How Should Lithium Battery Demand Be Viewed?
Demand is mainly divided into power batteries and energy storage systems. In 2026, the continued rise in the electrification rate—particularly led by commercial vehicles—will create a battery demand growth effect that outpaces vehicle sales growth, a factor that should not be overlooked.
| Category | Influencing Factors | Related Indicators | Domestic Penetration Rate |
| Energy Storage | Economy/Policy | Deployment Duration | – |
| Power (Battery Demand Driver) | Economy/Policy | 1. Penetration Rate Growth | – |
| 2. Single-Vehicle Battery Capacity | |||
| – | – | Single-Vehicle Power Consumption | – |
| Market Segment | – | – | – |
| New Energy Passenger Vehicle (Retail) | – | – | ~60% |
| New Energy Commercial Vehicle | – | – | ~20% |
| New Energy Heavy Truck (Commercial Vehicle) | – | – | ~15% |
| New Energy Light Truck (Commercial Vehicle) | – | – | ~20% |
Power Battery Perspective:
Across different electrified segments, electrification rates are rising sequentially, driven by improving cost parity. Adoption is progressing from ride-hailing fleets to private passenger vehicles, and further to commercial vehicles. Against a backdrop of moderated downstream demand growth, changes in battery capacity per vehicle (kWh per unit) have become a key variable shaping overall battery demand.
From domestic data, the increase in average battery capacity per vehicle, combined with shifts in the demand mix, led to battery shipment growth outpacing downstream vehicle sales growth in 2025.
In aggregate terms, from January to November 2025, the average battery capacity of new energy vehicles (NEVs) in China reached 53.7 kWh, up 16.5% year-on-year, with the increase primarily driven by commercial vehicles.
From a structural perspective, during the same period, the average battery capacity of new energy passenger vehicles, trucks, and specialty vehicles grew by 7%, 6%, and 78% year-on-year, respectively. Taking new energy heavy-duty trucks as an example, cumulative domestic sales reached 158,000 units from January to October 2025. Assuming an average 500 kWh battery per vehicle, this segment alone accounted for approximately 4.4% of global battery shipments as of October.
Looking ahead to 2026, the overall penetration rate of new energy commercial vehicles in China remains below 30%, suggesting that the uplift to overall average battery capacity per vehicle should not be underestimated. Based on domestic data, as of October 2025, the penetration rate of new energy commercial vehicles reached 25%, marking a significant increase compared with 2024. In terms of battery capacity per vehicle, while changes in the broader NEV market were relatively moderate, the average battery capacity of commercial vehicles reached 183 kWh in October 2025, representing a 51% year-on-year increase.
Looking ahead to 2026, changes in average battery capacity per vehicle driven by model upgrades in overseas power battery markets will also be a key area of focus. Major automakers such as Volkswagen, BMW, and Mercedes-Benz are set to launch new platforms in 2026, marking the start of new product cycles, with most initiatives targeting entry-level models.
Energy Storage Perspective:
The energy storage sector is at a critical economic inflection point. According to our team’s report, “Five Key Changes to Watch in Energy Storage in 2026,” global energy storage battery shipments are projected to reach 825 GWh in 2026, representing approximately 39% year-on-year growth based on shipment volumes.
| Domestic Penetration Rate Data of New Energy Commercial Vehicles and Passenger Vehicles | ||||
| Month | 2024-Commercial Vehicle Penetration Rate | 2025-Commercial Vehicle Penetration Rate | 2024-Passenger Vehicle Penetration Rate | 2025-Passenger Vehicle Penetration Rate |
| Jan | ~10% | ~15% | ~35% | ~40% |
| Feb | ~10% | ~20% | ~40% | ~50% |
| Mar | ~12% | ~20% | ~45% | ~52% |
| Apr | ~13% | ~22% | ~48% | ~53% |
| May | ~14% | ~22% | ~49% | ~54% |
| Jun | ~15% | ~22% | ~50% | ~55% |
| Jul | ~15% | ~23% | ~52% | ~56% |
| Aug | ~16% | ~24% | ~54% | ~58% |
| Sep | ~18% | ~25% | ~55% | ~59% |
| Oct | ~20% | ~26% | ~54% | ~58% |
| Nov | ~21% | ~26% | ~53% | ~57% |
| Dec | ~22% | ~27% | ~50% | ~55% |
| Month | Passenger Vehicle Single-Vehicle Battery Capacity (kWh) | Commercial Vehicle Single-Vehicle Battery Capacity (kWh) | ||||
| 2023 | 2024 | 2025 | 2023 | 2024 | 2025 | |
| Jan | – | 42 | 37.6 | – | 100 | 124 |
| Feb | – | 35 | 33.5 | – | 80 | 146 |
| Mar | – | 37 | 41.4 | – | 100 | 126 |
| Apr | – | 38.2 | 38.2 | – | 110 | 135 |
| May | – | 38.1 | 38.1 | – | 100 | 145 |
| Jun | – | 37.5 | 37.5 | – | 120 | 149 |
| Jul | – | 38.5 | 38.5 | – | 130 | 152 |
| Aug | – | 39.1 | 39.1 | – | 100 | 170 |
| Sep | 40.7 | 39 | 40.7 | 80 | 130 | 172 |
| Oct | 42.2 | 42 | 42.2 | 80 | 150 | 183 |
| Nov | – | 42 | – | – | 160 | – |
| Dec | – | 40 | – | – | 170 | – |
Will the Tight Supply–Demand Balance in the Lithium Battery Industry Intensify?
The peak season in Q3 2025 marked the first test of a tight supply–demand balance.
Due to the semi-customized (non-standardized) nature of lithium battery materials, assessing supply–demand conditions places greater importance on the output of key industry players rather than purely aggregate capacity.
Price increases are often the most direct reflection of tightening supply–demand dynamics and can be broadly categorized into supply-side driven and demand-side driven increases. Supply-side driven price hikes typically occur during periods of weak profitability, often reflected in selective tender pricing—for example, the successful implementation of price increases for high-compaction cathode products by some manufacturers at the beginning of 2025.
From the perspective of the 2025 peak season, tightening supply–demand conditions have gradually led to broad-based price increases, marking the first meaningful stress test of a tightening market balance.
The tight supply–demand balance in the industry is expected to intensify in 2026.
Under the base-case scenario, battery shipments are projected to grow by 22% year-on-year, exceeding 2.7 TWh. From a structural perspective, seasonal demand peaks are likely to result in supply–demand gaps in certain segments of the value chain, further reinforcing tight market conditions.
1) From an aggregate supply–demand perspective:
We estimate global lithium battery production to reach 2.26 TWh in 2025, with shipments exceeding 2.7 TWh in 2026, representing 22% year-on-year growth under our base-case assumption.
Based on shipment data from key industry players, the lithium battery materials segment is expected to experience a more pronounced tight supply–demand balance, with capacity utilization rates increasing by 0–4 percentage points quarter-on-quarter, depending on the sub-segment.
If demand growth expectations are revised upward by 5 percentage points, lithium hexafluorophosphate (LiPF₆) is likely to face an annual supply–demand shortfall.
2)From a structural perspective:
Based on our calculations, during the 2026 peak demand season, considering the capacity of key industry players, lithium hexafluorophosphate (LiPF₆), LFP cathode materials, and energy storage batteries may experience partial supply gaps. Among these, LiPF₆ is expected to face the tightest supply, which could constrain significant demand growth, although in practice the industry may partially mitigate shortages through overproduction or other measures.
Under Expectations of a Tight Supply–Demand Balance, What Is the Outlook for Supply-Side Expansion?
In 2026, the supply–demand balance is expected to remain tight, making supply-side expansion a key area of focus.
Typically, three factors—profitability, cash position, and capital expenditure—correspond respectively to a company’s current operational capability, future expansion capacity, and planned growth initiatives. When combined with policy considerations, these factors provide guidance on future changes in the supply side.
Currently, the profitability and cash flow of lithium battery companies are generally moderate, limiting the incentive for significant expansion.
Based on our analysis of publicly listed company financial reports, as of Q3 2025, the overall net profit margin of the representative sample is 9.2%.
From a structural perspective, LFP cathodes, electrolytes, copper foil, and batteries (excluding CATL) show relatively weak profitability and cash flow. Using the metric “cash on hand minus short-term liabilities”, segments such as LFP cathodes, anodes, separators, and copper foil are in negative territory.
In terms of cash flow, CATL accounts for the majority of industry cash reserves. Excluding CATL, the industry’s cash flow capacity is comparatively limited, constraining broad-based expansion.
Under a Tight Supply–Demand Balance, What Are the Limits to Price Increases?
The current demand cycle is primarily driven by the economic inflection point in energy storage, where demand is constrained by downstream installed IRR, making it a key focus area.
According to our calculations, recent LFP cell costs have increased by approximately 0.03 CNY/Wh. Specifically, from early July to mid-December 2025, LFP cell costs rose around 0.03 CNY/Wh, with lithium carbonate contributing roughly 0.02 CNY/Wh of this increase.
Looking ahead to 2026, from a battery system perspective, there is room for price increases based on current pricing and profitability. This could restore certain profit levels across the supply chain and allow for moderate upward adjustment in lithium carbonate prices.
Profitability varies across regions; for example, considering independent energy storage projects in Shandong, which has a high proportion of energy storage tenders, the IRR data illustrates regional differences in potential pricing flexibility.
2026 Materials Upgrade Outlook: New Technologies Gradually Enter the Realization Phase
Sodium-ion Batteries: Gradual 1–5 Commercialization in 2026
In the multi-core era, sodium-ion batteries (Na-ion) are finding niche opportunities due to their high-rate capability and low-temperature performance. According to SMM, global Na-ion shipments in the first half of 2025 reached 3.7 GWh, a year-on-year increase of 259.0%.
From an intrinsic properties perspective, smaller Stokes radius and lower desolvation energy contribute to higher rate performance, while the low desolvation energy also supports excellent low-temperature performance.
In terms of matching demand scenarios, Na-ion batteries are expected to help increase electrification rates in colder northern regions, offering targeted solutions for temperature-sensitive applications.
Sodium-ion Battery Cost Reduction Continues in 2026, Paving the Way for 1–5 Commercialization
Sodium-ion batteries have previously completed the 0–1 stage of commercialization, but their costs remain higher than LFP batteries and are currently in a rapid cost-decline phase.
According to CATL’s April 2025 press conference, sodium-ion products include:
- NaXin 24V integrated start-stop heavy truck battery
- NaXin passenger vehicle power battery
- XiaoYao dual-core battery
Among these, the integrated start-stop battery and NaXin power battery are both planned for mass production in 2025.
The NaXin passenger vehicle power lithium battery achieves an energy density of 175 Wh/kg, supports peak 5C charging, and delivers a 500 km driving range.
