GF Securities released a research report stating that stable growth in domestic passenger vehicles and rapid penetration of commercial vehicles, coupled with overseas new model cycles, have driven demand beyond expectations. The 30% threshold is currently the critical growth rate for supply-demand balance in the lithium battery industry. Projections indicate that total lithium battery demand will reach 2,495GWh in 2026, up 28% year-on-year from 1,944GWh in 2025. The firm is optimistic that both power and energy storage demand will jointly drive a reversal in the lithium battery cycle, presenting new development opportunities for batteries and materials. Key views from GF Securities are as follows:
**Power Batteries**: - **China**: High demand growth in 2025 due to pre-policy installations, followed by steady passenger vehicle growth and rapid commercial vehicle penetration in 2026, with increased battery capacity per vehicle contributing to additional growth. - **U.S.**: Demand suppressed in 2025 due to policy adjustments under the Inflation Reduction Act and FEOC rules, with growth expected to slow in 2026. - **Europe**: Accelerated electrification rates in 2025, driven by carbon emission regulations and new model cycles in 2026. - **Other Regions**: Policy incentives are boosting electrification rates. GF Securities estimates global power battery demand at 1,253.4GWh, 1,520.5GWh, and 1,834.2GWh for 2025-2027, with year-on-year growth rates of 26%, 21%, and 21%, respectively.
**Energy Storage**: - **China**: Capacity pricing policies and accelerated spot market development are driving rapid growth in large-scale storage demand. - **U.S.**: Pending policy details, but data center storage deployments may provide incremental demand. - **Europe**: Frequent negative electricity prices and urgent flexibility needs are expected to accelerate large-scale storage development. - **Other Regions**: Overseas energy storage orders from Chinese firms are growing rapidly. Improved economics for domestic projects and cost-competitive overseas storage solutions are unlocking long-term growth potential. Global energy storage installations are projected at 279GWh, 423GWh, and 563GWh for 2025-2027, with year-on-year growth of 44%, 52%, and 33%, respectively. Battery shipments for energy storage are forecasted at 544GWh, 824GWh, and 1,098GWh over the same period, up 73%, 52%, and 33% year-on-year.
**Supply**: Tight supply-demand balance is expected in 2026, with potential profit recovery in the industry. Leading players face weak profitability and limited expansion willingness, while rising material prices during peak demand seasons suggest tightening supply. GF Securities highlights 30% as the critical growth threshold for lithium battery supply-demand equilibrium. If demand growth exceeds this level, supply shortages could emerge quickly.
**Solid-State Batteries**: - **Electrolytes**: Lithium sulfide currently accounts for 77-80% of sulfide electrolyte costs. Long-term cost advantages from raw materials may diminish with expanded production and self-supply, while alternative synthesis methods offer greater cost reduction potential. - **Anodes**: Lithium metal anodes significantly enhance energy density and are already used in some solid-state batteries. Anode-free technology, a specialized form of lithium metal anodes, could further reduce costs and improve efficiency.
**Risks**: Potential downside risks include weaker-than-expected NEV sales, sharper-than-expected midstream price declines, slower-than-anticipated technological upgrades, and delays in production ramp-ups.
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