The lithium battery industry is currently navigating a complex landscape of outward prosperity coupled with underlying pressures. Having emerged from a downturn only in the second half of last year, companies are now simultaneously grappling with an ongoing price war and a relentless rush to expand production capacity, which has significantly strained corporate cash flows.
On July 3rd, two major industry players, Gotion High-Tech Co.,Ltd. (002074.SZ) and Eve Energy Co.,Ltd. (300014.SZ), both announced asset disposal plans on the same day, aiming to raise funds through the sale or planned reduction of their holdings in listed companies. Both firms cited the need to optimize their asset structures and meet funding requirements.
Raising Funds Through Equity Sales
According to Gotion's announcement, its wholly-owned subsidiary Hefei Gotion sold a total of 8.3995 million shares of Tongguan Copper Foil (301217.SZ) through centralized bidding transactions in the first half of 2026, generating total proceeds of 829 million yuan (including transaction fees). The gains from this transaction accounted for over 10% of Gotion's net profit from the previous fiscal year.
However, Gotion has not fully divested its position. As of the announcement date, Hefei Gotion still holds 10.5316 million shares of Tongguan Copper Foil, representing a 1.27% stake.
Tongguan Copper Foil is a state-owned enterprise platform controlled by Tongling Nonferrous Metals Group under the Anhui Provincial SASAC. As of Q1 2026, Tongling Nonferrous directly held a 72.38% stake, making it the controlling shareholder, with the Anhui SASAC as the ultimate controller. Hefei Gotion became a strategic secondary shareholder in 2020, initially holding a 3.5% stake. Tongguan Copper Foil is also a key supplier of lithium battery copper foil, serving as an upstream partner in Gotion's supply chain.
Notably, the timing of Gotion's share sales in the first half of the year may not have been optimal, potentially missing out on significantly higher gains. Driven by factors such as AI computing themes and recovering demand for new energy vehicles and energy storage, Tongguan Copper Foil's stock price surged this year, peaking at 202.15 yuan in mid-June, with a year-to-date gain of nearly 400%. As of July 3rd's close, the stock price was 154.63 yuan, giving the company a market capitalization of approximately 128.191 billion yuan. Hefei Gotion's average selling price was less than 99 yuan per share.
On the same day, Eve Energy announced a plan to reduce its stake in a portfolio company. The company's board approved a proposal authorizing the chairman to divest up to 3.5% of the shares in Smoore International (06969.HK) held by its wholly-owned subsidiary EBIL within one year, involving approximately 217 million shares. The divestment methods include centralized bidding and block trades.
Smoore International, which started as an OEM/ODM manufacturer for overseas e-cigarettes, now focuses on atomization devices. Eve Energy is its second-largest shareholder, an investment that began in 2014 when Eve spent 439 million yuan to acquire a 50.1% stake in Smoore's predecessor, Mcwell. Despite subsequent dilution and partial sales, Eve retains a significant holding.
Smoore International concurrently disclosed the matter. As of July 3rd, EBIL holds approximately 1.874 billion shares, representing about 30.25% of the company's issued share capital. Smoore's non-executive director, Jiang Min, also serves as a board director, board secretary, vice president, and CFO of Eve Energy. Smoore's announcement stated that if Eve completes the sale of the new 3.5% stake, it would no longer be the company's controlling shareholder.
Interestingly, Smoore International listed on the Hong Kong stock exchange in July 2020 at an IPO price of HK$12.4. Its stock price surged to a historical peak of HK$89.06 in mid-2021, pushing its market cap above HK$500 billion. Subsequently, impacted by tightening domestic e-cigarette regulations, the implementation of consumption taxes, and intensified overseas competition, its performance weakened, and its stock price declined for three consecutive years, hitting a low near HK$4.5 in early 2024, representing a drop of over 90% from its peak.
The stock is currently in a slow recovery phase. As of July 3rd's close, Smoore's share price was HK$7.87. At this price, Eve Energy's stake in Smoore is worth approximately HK$14.75 billion. A rough estimate based on the July 3rd closing price values the planned 3.5% stake sale at around HK$1.707 billion.
Gearing Up for the Next Round of Competition
Regarding the purpose of the asset sales, Gotion stated in its announcement that the transaction was primarily to adjust its asset structure, enhance asset liquidity and efficiency, and meet the funding needs for its operational development. It asserted that the transaction does not harm the interests of the company or its shareholders, particularly minority shareholders.
Eve Energy similarly mentioned that the transaction is a prudent decision based on its own operational development needs. It aims to help the company focus on its core business, optimize its asset structure, and meet funding requirements for R&D platform construction and investment. The exact impact on the company's performance cannot be accurately estimated at this time and will be subject to confirmation by auditors in the annual audit.
Eve Energy also disclosed on the same day that its subsidiaries, Eve Power and Jingmen Chuangneng, have established R&D branches in Huizhou. The announcement noted that this move facilitates the efficient recruitment of top scientific research talent and technical experts in the South China region, enabling resource sharing and complementary advantages. It also allows the company to be closer to customers and the market frontier, promoting the rapid conversion and application of R&D成果, and driving continuous upgrades in products and services.
Notably, the core motivation for these two leading battery manufacturers to simultaneously dispose of existing equity holdings likely stems from the substantial ongoing capital expenditures required for their own large-scale expansion plans.
For Gotion, in December 2024, the company announced two overseas investment plans on the same day: a proposed investment to build a 20GWh high-performance lithium battery and supporting project in Slovakia, and a similar 20GWh project in Morocco. The total investment for these two projects was disclosed not to exceed 2.514 billion euros.
In August 2025, Gotion announced two more domestic investment plans on the same day: a proposed 20GWh new energy battery base project in Wuhu, Anhui, and a 20GWh new lithium-ion battery intelligent manufacturing base project in Nanjing's Liuhe District. The total investment for these two projects is expected not to exceed 8 billion yuan.
Behind this aggressive expansion lies significant capital expenditure. At the end of Q1 2026, Gotion's net cash flow from investing activities was -4.657 billion yuan, with the net outflow expanding by 425.14% year-on-year, primarily due to increased investment in long-term assets. As of the end of Q1 2026, Gotion's asset-liability ratio stood at 71.97%. Short-term borrowings alone amounted to 17.987 billion yuan, and current portion of non-current liabilities was 10.939 billion yuan. However, the company's cash and cash equivalents were only 16.714 billion yuan, indicating a short-term funding gap of approximately 12.2 billion yuan.
In fact, in February of this year, Gotion had already proposed a private placement plan to raise 5 billion yuan. After deducting issuance costs, the proceeds are intended to be used for a 20GWh power battery project, a 20GWh new energy battery base project, a 20GWh new lithium-ion battery intelligent manufacturing base project, and to supplement working capital. The three projects are allocated 2 billion yuan, 1 billion yuan, and 1 billion yuan respectively, with the remaining 1 billion yuan earmarked for working capital.
Eve Energy's funding pressure similarly stems from its massive expansion plans. The company's 2025 annual report "previewed" that based on market demand, it plans to add approximately 260GWh of large lithium iron phosphate (LFP) capacity, with site selection and gradual implementation planned across Guangdong, Hubei, Jiangsu, Fujian, and Zhejiang provinces. Between March 28th and April 7th—a span of just 11 days—Eve Energy concentrated on releasing four domestic base investment announcements. The four projects involve a total investment of 23 billion yuan, planning to add 230GWh of power and energy storage battery capacity, primarily focused on large-capacity LFP prismatic cells.
As of the end of Q1 2026, Eve Energy's asset-liability ratio was 64.89%. The sum of its short-term borrowings and current portion of non-current liabilities was 9.883 billion yuan, while its cash and cash equivalents stood at 11.325 billion yuan. Statically, its cash could cover its debt due within one year, indicating no immediate solvency gap. However, its Q1 2026 report showed the company was experiencing negative operating cash flow, primarily due to payments made to suppliers.
In reality, in the face of the two industry "giants," Contemporary Amperex Technology Co., Limited (300750.SZ/03750.HK) and BYD Company Limited (002594.SZ/01211.HK), second-tier manufacturers like Eve Energy have long faced survival pressures from squeezed scale advantages, R&D funding, and access to premium automotive orders. Persistent industry price competition continues to compress profit margins. Strategies such as securing secondary supplier positions with automakers and aggressively expanding into energy storage have become critical paths for these companies to break through.
However, the scale gap directly and persistently manifests in profitability and financing capability. In the upcoming round of expansion battles, the more ample the financial resources, the greater the likelihood a company can secure its survival and breakthrough.
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