Soochow Securities has released a research report highlighting robust growth prospects for the lithium battery industry, driven by energy storage demand. The report forecasts a 32% demand growth in 2026, with sustained growth exceeding 20% in 2027, leading to significant improvements in supply-demand dynamics and reasonable price recovery across the sector. Currently, mainstream companies trade at under 20x 2026 P/E, reinforcing the recommendation to invest in leading battery firms with stable profitability and pricing power, as well as high-quality lithium material suppliers poised for margin expansion. The report also notes that lithium carbonate prices have bottomed, favoring resource-rich industry leaders.
In terms of technology, solid-state battery industrialization is accelerating. Key insights from Soochow Securities include:
**EV Demand Outlook**: - **China**: 2025 sales are projected to grow 30% YoY to 16.76 million units, supported by policy incentives and pre-subsidy rush purchases. However, 2026 may see short-term pressure due to subsidy phase-outs, though replacement subsidies post-"Two Sessions" could stabilize sales. Heavy-duty trucks and strong exports are expected to drive 15% YoY growth to 19.25 million NEVs in 2026. - **Europe**: After absorbing subsidy cuts, sales are forecast to surge 34% YoY in 2025 to 3.94 million units, with 30% growth in 2026 aided by policy support and new model launches. - **US**: Demand slowdown and delayed launches may limit 2025 growth to 4%, with a 10% decline in 2026 as subsidies expire. - **Other Regions**: 50%+ growth is anticipated in both 2025 and 2026. Globally, NEV sales are estimated at 21.5 million (+25% YoY) in 2025 and 24.53 million (+14% YoY) in 2026, with power battery demand reaching 1,704 GWh (+19.5% YoY) due to larger vehicle sizes and higher commercial EV penetration.
**Energy Storage Market Boom**: - Global energy storage battery demand is projected at 611 GWh (+86% YoY) in 2025, revised upward to nearly 1,000 GWh (+64% YoY) in 2026. Regional drivers include China’s capacity tariffs and business model innovations, Europe’s diversified growth, and AI-driven demand in the US. Combined power and storage demand is expected to hit 2,600–2,700 GWh in 2026 (+30%+ YoY), sustaining 20%+ growth into 2027.
**Industry Dynamics**: - Despite seasonal trends, Q1 2026 production schedules remain firm, with leading firms guiding flat output. Tight supply-demand conditions support price hikes (1–3 fen/Wh for batteries), with cost increases likely passed through. Materials like LiPF6 and VC have already surged, while LFP, anodes, separators, and aluminum foil prices are rising. Long-term contracts are expected to lock in margins in 2026.
**Solid-State Battery Progress**: - Sulfide-based solid-state batteries are gaining traction, with small-scale trials completed by late 2025, pilot lines optimized in 2026, and commercial production by 2027. Key challenges include high-cost solid electrolytes (e.g., lithium phosphorus sulfur chloride at ¥3 million/ton) and specialized equipment (dry electrode machines, integrated film formers). Innovations like lithium-rich manganese cathodes and lithium metal anodes are also worth monitoring.
**Risks**: Intensified competition, policy shifts, renewable energy delays, and material shortages.
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