The lithium battery industry in China maintained strong production and sales in November, with a clear "anti-involution" trend driven by policy guidance, leading to widespread price recovery across the supply chain. December production plans indicate sustained robust downstream demand. Following recent adjustments in the lithium battery sector, the stable and improving industry fundamentals present an investment opportunity, with leading player CATL (03750) highlighted as a key focus.
Key insights from BOCOM INTL include:
**Strong Growth in Domestic Power Battery Installations and Steady Exports** According to data from the China Automotive Battery Innovation Alliance, domestic power battery installations in November 2025 reached 93.5GWh, up 39.2% YoY and 11.2% MoM. Lithium iron phosphate (LFP) battery installations rose 40.7% YoY and 11.6% MoM to 75.3GWh, accounting for 80.5% of total installations. Battery exports remained steady at 32.2GWh, up 46.5% YoY and 14.1% MoM, representing 17.9% of total sales. Power battery exports surged 70.2% YoY and 9.4% MoM to 21.2GWh, while other battery exports grew 15.3% YoY and 24.4% MoM to 10.9GWh.
**"Anti-Involution" Trend and Supply Chain Price Recovery** On November 27, the National Development and Reform Commission held a meeting to curb irrational price competition, promoting rational pricing and reasonable profit margins. The Ministry of Industry and Information Technology also convened battery manufacturers to oppose non-competitive market behavior. Supported by policy and market dynamics, supply chain prices have risen. For instance, lithium hexafluorophosphate prices reached RMB 180,000/ton, while battery-grade lithium carbonate exceeded RMB 95,500/ton. Suzhou Dejia Energy Technology announced a 15% price hike for battery products starting December 16 due to rising raw material costs. BOCOM INTL expects tight supply-demand conditions to persist, benefiting companies in batteries, lithium hexafluorophosphate, LFP, wet-process separators, and anodes.
**December Production Plans Reflect Resilient Demand** Preliminary December production plans show domestic battery output at 148.8GWh (+2.3% MoM), while overseas output dipped 2.6% to 23.8GWh. Cathode material production held steady at 187,000 tons, anode materials at 154,000 tons, separator output rose 2.6% to 1.98 billion square meters, and electrolyte production increased 1.4% to 109,000 tons, indicating strong downstream demand.
The lithium battery sector has corrected by approximately 12% from its peak, with second-tier battery firms like Eve Energy, Guoxuan High-Tech, and CALB seeing declines of 14.6%, 15.0%, and 17.8%, respectively, since early November. Given solid fundamentals and upward production trends, the current adjustment may offer a buying opportunity. CATL (03750) is recommended for its cost and technological advantages, as well as its leading global expansion strategy.
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