China's EV battery giant CATL is eyeing a stake in DeepSeek's $7.36 billion funding round, which could close in June and reshape China's AI stack.
CATL, the world's largest EV battery manufacturer, is in talks to invest in DeepSeek, the Chinese AI lab whose low-cost R1 model rattled global markets in early 2025. News.az, citing The Information, reported the development Friday, sourcing two people with knowledge of the discussions.
The funding round targets 50 billion yuan, roughly $7.36 billion, with a potential close as early as June. A fully subscribed raise at that level would push DeepSeek's valuation above 350 billion yuan. JD.com and NetEase are also said to be in discussions for equity stakes, though the investor lineup and deal terms remain fluid.
For CATL, the rationale extends beyond a financial bet. The battery maker has been positioning itself as a power infrastructure supplier to AI data centers, selling high-density energy systems to operators under pressure from surging GPU workloads. A stake in DeepSeek would give CATL a direct commercial relationship at one of China's most prominent AI labs, along with a window into where hardware requirements are heading next.
The coordination angle
DeepSeek's latest release sharpens that picture. The company said its V4 model has been optimized for inference on Huawei's Ascend 950PR chips, underscoring a deliberate push to pair frontier artificial intelligence software with domestically manufactured silicon. As US export controls continue to restrict Nvidia's most advanced GPUs from Chinese buyers, software-hardware co-optimization is accelerating on the Chinese side. That dynamic is drawing close scrutiny from engineers and policymakers, given what it implies for the actual effectiveness of chip restrictions.
R1 was the catalyst. Released in January 2025, DeepSeek's open-source model claimed performance comparable to leading US systems at a fraction of the training cost, briefly wiping tens of billions off Nvidia's market cap and triggering a broader reassessment of AI infrastructure economics. That the lab is now pursuing a $7.36 billion raise, and attracting a battery conglomerate as a prospective anchor investor, shows how quickly that initial shock converted into commercial momentum.
The infrastructure pressure
Beyond DeepSeek itself, CATL's move reflects a wider scramble for AI infrastructure exposure. SiliconAngle reported this week that serverless compute startup Modal Labs raised $355 million in a round led by Redpoint Ventures and General Catalyst, vaulting its valuation from $1.1 billion to $4.65 billion in under eight months. One of Modal's co-founders attributed the surge to rapid enterprise adoption of AI coding tools driving demand for execution infrastructure.
Power is the underlying constraint tying these stories together. Running large-scale AI inference requires reliable, high-density energy delivery, which is precisely what battery companies know how to engineer. CATL's interest in DeepSeek is partly strategic positioning for its energy business, not solely a wager on the lab's model capabilities.
The broader AI industry is wrestling with a parallel tension around monetization. Digital Watch Observatory noted earlier this year that OpenAI launched a lower-cost ChatGPT Go subscription tier to broaden access without resorting to advertising, a revenue model CEO Sam Altman has called a last resort. DeepSeek has taken a different path: open-source distribution builds ecosystem reach but defers direct revenue. A raise of this size would give it years of runway to sustain that approach.
Enterprise adoption is accelerating on every front. Yahoo Finance reported this week that Anthropic's Claude is expanding across corporate finance, with PwC and KPMG announcing major deployments and Anthropic launching dedicated financial services agents in May. The race for AI platform dominance is intensifying across sectors far removed from battery manufacturing.
Whether CATL finalizes its position depends on negotiations that are not yet complete. But the combination of industrial capital, frontier AI software, and chip optimization for domestic hardware illustrates how China's AI stack is assembling itself in ways that sidestep Western supply chains. The June close date, if it holds, will be an early test of whether that coalition can attract the capital its ambitions require.
Frequently asked questions
What is CATL's strategic interest in DeepSeek?
CATL supplies high-density power systems to AI data centers and sees an equity stake in DeepSeek as a way to build direct relationships with leading AI labs while expanding its energy infrastructure business beyond batteries.
What valuation would DeepSeek reach after the round?
The funding round targets 50 billion yuan, roughly $7.36 billion. If completed, it would push DeepSeek's valuation above 350 billion yuan, placing it among China's most valuable AI companies.
Why does DeepSeek's V4 chip optimization matter?
Optimizing V4 for Huawei's Ascend 950PR chips demonstrates China's ability to build capable AI systems without Nvidia hardware, raising questions about whether US export controls are achieving their intended effect on Chinese AI development.
Who else is reportedly participating in the round?
JD.com and NetEase are also said to be in discussions for equity stakes, but no investments have been finalized and the final participant list remains subject to change, according to The Information's sources.