by GAO Jing
China's lithium battery manufacturers are pushing ahead with more than RMB 400 billion (about US$56 billion) in new investment as they race to secure orders from the electric-vehicle and energy-storage sectors, raising the risk of excess capacity if demand cools.
Leading cell producers including CATL (300750.SZ), CALB (03931.HK), Gotion High-tech (002074.SZ) and EVE Energy (300014.SZ) plan to add over 500 GWh of capacity this year, with capex above RMB 170 billion. Materials suppliers such as Tinci Materials (002709.SZ) and Jiayuan Technology (688388.SH) have secured large-volume electrolyte, copper-foil and anode contracts. Data from industry research firm GGII show 183 new supply-chain projects announced or launched in January–August, totaling about RMB 400 billion.
An executive at a major copper-foil producer said orders tightened sharply in the fourth quarter and the company has begun expanding capacity. Other leading materials suppliers report full schedules and high operating rates.
Demand has been driven by grid-scale storage deployments and a sharp rise in commercial-vehicle electrification. China sold 649,000 new-energy commercial vehicles in January–October, up 60.2% year on year, according to the China Association of Automobile Manufacturers. A phase-down of purchase-tax incentives has pulled some passenger-vehicle demand into the fourth quarter, while overseas storage orders strengthened through mid-year.
"The entire chain has run ahead of expectations," said ZHANG Jinhui, a senior analyst at ICCSINO. "Global storage orders are full, and commercial-vehicle electrification in China is climbing rapidly."
Lithium carbonate prices have rebounded with the demand shock. Benchmark futures topped RMB 100,000 per ton on Nov. 19 and 20 before the Guangzhou Futures Exchange tightened trading limits, sending the contract limit-down the next day. Spot battery-grade prices reached RMB 93,600 per ton, nearly 60% above this year's low, according to mysteel.com.
Capacity utilization is increasingly polarized. Top cell makers such as CATL and EVE Energy are operating near 90%, while many second- and third-tier storage-battery firms are running at 30%–60%, said LIU Yong, secretary-general of the Energy Storage Application Branch of the China Industrial Association of Power Sources. Some producers report lower rates due to weaker technology and fewer qualified orders.
Customer preference is also reinforcing the split. REPT BATTERO said buyers "prioritize brand strength and quality," giving leading cell suppliers a clear advantage and concentrating upstream materials procurement around the top of the chain.
Forecasts for the coming years remain strong — China Securities expects global battery demand to reach more than 2,700 GWh in 2026, while Soochow Securities projects 23–35% annual growth in 2025–26. Even so, several executives say storage demand could ease once the current wave of projects is completed, noting that the segment has historically shown cyclical patterns and that manufacturers should be cautious about adding capacity too quickly.
Others say the risks are uneven rather than industry wide. Most new investment is coming from top-tier manufacturers with lower costs and long-term customer agreements, leaving them better positioned to navigate any slowdown. Analyst DONG Yunfan said this concentration makes another round of cut-throat competition less likely, while CORNEX New Energy chairman DAI Deming said the industry remains early in its development and its long-term outlook has not changed.
