In-Depth Analysis Report on Policies Regulating Competitive Order in the Power and Energy Storage Battery Industry

Based on the aforementioned search data and industry chain research, I have prepared this in-depth analysis report on the policy impact of the power and energy storage battery industry.

I. Policy Background and Core Points

1.1 Policy Background

On January 7, 2025, the Ministry of Industry and Information Technology (MIIT), National Development and Reform Commission (NDRC), State Administration for Market Regulation (SAMR), and National Energy Administration (NEA) jointly held a symposium on the power and energy storage battery industry. This marks another policy guidance for the battery industry by government departments following the earlier overcapacity warning for the lithium battery industry [1]. The meeting was chaired by Xin Guobin, Vice Minister of MIIT, with heads of key enterprises and industry associations in attendance [1].

The meeting pointed out three core problems:

Blind construction exists in the industry
Irrational competitive behaviors such as cutthroat competition have emerged
Disrupting the normal market order and weakening the industry’s sustainable development capacity [1][2]

1.2 Four Core Policy Measures

Policy Dimension	Specific Measures	Expected Impact
Market Supervision	Strengthen price law enforcement inspections, product quality supervision, and crack down on intellectual property infringement	Eliminate low-quality production capacity and raise industry entry thresholds
Capacity Management	Improve capacity monitoring and hierarchical early warning mechanisms to prevent overcapacity	Curb blind expansion and optimize supply structure
Industry Self-Discipline	Give play to the role of industry associations and guide scientific capacity layout	Establish an order of good quality at a fair price and fair competition
Regional Coordination	Central-local linkage to strictly control redundant construction	Break local protectionism and promote optimal resource allocation [1][2]

II. Analysis of Current Industry Supply and Demand Pattern

2.1 Market Size and Growth Trend

According to data from the China Automotive Power Battery Innovation Alliance,

in November 2025

, sales of power and other batteries in China reached

179.4GWh

, with a month-on-month increase of 8.1% and a year-on-year increase of 52.2%. Among them:

Power battery sales: 134.0GWh (accounting for 74.7%), year-on-year +52.7%
Other battery sales: 45.4GWh (accounting for 25.3%), year-on-year +50.7% [1]

The industry shows characteristics of structural prosperity:

The capacity utilization rate of lithium iron phosphate has increased from 50%-60% in 2024 to over 70% in 2025
During peak seasons, the capacity utilization rate of leading enterprises is close to 80%, operating near full capacity [3]

2.2 Evolution Trend of Supply-Demand Balance

From a global supply-demand balance perspective, the entire industry is still expected to be in surplus in 2026, but shows

seasonal characteristics

First half of the year
: Inventory accumulation may occur (expectation of mine resumption)
Second half of the year
: Expected to enter the destocking phase

According to calculations by Zheshang Securities, if power battery production maintains growth of over 20% and energy storage demand grows by over 50% in 2026:

Total demand for lithium carbonate: approximately 1.95 million tons
Total supply: approximately 1.977 million tons
Surplus margin: narrowed to around 30,000 tons (a significant improvement from 140,000 tons in 2025) [4]

III. Analysis of Investment Impact on the Industry Chain

3.1 Profit Distribution Structure of the Industry Chain

Industry Chain Gross Margin Distribution

According to industry data, the gross margins of various links in the lithium battery industry chain show obvious differentiation:

Industry Chain Segment	Gross Margin Level	Competitive Landscape
Battery Manufacturing	~18%	Headquartered concentration, CATL dominates the market
Lithium Carbonate/Lithium Ore	~15%	Strong resource attribute, bargaining power recovering
Vehicle/End-User	~12%	Fierce competition, obvious vertical integration trend
Cathode Materials	~8%	Most competitive segment, under severe profit pressure [3][5]

3.2 Specific Impact of Policies on Each Segment

(I) Upper Stream: Lithium Ore Resources

Benefit Logic:

Policies regulate capacity expansion, slowing down the growth rate of supply
The central level of lithium price is gradually rising, rebounding from the low of 59,000 yuan/ton in 2025 to 126,800 yuan/ton [4]
Inventories are at historically low levels, forming bottom support for prices

Risk Factors:

Some suspended mines may resume production in the first half of 2026, creating short-term supply pressure
The conversion of lithium hydroxide production lines to lithium carbonate has increased, leading to increased capacity

(II) Mid Stream: Cathode Materials

Risk of Damage:

Lithium iron phosphate cathode materials are the “most competitive segment under the most severe profit pressure”
The entire industry has been in continuous loss for over 36 months, with the average asset-liability ratio of 6 listed enterprises reaching 67.81% [3]
From the end of 2022 to August 2025, the price plummeted by 80.2% (from 173,000 yuan/ton to 34,000 yuan/ton)

Turnaround Opportunity:

Processing fee hikes are in the works; starting from 2026, leading manufacturers will uniformly increase processing fees for all series of lithium iron phosphate products by 3,000 yuan/ton [3]
New-generation products such as high tap density and long cycle life have premium capabilities
Leading enterprises have orders scheduled until 2026, with capacity utilization rate continuously rising

(III) Battery Manufacturing

Benefit Logic:

Industry integration accelerates, eliminating backward production capacity
Leading enterprises have significant technological advantages and scale effects
Policies support “good quality at a fair price”, benefiting enterprises with high technological barriers

Segment Prosperity:

Separator
: Capacity expansion is relatively cautious, with a good supply-demand structure and operating rate maintained above 80% [5]
Electrolyte
: The operating rate in 2025 is significantly higher than that in 2024, and the price increase of lithium hexafluorophosphate drives the upward price of electrolyte [5]
Lithium Iron Phosphate
: Demand is booming, with capacity utilization rate increasing to 70%-80% [3]

IV. Analysis of Benefiting and Damaged Enterprises

4.1 Competitive Landscape of Power Batteries from January to November 2025

Enterprise	Market Share	Characteristics	Policy Impact Judgment
CATL	44.0%	Dual-drive of ternary and lithium iron phosphate batteries	Significantly Benefited - Absolute leader with advanced technology
BYD	22.0%	Vertical integration (Fudi Battery)	Significantly Benefited - Cost advantage of Blade Battery
CALB	7.5%	Ternary and lithium iron phosphate batteries	Neutral - Second-tier leader, expected to integrate
Guoxuan High-Tech	5.0%	Specialized in lithium iron phosphate batteries	Marginally Benefited - Professional focus, strong growth in energy storage
Eve Energy	4.5%	Full technical route layout	Marginally Benefited - High elasticity in energy storage business
SVOLT Energy	4.0%	Short-blade battery technology	Neutral - Need to observe technology conversion
Sunwoda	3.0%	Ternary and lithium iron phosphate batteries	Neutral to Weak - Market share needs to be improved
REPT BATTERO	2.5%	Focus on lithium iron phosphate batteries	Neutral to Weak - Relatively small scale

Data Source: China Automotive Power Battery Innovation Alliance [1]

4.2 Detailed Analysis of Policy-Benefiting Enterprises

[Significantly Benefited] CATL (300750.SZ)

Core Competitive Advantages:

Absolute leading market share
: Cumulative power battery loading volume reached 287.7GWh (January-November), accounting for 43%, with a year-on-year increase of 36% [6]
High technological barriers
: 5μm ultra-thin high-strength separators have been put into mass use, and all-solid-state batteries are targeted for mass production in 2027 [7]
Supply chain binding
: Plans to invest 2.563 billion yuan to increase capital in Jiangxi Shenghua, holding 51% stake to strengthen the lithium iron phosphate supply chain [3]
Sound financials
: ROE reached 22.84%, net profit margin 16.53%, with abundant cash flow [8]

Valuation Level:

Current stock price: $370.55, market capitalization: $1.63 trillion
P/E: 26.37x, P/B: 5.35x
YoY increase: +48.55% [8]

Investment Key Points:

It is recommended to pay attention to companies with
leading technology and strong discourse power
in the power battery industry chain. As the absolute leader, CATL will continue to benefit from industry integration [6]

[Significantly Benefited] BYD (002594.SZ)

Core Competitive Advantages:

Vertical integration strategy
: Its subsidiary Fudi Battery supplies all vehicle models, with a loading volume of 107.9GWh from January to November 2025 (driven by its own vehicles) [9]
Blade Battery technology
: Significant cost advantage and outstanding safety performance
Fast loading growth
: Cumulative power battery loading volume reached 148.2GWh (January-November), accounting for 22%, with a year-on-year increase of 26% [6]

Financial Performance:

Current stock price: $96.79, market capitalization: $87.177 billion
P/E: 23.01x, EV/OCF only 7.43x (relatively undervalued) [8]
Profitability continues to improve, Q3 EPS reached $1.51, fully in line with expectations [8]

[Marginally Benefited] Guoxuan High-Tech, Eve Energy

Guoxuan High-Tech

Specialized in lithium iron phosphate batteries, with an all-solid-state battery pilot line already in place
Jinshi all-solid-state battery is advancing the design of a 2GWh mass production line [7]

Eve Energy

The “Longquan No. 2” all-solid-state battery successfully rolled off the production line in September 2025 [7]
High elasticity in energy storage business, benefiting from the booming demand for energy storage

4.3 Enterprises at Risk of Damage from Policies

[Damage Risk] Small and Medium-Sized Cathode Material Enterprises

Core Risks:

Continuous losses
: The entire industry has been in continuous loss for over 36 months, with an average asset-liability ratio of 67.81% [3]
Cutthroat competition
: Disorderly competition weakens the industry’s innovation vitality
Capacity elimination
: Policies guide rational competition, and inefficient production capacity faces elimination

Key Focus Enterprises:

Lithium iron phosphate cathode material producers (excluding leading enterprises such as Hunan Yuneng and Dynanonic)
Second and third-tier enterprises lacking differentiated competitive advantages

[Damage Risk] “Speculators” Entering the Industry Cross-Border

Core Risks:

Capital chain pressure
: In 2026, only enterprises with “cash flow” can take actions, and cross-border players without cash flow support will be under pressure [10]
Capacity release falls short of expectations
: Lack of technological and scale advantages, making it difficult to sustain
Strengthened policy constraints
: Local financing constraints are tightened, increasing the difficulty of project implementation

V. In-Depth Analysis of the Energy Storage Battery Sub-Track

5.1 Supply-Demand Gap of Energy Storage Batteries

According to market information,

the shortage of energy storage batteries may continue

until 2026:

From September to November 2025, first and second-tier battery enterprises faced tight supply, and car companies sent personnel to “compete for batteries” [1]
The demand growth rate in the energy storage battery field is expected to exceed 50% [4]
The global shipment of energy storage batteries is expected to exceed 650GWh in 2025, with the Chinese market accounting for over 50% [11]

5.2 Benefiting Enterprises in Energy Storage Batteries

Enterprise	Energy Storage Layout	Benefit Logic
CATL	Leader in energy storage batteries	In a tight supply pattern, production capacity is competitiveness
BYD	Fudi Energy Storage	Vertical integration advantage, synergy between energy storage and vehicles
Eve Energy	Energy storage cells	Leading all-solid-state technology, high elasticity in energy storage
REPT BATTERO	Specialized in energy storage	Focus on the energy storage sub-track

5.3 Price Increase Transmission Chain

Price increase signals have emerged:

On December 9, 2025, Dejia Energy fired the “first shot” of lithium battery price increase, announcing a 15% price increase [1]
Multiple lithium iron phosphate cathode material producers have launched a price increase wave, with an increase of 2,000-3,000 yuan/ton [1]
Industry insiders expect the price increase to continue until the fourth quarter of 2026 [1]

Price Increase Transmission Path:

Lithium Carbonate → Cathode Materials (Lithium Iron Phosphate) → Batteries → End-Use (Energy Storage/Vehicles)

VI. Investment Strategy Recommendations

6.1 Core Investment Themes

Theme 1: Beneficiaries of Leading Enterprise Integration

Recommended Targets

: CATL, BYD

Logic

Policies regulating competitive order are conducive to the improvement of market share of leading enterprises
Vertically integrated enterprises (BYD) have significant advantages in supply chain security
Strong capital strength to survive industry cycles

Theme 2: Price Increase Elasticity of Materials

Recommended Targets

Lithium Iron Phosphate Cathode
: Hunan Yuneng, Dynanonic
Electrolyte
: Tianci Materials, Do-Fluoride New Materials
Separator
: Starry Industrial, Enjie Industry

Logic

Processing fee hikes directly increase profits
Leading enterprises have orders scheduled until 2026, with full capacity utilization
The capacity utilization rate of the lithium iron phosphate industry has increased from 50% to over 70% [3][5]

Theme 3: Leading Enterprises in Solid-State Battery Technology

Recommended Targets

: CATL, BYD, Eve Energy, Guoxuan High-Tech, CALB

Logic

All-solid-state batteries are the ultimate form, with leading manufacturers targeting mass production in 2027 [7]
Technologically leading enterprises will obtain excess premiums
GAC has built China’s first large-capacity all-solid-state battery pilot production line [7]

6.2 Risk Warning

Risk Type	Specific Content	Response Suggestions
Demand Falls Short of Expectations	The growth rate of energy storage and power batteries may be lower than expected	Pay attention to monthly loading data and adjust dynamically
Price Fluctuations	Lithium carbonate prices may pull back	Pay attention to inventory levels and supply release rhythm
Policy Risks	Overseas trade frictions may intensify	Pay attention to the progress of enterprises going overseas
Technological Risks	Technological route changes may exceed expectations	Pay attention to the industrialization process of all-solid-state batteries

6.3 Key Focus Time Nodes

Q1 2026
: Lithium carbonate inventory accumulation
H1 2026
: Production progress of Australia’s Greenbushes CGP3 project
Q3-Q4 2026
: Peak season for energy storage loading, verifying demand resilience
2027
: Key node for small-batch mass production of all-solid-state batteries

VII. Conclusion

7.1 Core Conclusions

Clear Policy Orientation
: Regulating competitive order is the implementation of the “anti-involution” policy in the lithium battery field, aiming to guide high-quality development of the industry
Industry Cycle Reversal
: From “gradual shift from overcapacity to tight balance” in 2025, it may even become tight after 2027
Leading Enterprises Benefit Significantly
: CATL and BYD, with advantages in technology, scale, and capital, are expected to further increase their market share
Improvement in Material Segments
: A price increase cycle has started for segments such as lithium iron phosphate and electrolyte, with profitability of leading enterprises recovering
Small and Medium-Sized Backward Production Capacity Under Pressure
: Enterprises with continuous losses and high asset-liability ratios face risks of elimination

7.2 Investment Ratings

Sector	Rating	Core Logic
Power Battery Leaders	Overweight	Market share increasing, with solid technological barriers
Lithium Iron Phosphate Cathode	Overweight	Capacity utilization rate increasing, processing fees raised
Electrolyte	Overweight	Driven by the price increase of lithium hexafluorophosphate
Separator	Overweight	Relatively good supply-demand structure
Energy Storage Batteries	Overweight	Tight supply-demand pattern continues
Small and Medium-Sized Material Enterprises	Reduce/Hold	Risk of elimination and clearance