching a manufacturing facility in Erfurt, Germany, and an R&D facility in Munich, also in Germany. In 2021, CATL produced 96.7 GWh of total battery capacity, a 168% growth rate over the prior year. It plans on ramping up capacity to 800 GWh by 2030.

CATL has several strategic partnerships. The highest-profile one is with Tesla. CATL and Tesla’s Shanghai factory have a battery supply agreement that runs through 2025. CATL has additional deals with global automakers, including BMW, Daimler AG, Hyundai, Honda, Toyota, Volkswagen, and Volvo. And, of course, it is the supplier of choice to the Chinese EV industry, including Nio, Li Auto, and Xpeng.

One of the largest companies listed in mainland China, CATL has a market capitalization of nearly $140 billion. 

How can I buy Chinese stocks?

Geopolitical tensions between the United States and China have made investing in Chinese stocks increasingly difficult. Stocks available via American depository receipts (ADRs) on U.S. exchanges can be traded like every other stock. Alibaba (BABA) is an example of a stock that trades via ADR on the NYSE.

But not all stocks have an ADR listed on a U.S. exchange. If that’s the case, investing options are limited. Few brokerages allow trading stocks listed on Chinese exchanges like the Shenzhen Stock Exchange, referred to as A-Shares.

Some companies choose to list in Hong Kong instead or in addition to the mainland China listing. Hong Kong-listed stocks, known as H-Shares, are available to a wider audience. There are more brokerages that let you invest in H-Shares vs. A-Shares.

CATL is listed on the Shenzhen Stock Exchange and does not currently trade on the United States exchanges as an ADR. It does not have an alternate listing on the Hong Kong exchange either.

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So how can I buy CATL stock?

We have found only one U.S.-based brokerage that lets you invest in China A-Shares. But if getting another brokerage account just to buy one stock is too much, the easiest way to invest in CATL may be via ETFs that own it in their portfolios. However, in that case, most of your investment will be in companies other than CATL. You could also consider alternative EV battery stocks.

Brokerages that let you invest in Chinese stocks

The only major brokerage in the United States that allows buying China A-Shares is Interactive Brokers. Investors may need to receive a special permission from Interactive Brokers to gain access to the platform before trading.

The best-known brokerages, such as Vanguard, Fidelity, and Schwab, or apps like Robinhood, Public, and M1 Finance, do not let you trade A-Shares.

Exchange-traded funds (ETFs) that include CATL

Several ETFs have large positions in CATL. Many of these own CATL stock as part of their broad focus on China, but ETFs targeting the battery and electric vehicle markets also own it.

VanEck ChiNext ETF (CNXT)

  • CATL as a % of assets: 17%

CNXT tracks the performance of the 100 largest and most liquid stocks listed on the ChiNext Market of the Shenzhen Stock Exchange. It consists primarily of Chinese large-cap stocks and has 57% of its portfolio invested in healthcare and industrial stocks. CATL is the fund’s top holding, accounting for 17% of total assets.

CNXT has just $21 million in assets, so liquidity and tradeability could be problematic. Its 0.65% expense ratio is average within the China ETF category. Since no other ETF has more than an 8% weighting in CATL, CNXT would provide the most significant exposure to the stock through an ETF.

KraneShares Bosera MSCI China A 50 Connect Index ETF (KBA)

  • CATL as a % of assets: 7%

KBA consists of 50 large-cap Shanghai and Shenzhen listed stocks (A-shares) available through Stock Connect. The issuer notes that this fund “may offer greater liquidity and investability due to its balanced sector weighting methodology and focus on China’s largest, most liquid securities.”

With a 7.4% allocation, CATL is the 2nd largest holding within KBA’s portfolio. At nearly $40 million invested, KBA owns one of the single largest positions in CATL of all ETFs. From a sector allocation perspective, KBA looks quite a bit different from CNXT. It’s very balanced with six sectors having weightings of at least 9%. Financials, industrials, and consumer staples are the three largest sectors accounting for a combined 50% of the portfolio.

KBA comes with an expense ratio of 0.56%.

If you invest in CNXT or KBA, you are investing in China generally, not in EV batteries. If you are more focused on EV battery stocks, you may be OK owning less CATL and more other battery companies. This is where the battery and EV-focused ETFs come in.

Amplify Lithium & Battery Technology ETF (BATT)

  • CATL as a % of assets: 5%

BATT is a portfolio of companies generating significant revenue from the development, production, and use of lithium battery technology. This can include battery storage solutions, battery metals & materials, and electric vehicles.

CATL has a 5% weighting in BATT. That’s not as material as in the China ETFs, but CATL is the third-largest holding here, behind only Tesla and BHP Group. BATT is more globally diversified beyond China and is the better play in terms of exposure to the battery technology theme. China is still the top geography with 24% of BATT’s assets, but Australia, the United States, and South Korea get significant weight. BATT has an expense ratio of 0.59%.

KraneShares Electric Vehicles & Future Mobility Index ETF (KARS)

  • CATL as a % of assets: 4%

KARS provides exposure to companies that make electric cars and their components. It’s a little different from BATT in that it focuses on the entire electric vehicle ecosystem, not just battery manufacturers, such as CATL. The stock still resides in the fund’s top ten holdings at 4.2% of total assets.

Besides battery technology, KARS invests in hydrogen fuel cell development, electric vehicle and EV component manufacturers, vehicle connectivity, charging, and raw materials. It manages nearly $250 million and charges 0.70% annually.

There are two primary ways to gain CATL stock exposure from an ETF. You can target a China ETF or a battery-themed ETF. A China ETF, such as CNXT, will give you a greater relative investment in CATL stock. An ETF focused on the battery and EV sectors will do better at targeting the clean energy theme.

🔔 Looking for battery stocks that are easier to invest in? Check out the full list of EV battery stocks.

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

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