Gf Securities has released a research report stating that with the confirmation of a cyclical bottom in the lithium battery sector and strong expansion intentions from leading downstream battery manufacturers, it is optimistic about the growth potential of lithium battery equipment in the new cycle. The report recommends focusing on: (1) equipment manufacturers with full-line delivery capabilities, and (2) equipment manufacturers benefiting from incremental demand related to solid-state and dry electrode processes. The main viewpoints from Gf Securities are as follows.
Contemporary Amperex Technology Co., Ltd. (CATL) has reached a record high in capacity utilization, indicating an urgent need for expansion. According to CATL's 2025 annual report, by the end of 2025, the company's total battery production capacity was 772 GWh, with an output of 748 GWh. The capacity utilization rate for 2025 reached 96.9%, exceeding the previous cycle's high point (a 95.0% utilization rate in 2021) and setting a new historical record. Sustained high capacity utilization indicates that existing production lines are near full capacity and cannot meet future order growth, creating an urgent need for expansion.
Amidst strong expansion intentions, demand for lithium battery equipment is both urgent and rigid. According to CATL's 2025 annual report, the company had 321 GWh of capacity under construction by the end of 2025. As new capacity collaborations materialize in 2026, the overall scale of capacity under construction is expected to continue expanding, accompanied by sustained increases in capital expenditure. Furthermore, according to CATL's investor relations records dated March 9, strong market demand in 2025 led to some order spillover due to short-term capacity constraints. Against this backdrop of urgent equipment upgrades and expansion needs from downstream battery manufacturers, lithium battery equipment suppliers are poised to benefit significantly from this new capacity expansion cycle.
Demand from both the power battery and energy storage sectors provides dual drivers, offering long-term support for lithium battery demand. According to CATL's 2025 annual report, sales of power batteries and energy storage batteries increased by 41.85% and 29.13% year-over-year, respectively, in 2025. Continued growth in new energy vehicle sales, increasing battery capacity per vehicle, and the rapid release of global energy storage market demand suggest that demand for liquid batteries is likely to continue exceeding expectations and remain well-supported in the long term.
New technologies such as solid-state batteries and dry electrode processes are expected to create additional demand. Regarding solid-state batteries, according to TrendForce, major battery manufacturers are currently in the pilot line stage, with mass production estimated to begin between 2027 and 2028. As a new technology, solid-state batteries will bring incremental investment for entire production lines and key equipment segments. In terms of dry electrode technology, according to Gaogong Lithium, Elon Musk announced the achievement of large-scale production for the dry electrode process in February 2026. This process simplifies production, reduces costs by over 50%, and lowers energy consumption by eliminating traditional solvent coating and drying steps, potentially driving demand for upgrades in front-end equipment.
Investment recommendations: It is advised to focus on two categories. First, equipment manufacturers with full-line delivery capabilities, such as leading providers of integrated lithium battery solutions including Lead Intelligent Equipment, Hymson Laser, Liyuan Heng, and Yinghe Technology, which maintain close ties with leading downstream customers. Second, equipment manufacturers poised to benefit from incremental demand related to solid-state and dry electrode processes. These include Honggong Technology, benefiting from front-end dry processes; Naconor, benefiting from demand for roller presses; Unilaser, benefiting from laser equipment demand; Joconson Ultrasonic, benefiting from ultrasonic welding demand; and Hangke Technology and Huanzhi Technology, which stand to gain from demand for high-voltage formation and capacity testing equipment.
Risk warnings include potential underperformance in new energy vehicle sales, slower-than-expected pace of lithium battery capacity expansion, delays in solid-state battery technology development, and intensifying industry competition.
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