According to an article published by Cui Dongshu of the China Passenger Car Association, in September, China's combined output of power batteries and other batteries reached 237GWh, representing a year-on-year increase of 57%. For the January-September period, China's combined output of power batteries and other batteries totaled 1,833GWh, up 63% year-on-year.
This year, battery growth has gradually declined from above 60%. Due to weak demand for power batteries and adjustments to export tax rebates, battery demand has been progressively slowing down.
In September 2026, lithium battery installations reached 87GWh, up 15% year-on-year. For January-September 2026, lithium battery installations totaled 576GWh, up 17% year-on-year. The ratio of installed capacity to production in power batteries declined to 44% in 2025, and in September 2026, the installation rate within power battery production stood at 37%, with ternary batteries at a 35% installation rate and lithium iron phosphate batteries at a 37% installation rate.
In September 2026, lithium battery vehicle installations in the domestic market reached 1.26 million units, down 12% year-on-year. Of this total, pure electric passenger vehicles accounted for 810,000 units, down 6% year-on-year; plug-in hybrid passenger vehicles accounted for 350,000 units, down 29% year-on-year; and pure electric commercial vehicles accounted for 82,000 units, up 22%. This production data shows severe divergence.
In the third quarter of 2026, vehicles equipped with battery energy density above 160 accounted for 9% of the total, a notable rebound from 7% in the same period of 2025, mainly driven by the recovery in high-end demand for ternary batteries. Meanwhile, products with energy density below 125 dropped to a 0% share in 2026.
The competitive landscape among battery companies has formed a pattern where CATL (03750) and BYD Company Limited (002594) are relatively stronger. CATL's share rose to 45.1% during July-September 2026, while BYD Company Limited's domestic battery demand share climbed from 15% in 2020 to 26.9% in 2023. Other battery companies have also shown significant divergence in their shares. The top two companies, CATL and BYD Company Limited, saw their combined share go from 72% in 2022 to 63% in 2026, leaving over 36% of space for other companies. This year, CALB (03931), Sunwoda (300207.SZ), and Zhengli New Energy (03677) have performed relatively strongly.
1. Analysis of Overall Power Battery Production Characteristics
In September, China's combined output of power batteries and other batteries reached 237GWh, up 57% year-on-year. For January-September, China's combined output of power batteries and other batteries totaled 1,833GWh, up 63% year-on-year. This year, battery growth has gradually declined from above 60%. Due to weak demand for power batteries and adjustments to export tax rebates, battery demand has been progressively slowing down.
Currently, the ratio of installed capacity to production in power batteries is continuously declining. In 2021, the installation rate within power battery production reached 70%; in 2022 it was 54%; in 2023 it was 50%; in 2024, the ratio of installed capacity to production in power batteries remained at 50%; in 2025, the ratio declined to 44%; and in September 2026, the ratio stood at 37%, with ternary batteries at 35% and lithium iron phosphate batteries at 37%. This year, the installation prosperity of power batteries has fluctuated. With the launch of commercial vehicle subsidies and declining energy storage demand, the recent installation ratio has gradually increased.
With the development of energy storage and other industries, especially the global energy crisis brought about by the Russia-Ukraine conflict, battery demand for energy storage and other industries has grown rapidly, leading to a significant decline in the battery installation ratio. However, the market downturn at the beginning of the year brought about a decline in the ratio. Both power batteries and energy storage batteries are facing overproduction and relatively high inventory pressure. In 2021 and 2022, the growth rate of power batteries was lower than that of complete vehicles. In 2023 and 2024, power battery installations were relatively low, and battery production was flat with installation growth. In 2026, battery production is relatively high, while installations started at a low level. At the beginning of 2026, the installation rate dropped to a recent low, recovering well by September.
2. Low Ternary Battery Share in Domestic Vehicle Certificate Battery Installations
The demand growth for power battery installations has shown super-strong growth. In 2019, demand grew 10%; in 2020, domestic vehicle power battery installations reached 64GWh, with demand growing 2%; in 2021, power battery installations reached 155GWh, with demand growing 143%; in 2022, installations reached 295GWh, with demand growing 91%; in 2023, installations reached 388GWh, with demand growing 32%; in 2024, lithium battery installations reached 548GWh, up 41% year-on-year; in 2025, lithium battery installations reached 770GWh, up 40% year-on-year; in September 2026, lithium battery installations reached 87GWh, up 15% year-on-year; and for January-September 2026, lithium battery installations totaled 576GWh, up 17% year-on-year.
3. Growth in Automotive Battery Demand Is Slowing
Battery demand growth for passenger vehicles has remained relatively strong. In 2025, battery demand for pure electric passenger vehicles grew 29%, while battery demand for plug-in hybrid passenger vehicles grew 17%, maintaining strong growth. Battery demand for pure electric commercial vehicles also grew substantially, reaching 169%. In January-September 2026, battery installations grew 17%, with commercial vehicles showing stronger growth, especially pure electric commercial vehicles surging 41% in September, while battery usage for pure electric passenger vehicles grew only 10%.
From the perspective of battery installation share, the demand structure for power batteries has been rapidly changing in recent years. In 2020, the landscape was still pure electric passenger vehicles first, pure electric buses second, pure electric special-purpose vehicles third, with plug-in hybrid passenger vehicles only in fourth place. By 2026, pure electric passenger vehicles still maintain first place, while plug-in hybrid passenger vehicles have dropped to third place, pure electric commercial vehicles have risen to second place, plug-in hybrid special-purpose vehicles remain in fourth place, and pure electric buses have fallen to fifth place.
In recent years, the pure electric bus market has declined dramatically, while pure electric special-purpose vehicles have maintained rapid growth in battery usage. Currently, battery usage for pure electric passenger vehicles and plug-in hybrid passenger vehicles has declined significantly, while battery usage for heavy trucks has surged. The high subsidy advantage for heavy trucks brought about by new energy subsidies has led to differentiated battery trends.
4. Vehicle Certificate Production
Based on vehicle certificate battery volume estimates, domestic new energy vehicle certificates in 2025 reached 14.5 million units, up 24% year-on-year, relatively strong. Of this total, pure electric passenger vehicles accounted for 8.6 million units, up 35% year-on-year; plug-in hybrid passenger vehicles accounted for 5.03 million units, up 7% year-on-year; and pure electric special-purpose vehicles and commercial vehicles accounted for 780,000 units. This production data is very strong.
In September 2026, lithium battery vehicle installations in the domestic market reached 1.26 million units, down 12% year-on-year. Of this total, pure electric passenger vehicles accounted for 810,000 units, down 6% year-on-year; plug-in hybrid passenger vehicles accounted for 350,000 units, down 29% year-on-year; and pure electric commercial vehicles accounted for 82,000 units, up 22%. This production data shows severe divergence.
5. Supporting Battery Companies Are Far from Full Competition
Over the past few years, the competitive landscape of the battery market has not undergone significant changes. In September 2026, the number of supporting battery companies reached 31, a year-to-date low. Due to differences in power battery market prices, relatively obvious scale growth characteristics, and the development of new industries such as energy storage, battery companies have achieved strong growth in production and installation volumes.
6. Divergence in Battery Capacity Across Various Vehicle Types
As battery prices decline, electric vehicle range continues to increase. Currently, there is very strong demand for high-end electric vehicles, similar to the upgrade from low-speed vehicles to small and micro cars, with policy pressures leading to obvious premiumization. In the second half of 2024, with the promotion of trade-in policies, the small car market recovered, micro electric vehicles became popular, driving down installed battery capacity. As the cost advantage of electric vehicles becomes evident, the structure of pure electric special-purpose vehicles is shifting toward heavy trucks, driving a surge in battery capacity.
Regarding supply chain issues, future vehicle manufacturers will become increasingly powerful, further strengthening their control over battery companies and upstream supply chains, while also further strengthening control over downstream brand marketing capabilities. Under the new energy system, the characteristic of "vehicle manufacturers as kings" will continue to be further demonstrated.
7. High Energy Density Batteries Need to Recover
The current mainstream battery energy density range for pure electric vehicles is between 125 and 160. Particularly notable in the third quarter of 2026 is that batteries in the 140-160 range accounted for 51%, up 14 percentage points year-on-year. In the third quarter of 2026, vehicles equipped with battery energy density above 160 accounted for 9%, a notable rebound from 7% in the same period of 2025, mainly driven by the recovery in high-end demand for ternary batteries. Meanwhile, products with energy density below 125 dropped to a 0% share in 2026.
8. Battery Company Landscape
The competitive landscape among battery companies has formed a pattern where CATL (03750) and BYD Company Limited (002594) are relatively stronger. CATL's share rose to 45.1% during July-September 2026, while BYD Company Limited's domestic battery demand share climbed from 15% in 2020 to 26.9% in 2023. Other battery companies have also shown significant divergence in their shares. Battery companies have shown a characteristic of slowing head enterprise concentration. The top two companies, CATL and BYD Company Limited, saw their combined share go from 72% in 2022 to 63% in 2026, leaving over 36% of space for other companies. This year, CALB (03931), Sunwoda (300207.SZ), and Zhengli New Energy (03677) have performed relatively strongly.
Lithium iron phosphate batteries have obvious product differentiation advantages. BYD Company Limited remains relatively outstanding, but was in a domestic adjustment period at the beginning of this year, with strong export performance not included in the statistics. EVE Energy and Gotion High-tech performed relatively strongly. Sunwoda (300207.SZ), Ruipu Lanjun, and Geely Yaoning improved significantly. Since BYD Company Limited fully transitioned to lithium iron phosphate batteries, the ternary battery advantages of the top four — CATL, SVOLT, Sunwoda (300207.SZ), and LG — have become more evident. Recently, Great Wall Motor's SVOLT Energy has performed relatively well. LG New Energy's statistics are relatively low due to the decline in Tesla's domestic sales proportion.
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