On April 9, relevant departments of the Ministry of Industry and Information Technology, the National Development and Reform Commission, the State Administration for Market Regulation, and the National Energy Administration jointly held a symposium with companies in the power and energy storage battery industry to discuss measures for regulating market competition. The meeting emphasized the importance and urgency of addressing "cutthroat" competition, calling for a firm rejection of unreasonable and unfair competitive practices to maintain a healthy and orderly market environment. Discussions also covered a negative behavior list related to irrational competition within the power and energy storage battery sector.
In the past two years, the energy storage industry has been embroiled in a price war. System quotations have halved from over RMB 1 per watt-hour to around RMB 0.5. Driven by policies mandating energy storage allocation, a large number of companies entered the market, making price the primary competitive tool. By the first half of 2025, the average gross margin in the energy storage industry had dropped to 16.3% from 28% in 2022, reflecting a paradox of "volume growth but profit decline." Net profit margins for leading companies generally fell below 3%, with some firms barely sustaining operations through subsidies, leading to an abnormal situation where increased installation capacity resulted in greater losses.
With the end of the mandatory energy storage allocation era under Document No. 136, the industry has shifted from being policy-driven to market-driven. In mid-2025, battery-grade lithium carbonate prices bottomed out at approximately RMB 60,000 per ton before staging a strong rebound, reaching RMB 130,000 per ton by the end of the year. Since the beginning of this year, prices have fluctuated around RMB 150,000 per ton, climbing to nearly RMB 170,000 per ton by the end of March—a surge of over 160% from the 2025 low.
In January 2026, the Ministry of Finance and the State Taxation Administration announced that the value-added tax export rebate rate for battery products would be reduced from 9% to 6% effective April 1, 2026, through December 31, 2026, with a complete elimination scheduled for January 1, 2027. Rising raw material costs, coupled with the gradual phasing out of export tax rebates, have significantly increased costs across the energy storage industry chain.
The V-shaped recovery in raw material prices has forced companies to reassess their pricing strategies. In 2026, an increasing number of energy storage contracts have moved away from fixed pricing, adopting instead formula-based pricing linked to lithium price indices. When lithium carbonate price fluctuations exceed a certain threshold, system selling prices are automatically adjusted, protecting integrators while enabling downstream customers to understand and accept the changes.
Industry experts suggest that as China's power market mechanisms improve and strong regulatory policies against cutthroat competition take effect, combined with a greater focus on the full lifecycle value of products and active expansion into high-value overseas markets, the energy storage sector is approaching a critical turning point for restructuring. A significant improvement in the industry's profitability environment is anticipated in the second half of the year.
Caixin Securities believes that while global power battery shipments grew rapidly in 2025, growth is expected to slow in 2026. In contrast, demand for energy storage batteries is projected to continue increasing, becoming a key driver of overall battery demand growth. Lithium iron phosphate (LFP) is the dominant chemistry for energy storage batteries, and companies within the LFP battery industry chain are expected to benefit substantially.
Industrial Securities notes that multiple favorable factors are converging to sustain positive momentum in the energy storage segment. First, the implementation of capacity-based electricity pricing policies will enable the industry to accelerate growth in 2026, supported by policy tailwinds, rigid demand, and improved economics. Second, ongoing geopolitical tensions in the Middle East have disrupted global energy supplies, increasing volatility in European natural gas prices and accelerating regional demand for energy independence—potentially reigniting strong growth in the European energy storage market. Third, numerous countries worldwide have introduced policies to support residential energy storage, while commercial and industrial energy storage is also in a phase of expansion, suggesting sustained high growth throughout 2026. Fourth, as a core component of future energy systems, energy storage is becoming essential for ensuring the stable operation of AI data centers amid their large-scale development.
Relevant concept stocks: CATL (03750) specializes in the research, development, production, and sales of power battery and energy storage battery systems. It has maintained the world's leading market share in both segments for multiple consecutive years. In 2025, the company reported total revenue of RMB 423.702 billion, a year-on-year increase of 17%, and net profit of RMB 72.2 billion, up 42%.
Ganfeng Lithium Group (01772) reported revenue of approximately RMB 23.082 billion in 2025, a year-on-year increase of 22.08%. Net profit attributable to shareholders was about RMB 1.613 billion, turning a profit compared to a loss in the previous year. Basic earnings per share were RMB 0.8, with a proposed cash dividend of RMB 1.5 per 10 shares (tax inclusive).
Tianqi Lithium Corporation (09696) recorded revenue of RMB 10.322 billion in 2025, a decrease of 20.78% year-on-year. Profit attributable to equity shareholders was RMB 458 million, representing a turnaround from a loss. Earnings per share were RMB 0.28.
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