On January 6, GGII released its top ten predictions for China's new energy battery industry in 2026. It is projected that China's total lithium battery shipments will grow by nearly 30% year-on-year to exceed 2.3 TWh in 2026. Among these, energy storage lithium battery shipments are expected to surpass 850 GWh, with a growth rate potentially exceeding 35%. Power battery shipments, including those for passenger and commercial vehicles, are forecast to exceed 1.3 TWh, growing over 20%, with the absolute incremental growth of the energy storage market anticipated to surpass that of the power battery market for the first time.
Reflecting on 2025, the lithium battery industry experienced a strong recovery following a deep correction, forming a matrix of key themes centered on "supply-demand mismatch, anti-involution, energy storage explosion, technological iteration, a new round of industry capacity expansion, full production and sales, accelerated overseas expansion, and competing on value." The logic driving this round of industry growth has undergone a profound reshaping compared to the period around 2020, and this trend is expected to continue beyond 2027.
In 2025, orders continued to concentrate towards leading enterprises, frequently causing capacity shortages at major manufacturers, while small and medium-sized enterprises experienced some idle capacity; supply-demand mismatch became the core industry contradiction. Against this backdrop, the effectiveness of "anti-involution" actions, driven by policy and industry coordination, became apparent. Industry capacity expansion is no longer blind but is instead concentrated among leading enterprises with technological and scale advantages.
This trend is expected to persist throughout 2026. Key segments such as the electrolyte industry chain, negative electrode materials, wet-process separators, phosphate-based material chains, and battery cells are anticipated to remain in a state of tight supply. The industry is formally entering a value-return cycle shifting from emotion-driven to rationality-dominated dynamics.
Based on tracking the new energy battery industry over the past year, GGII predicts the following trends for China's new energy battery market in 2026: Energy storage, overseas expansion, and commercial vehicles will become key growth engines, with lithium battery shipment scale expected to exceed 2.3 TWh.
China's total lithium battery shipments are projected to grow nearly 30% year-on-year to over 2.3 TWh in 2026. Energy storage lithium battery shipments are forecast to break 850 GWh, with growth potentially surpassing 35%. Power battery shipments are expected to exceed 1.3 TWh, growing over 20%, with the energy storage market's absolute growth increment likely to outpace power batteries for the first time.
The domestic independent energy storage market achieved growth exceeding expectations, coupled with capacity tariff subsidy policies introduced in many regions, boosting the internal rate of return for energy storage power stations. Increased demand for large-scale storage and commercial/industrial storage in Europe, along with demand from data center energy storage allocations in the US, are key factors driving domestic energy storage demand growth.
In the power sector, growth is primarily driven by the increase in new energy vehicles, rising battery capacity per vehicle, and growth in new energy commercial vehicles. The penetration rate of new energy commercial vehicles in China increased from 20.38% in 2024 to 25.7% from January to November 2025, with the single-month penetration rate reaching 33.9% in November. Driven by policies like vehicle replacement subsidies, the penetration rate continues to rise rapidly, with expectations for it to exceed 40% in some segments by 2026.
Sales of domestic new energy heavy-duty trucks are projected to grow from 210,000 units in 2025 to over 350,000 units in 2026. Their battery capacity is an order of magnitude higher than plug-in hybrid passenger vehicles, with mainstream capacities reaching 400-600 kWh, effectively boosting power battery demand by over 100 GWh.
In other segments, lithium battery shipments for construction machinery grew from approximately 14 GWh in 2024 to 24 GWh in 2025, and are expected to increase to 35 GWh in 2026. This is mainly benefiting from the retirement and replacement of old equipment and the advancement of major investment projects, with new energy substitution becoming an industry consensus.
Overseas markets are becoming a new growth pole. China's new energy vehicle exports are expected to approach 4 million units in 2026, a year-on-year increase of over 50%. Regarding vehicle exports, as overseas production capacities like BYD's Hungary factory, Chery's Spain factory, and Great Wall's Brazil factory successively commence operations, China's overseas automobile production scale is expected to triple to 900,000 vehicles, corresponding to a power battery demand exceeding 35 GWh. For battery exports, the capacity of overseas bases of Chinese lithium battery enterprises is expected to exceed 100 GWh, with accelerated release of overseas battery capacity leading to annual shipments potentially surpassing 40 GWh.
The tight supply-demand situation in the lithium battery industry is expected to continue in 2026, with TOP10 cell manufacturers and leading producers of phosphate-based cathode materials, anodes, separators, and upstream electrolytes basically maintaining full production.
On the supply side, influenced by "anti-involution" policy controls, industry capacity expansion has returned to rationality. Although new bidding orders in the industry are projected to increase by over 30% year-on-year in 2026, most of this capacity will gradually come online in 2027-2028, making it difficult for new capacity to fully bridge the supply-demand gap in the short term. On the demand side, multiple drivers including energy storage, commercial vehicles, and exports create rigid demand support.
In key material segments, leading enterprises dominate the market with technological and scale advantages, while long-tail capacity is accelerating its exit. For instance, leading lithium iron phosphate enterprises face capacity shortages, and high-end anode products experience supply-demand gaps, further intensifying the industry's tight balance.
Since 2025, China's lithium battery industry chain has entered a "third round" of capacity expansion. Based on equipment bidding situations and battery manufacturer plans, it is estimated that China will add over 700 GWh of effective new lithium battery capacity in 2026. This expansion is primarily concentrated among leading power and storage TOP10 enterprises such as CATL, BYD, CALB, Haichen, Eve Energy, REPT BATTERO, and Chuno New Energy, as well as some solid-state and sodium-ion battery companies.
Concurrently in 2026, overseas capacity of leading enterprises will see increased release. This capacity expansion will directly drive the lithium battery equipment market size to grow by over 65 billion yuan, with strong demand for equipment like coating machines, stacking machines, and formation & grading systems.
Driven by industry supply tightness and cost transmission from upstream material price increases, the lithium battery industry chain is expected to experience both volume and price increases in 2026. The annual average price of battery-grade lithium carbonate is anticipated to stabilize above 120,000 yuan/ton, with periodic highs potentially breaking 15,000 yuan/ton. Chinese lithium battery demand for lithium salts is growing over 25%, while supply-side expansion is slowing and destocking continues, making it difficult to fully meet the high-growth demand and providing support for price increases.
Copper foil prices are expected to exceed 120,000 yuan/ton. Rising copper prices increase the cost of lithium battery copper foil, while the supply-demand balance for high-end copper foil is turning tight. Copper foil processing fees are projected to rise by over 1,000 yuan/ton in 2026, further supporting price increases.
Electrolyte prices, pushed by tight supply-demand for upstream materials like lithium hexafluorophosphate and VC/FEC, surged over 70% in 2025. With limited new capacity for upstream additives in the first half of 2026, combined with cost transmission from lithium carbonate price hikes, mid-range electrolyte prices are expected to continue increasing by 10%-20%. Rising raw material costs will drive up energy storage cell prices, with an estimated increase exceeding 5%.
The number of small and medium-sized enterprises engaged in OEM/contract manufacturing within the lithium battery industry chain is expected to increase significantly in 2026, particularly in areas like cells, phosphate materials, and anode materials. A competitive situation where major manufacturers "scramble for contract factory capacity" is likely to emerge.
The core contradiction lies in the imbalance between leading enterprises' capacity shortages and constraints on expansion. On one hand, leading enterprises have ample orders, but building new bases is costly and time-consuming, making rapid capacity release difficult in the short term. On the other hand, acquiring SMEs requires substantial investment, offers low cost-effectiveness, and involves technical integration challenges. Meanwhile, recently established SMEs, affected by industry polarization, suffer from order shortages leading to significant idle production lines, possessing the capacity foundation for contract manufacturing.
This supply-demand mismatch is driving leading enterprises and SMEs to form OEM partnerships, which addresses the short-term capacity gap for leaders and provides survival space for SMEs, creating a temporary industrial collaboration pattern.
Semi-solid-state battery shipments are projected to exceed 15 GWh in 2026. Key drivers include: 1) The accelerated establishment of pilot lines and early mass production lines in 2026, such as GAC Group's all-solid-state battery production line and Qing Tao Energy's energy storage demonstration project, laying the capacity foundation for shipment breakthroughs. 2) Performance improvements, with ongoing breakthroughs in core materials and processes for solid-state batteries enhancing product stability and energy density. Mass-produced products in 2025 already achieved energy densities of 400 Wh/kg, a significant improvement over the sub-350 Wh/kg levels prior to 2024.
Market growth speed remains uncertain. Challenges include difficulty controlling consistency in oxide and polymer routes, directly impacting product yield and delivery stability. Furthermore, current solid-state battery applications are largely limited to markets below 50Ah, such as small devices like drones, and remain difficult to apply in high-capacity scenarios like power batteries. All-solid-state lithium batteries will enter an intensive road-testing phase but are unlikely to achieve批量随车上市 within the year, hindered by technical bottlenecks, immature specialized materials and equipment systems, and high costs.
Amid surging demand and returning profits, a wave of IPO applications from lithium battery industry chain companies is anticipated in 2026. Leaders in segments like materials, equipment, energy storage integration, and solid-state batteries are expected to benefit first.
Among material companies, the supply-demand gap for high-end products like high-voltage fast-charge LFP cathodes, silicon-based anodes, and ultra-thin wet-process separators is widening. Leading companies with technological advantages and strong customer relationships are expected to accelerate their IPO processes, with fundraising aimed at high-end capacity and overseas expansion. Lithium carbonate companies, benefiting from industry inventory reduction and rising price centers, particularly resource-based firms with lithium mine resources and strong cost control, will see significantly increased willingness and feasibility to restart IPOs.
Equipment companies will benefit from recovering expansion demand from battery plants and stabilizing equipment prices. Firms focusing on semi-solid/all-solid-state battery equipment and AI quality inspection equipment, with their strong bargaining power, are expected to be core candidates for IPO applications. Energy storage integration and supporting companies, riding the wave of explosive growth in domestic and international energy storage markets, are transitioning from a "low-price bidding" to a "technology + service premium" profit model. Companies with integrated capabilities and overseas project experience are expected to see significantly improved IPO success rates. Solid-state battery companies are reaching a critical node for the scaled mass production of semi-solid-state batteries, and those with mass production capabilities and downstream customer validation are also expected to pursue IPOs in 2026.
China's sodium-ion battery shipments are projected to exceed 10 GWh in 2026, more than doubling year-on-year. This growth is driven by: 1) Collective price increases for main lithium battery materials in 2026, potentially reducing sodium battery cell costs below 0.4 yuan/Wh, enhancing their cost-effectiveness for applications like energy storage where energy density is less critical. 2) Compensating for specific performance shortcomings of lithium batteries, such as cycle degradation in low temperatures. To overcome limitations for new energy vehicles in northern markets, sodium batteries, with their excellent wide-temperature performance, are poised to become a major growth driver in northern power markets. 3) Accelerated布局 by leading companies. CATL announced plans for large-scale sodium battery application in 2026 across battery swapping, passenger vehicles, commercial vehicles, and energy storage. Haichen Energy Storage and Eve Energy have both announced sodium battery application solutions for AIDC scenarios and are building related capacity.
Technologically, NFPP sodium-ion batteries are expected to capture over 80% market share. NFPP batteries hold comprehensive advantages in cycle stability, cost control, and process maturity, making them better suited for mainstream applications like low-speed vehicles and energy storage. Furthermore, leading battery companies have deeper布局 in the NFPP route. Whether sodium batteries can突破百GWh规模 by 2030 depends critically on breakthroughs in anode-free technology by 2026. Success could enable timely achievement of the goal, otherwise, competitiveness improvements in energy density and cost may be limited, leading to delays.
China's large cylindrical battery shipments are expected to achieve over 50% year-on-year growth in 2026, exceeding 45 GWh, with the energy storage segment being a key driver. Reasons for high growth include: 1) Substitution demand in residential storage products: The residential storage market faced structural shortages of 100Ah prismatic cells in 2025. Large cylindrical batteries, with their performance suitability, became a solution to this "core shortage," while their low cost and high safety advantages made them a key reason for integrators to switch orders. This high-growth trend is expected to continue in 2026. 2) Rapid capacity release ensuring supply: Domestic capacity for 32-series and larger cylindrical batteries accelerated in 2025, with capacity expected to exceed 100 GWh in 2026. Leading and second/third-tier manufacturers have differentiated strategies. Leaders like CATL and Eve Energy focus capacity on passenger vehicles, while companies like Penghui, Chuangming, and Lihua focus on residential storage and other niches, delivering in bulk to overseas customers in Europe and Australia. The resonance between capacity release and overseas demand growth provides the foundation for shipments to突破45GWh.
The application share of CVD silicon-based composite anode materials in the 3C digital battery market is expected to exceed 50% in 2026, driving CVD silicon-carbon anode shipments to the 5,000-ton level and marking the industry's entry into an explosive growth period. This is primarily due to continuously increasing demands for battery energy density and thinness/lightness in 3C digital products, where traditional graphite anodes are approaching their theoretical capacity limit. Silicon-carbon composite anodes can significantly enhance battery energy density, aligning with the development needs of thin, high-energy 3C products.
Vehicle models equipped with CVD silicon-carbon anodes are expected to launch in 2026, potentially pushing power battery system energy density above 250 Wh/kg. However, process technology remains the core bottleneck limiting its large-scale application in power batteries, as issues like poor consistency in CVD processes have not been fully resolved.
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