A mid‑January announcement by Rongbai Technology — a materials maker best known for high‑nickel cathodes — promised to supply 3.05 million tonnes of lithium‑iron‑phosphate (LFP) cathode material to battery giant CATL between 2026 and 2031, and put a headline figure on the deal of “more than RMB120 billion.” The market reacted immediately: Rongbai shares rose and the company’s market value ticked up, only for regulators and the counterparty to swiftly puncture the story.
Within hours the Shanghai Stock Exchange queried why the agreement text carried no monetary clause and where the RMB120 billion number had come from. CATL, the supposed buyer named in the deal, waited two days before issuing a terse clarification that the document was a non‑binding letter of intent that had not passed internal approval and did not represent firm orders.
Regulatory pressure escalated on 18 January when China’s securities regulator announced a formal investigation into Rongbai for allegedly making misleading statements. Rongbai subsequently told the exchange that the “RMB120 billion” figure was an estimate derived from multiplying 3.05 million tonnes by a projected price; it conceded the amount was contingent on raw material prices, delivery schedules and other variables and carried no contractual or legal obligation.
The episode exposed a stark mismatch between rhetoric and reality. Rongbai’s actual LFP capacity is modest: the company only recently acquired a plant with annual nameplate capacity of 60,000 tonnes, a fraction of the roughly 508,000 tonnes per year required to meet the six‑year supply target. To bridge that gap would demand roughly a tenfold capacity expansion and, by the company’s own industry‑standard math, at least about RMB8 billion in new investment — details neither spelled out in the announcement nor accounted for in subsequent disclosures.
The timing and tone of the disclosure also flagged corporate‑governance weaknesses. Rongbai said the release was circulated and approved by the company secretary without sign‑off from the chairman or the formal internal review procedures normally required for major contracts, suggesting lapses in both information control and board oversight.
For CATL the episode is an awkward reminder that being the anchor of an industry ecosystem carries reputational risks. The battery giant routinely signs non‑binding framework agreements with suppliers, carmakers and state energy firms as a strategic posture; in 2025 alone it reportedly entered nearly 20 such memorandums. When counterparties convert flexible, intent‑based language into headline orders without clear joint statements, the resulting market noise can cultivate speculation that benefits smaller partners at the expense of investor clarity.
More broadly, this affair says something about the Chinese battery sector’s current moment. LFP has moved from niche to mainstream as EV makers chase lower costs and longer life cycles, but capacity has been ramping fast and prices are under downward pressure. In that environment, fuzzy “strategic cooperation” announcements can be used to claim future offtake and shore up valuations, even where delivery economics and financing remain unresolved.
Regulators’ rapid intervention signals lower tolerance for such messaging. The CSRC’s formal inquiry and the exchange’s probing letter are likely to make issuers more cautious and could prompt clearer rules on how non‑binding memorandums are disclosed. For Atlantic and Asian investors watching China’s battery supply chain, the episode is a timely caution: headline numbers can be seductive, but the substance — capacity, capital and legally binding contracts — matters far more.