Lithium Battery Industry Sees Booming Production and Sales, But Is Valuation Already Too High?

According to the latest data, the lithium battery industry shows an obvious trend of ‘booming production and sales’, but there are structural differences inside. China dominates the global lithium battery field, controlling 69% of the global EV battery market share [1]. In the first eight months of 2025, BYD delivered 2.6 million electric vehicles, accounting for about 20% of the global market share [1]. As the industry leader, CATL’s revenue maintained growth in the first three quarters of 2025, with the latest quarterly EPS of $4.10, exceeding market expectations by 0.49% [0].

However, it should be noted that the industry has overcapacity risks. Zhu Huarong, chairman of Changan Automobile, pointed out that by 2025, China’s demand for power battery capacity will be 1000-1200GWh, but the current industry capacity planning has reached 4800GWh [2]. This means that actual capacity far exceeds demand, which may lead to price wars and profit compression.

Sub-sector	Performance
Power Battery	Booming production and sales, but capacity utilization varies significantly
Energy Storage Battery	Fastest growth rate, becoming a new growth point [1]
Lithium Carbonate	Price dropped 80% from 2022 peak [2]
Battery Pack	Price dropped to $108/kWh [3]

Enterprise	Market Cap ($100M)	PE(TTM)	PB	Profitability
CATL	16503	26.64x	5.41x	ROE 22.84%, Net Profit Margin16.53%
BYD	9008	71.95x	-	High growth but high valuation
EVE Energy	1464	42.49x	-	Good performance growth
Ganfeng Lithium	1438	Loss	-	Performance affected by falling lithium prices
Tianqi Lithium	949	Loss	-	Lithium resource enterprise under pressure

• CATL
  Valuation is relatively reasonable, PE around27x, at historical central level, technical side shows sideways consolidation trend [0]
• BYD
  PE as high as72x, valuation significantly high, need to treat with caution [0]
• Lithium mining enterprises
  Losses due to plummeting lithium carbonate prices, valuation distorted

###3. Is Valuation Already Too High?

1. Overcapacity risk
   : Industry planned capacity is4 times actual demand, may trigger price wars
2. Lithium carbonate price collapse
   : Dropped80% from peak, compressing upstream profit margins [2]
3. Valuation differentiation of leading enterprises
   : BYD’s72x PE significantly deviates from historical average
4. Technical pressure
   : CATL’s MACD indicator is bearish, short-term pressure [0]

1. Industry growth certainty
   : China accounts for68% of global new energy vehicle production share [1]
2. Energy storage demand explosion
   : Data centers and new energy installations drive energy storage battery demand growth by75% [1]
3. Leading enterprise advantages are stable
   : CATL’s ROE reaches 22.84%, profitability is outstanding [0]
4. Valuation is not fully overestimated
   : CATL’s 26x PE is in a reasonable range

###4. Investment Suggestions and Risk Warnings

The overall valuation of the lithium battery industry is

, but shows structural differentiation:

• Leading stocks (CATL)
  : Valuation relatively reasonable, has allocation value
• High-growth stocks (BYD)
  : Valuation is high, need to wait for correction
• Upstream lithium mining stocks
  : Suppressed by prices, valuation distorted, need to pay attention to cycle inflection points

: Need to closely monitor changes in capacity utilization, lithium carbonate price trends, and impacts of international trade policies.

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[1] Forbes - “China’s Ghost City Dividend: Building A World-Class Supply Chain” (https://www.forbes.com/sites/jonmarkman/2025/12/24/chinas-ghost-city-dividend-building-a-world-class-supply-chain/)

[2] Wall Street Journal - “US and Europe Complain About China’s Overcapacity But Data Does Not Fully Support It” (https://hk.finance.yahoo.com/news/美欧抱怨中国产能过剩-可是数据并不完全支持-233915052.html)

[3] Reuters - “China’s power reforms, global data centre buildout usher in battery boom” (https://www.reuters.com/sustainability/climate-energy/chinas-power-reforms-global-data-centre-buildout-usher-battery-boom-2025-12-21/)

[0] Jinling API Data (company financial reports, real-time quotes, technical analysis)