I was somewhat astonished to see the first-quarter report card of Contemporary Amperex Technology Co., Limited (CATL) in the evening.

On April 20th, CATL released its performance report, showing that the operating income for the first quarter was 89.038 billion yuan, a year-on-year increase of 82.91%, and the net profit attributable to shareholders of the listed company was 8.291 billion yuan, a year-on-year increase of 557.97%; the net profit after deducting non-recurring gains and losses was 7.8 billion yuan, a year-on-year increase of 698.35%!

This is somewhat inconsistent with the company's continuously falling stock price. It should be noted that since the end of January this year, the stock price of CATL has fallen by more than 24% at its maximum, and since the end of 2021, the stock price of CATL has fallen by 49% at its maximum. Of course, the decline of the new energy vehicle industry chain this time is also due to macroeconomic factors, not all industry issues.

It should be noted that since the end of 2021, the decline of the new energy vehicle sector has not only caused heavy losses to investors but also made securities analysts feel ashamed.

So, the question arises, has CATL delivered such an excellent answer, and is the new energy vehicle sector being mistakenly killed by the market?

Let's look at the situation of EVE Energy. According to the company's forecast on April 9th, it is expected that the operating income for the first quarter of 2023 will increase by 60%, and the net profit after deducting non-recurring gains and losses will increase by 30%-50%!

Although the key indicators are not as dazzling as CATL, the two giants of the power battery industry both maintained a strong growth momentum in the first quarter of 2023, which seems to be extremely inconsistent with the previous decline in stock prices.

An important reason is that since the end of 2019, the increase in the sector has been too large, and overvaluation is a hard injury. What is more critical is that there has been a significant differentiation in the upstream, midstream, and downstream of the industry chain, and the decline is rational.

Since 2023, the performance of the new energy vehicle sector has been relatively weak, which is related to the price reduction and promotion of whole vehicle companies. This is the direct reason for investors not to be optimistic about the sector. Whole vehicle companies, obviously, do not look as optimistic as power battery companies.

Warren Buffett, the "Oracle of Omaha," has repeatedly reduced his holdings in BYD, which is a typical case.Tesla's news indicates that in the first quarter of 2023, the company's operating revenue increased by 24%, while net profit decreased by 24%. Price reductions and promotions are eroding the profits of new energy vehicle manufacturers.

Tesla CEO Elon Musk stated that Tesla's orders exceed production, and the time has come to sell cars in more global markets. It is best to ship in large quantities at lower prices.

"Low profit, high volume" has become the consensus among global vehicle manufacturers in 2023.

Musk did not reveal his true thoughts. Tesla's "price reduction promotion" strategy appears to aim to increase sales to compete with rivals, but in reality, it is due to the sluggish world economy and insufficient consumption in 2023. Tesla wants to continue to open up the market and must pay the price of sacrificing its own profits.

Of course, for now, it has not reached the point where overall market demand begins to shrink. Once it reaches that point, the desire for survival among vehicle manufacturers will be even stronger, and price will be secondary.

Looking at the strategies of new energy vehicle manufacturers, price reduction marketing and exchanging volume for price, power battery companies are still the beneficiaries.

The good news for power battery companies is not limited to this. In addition to the factor of new energy vehicle manufacturers selling at reduced prices to rush sales, upstream raw material prices have also seen a significant decline. The decline in lithium carbonate prices has been a focus of market attention in recent months. The latest data shows that battery-grade lithium carbonate has fallen to 178,500 yuan/ton, with a cumulative decline of over 65% so far this year.

The continuous decline in lithium carbonate prices is also an important factor causing the continuous downward trend in the stock prices of the new energy vehicle sector, which is also an important reason for the performance improvement of midstream power battery companies.

The question then arises, downstream is promoting price reductions and exchanging volume for price, and the upstream price decline seems a bit unreasonable, right?

The decline in lithium carbonate prices may be related to stockpiling in the past few years. The underlying logic of speculation is expectation. Once the market expects that lithium carbonate production capacity will exceed demand, market prices will experience irrational declines.In other words, the overheated new energy vehicle industry chain in the past few years has been temporarily cooled down by the market. Overall, the new energy vehicle industry chain also has opportunities at present, but they are not systematic opportunities, but structural opportunities.