CATL Shares Hit 6-Month Low on Partial Hungary Plant Suspension Over Safety Issues

Shares of Contemporary Amperex Technology Co., Limited (CATL) fell sharply on Wednesday after Hungarian regulators ordered a partial suspension of operations at its key factory in Debrecen, raising concerns about the timeline for mass production at the facility.

Regulatory Action

The government office of Hungary's Hajdú-Bihar County ordered a halt to work in three areas of the plant until safety issues are resolved, according to a report by Caixin. The order came after CATL self-reported that nine workers were found to have elevated levels of nickel exposure during routine biological monitoring.

A subsequent occupational safety inspection by Hungarian authorities found that protective equipment in the affected areas was inadequate. The suspension impacts facilities for laser cutting of positive and negative electrode foils, electrode winding, and cell drying. CATL stated it is still investigating the specific source of the exposure and has suspended the commissioning of related equipment while implementing stricter safety protocols.

Market Impact

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Investor concerns over potential delays to a crucial European expansion project sent CATL's Hong Kong-listed shares down 4.1% to HK$568.00, their lowest point since March 10. The decline was significantly steeper than the broader Hang Seng Index, which fell approximately 0.9% during the same period.

Project Background

The Debrecen plant is a cornerstone of CATL's global strategy, representing a €7.34 billion investment announced in 2022. The facility is planned to have an annual capacity of 100 GWh for producing battery cells and modules for the European automotive market.

The plant has not yet formally started mass production of battery cells and is currently in the equipment commissioning and trial production phase. While module production has already begun on-site, the halt affects key steps in the cell manufacturing process. According to the Caixin report, citing Hungarian authorities, equipment testing is permitted to continue despite the partial suspension.