Analysis of Cycle Reversal in the Lithium Battery Sector and CATL's Leading Edge in Solid-State Battery Technology

Based on the latest market data and industry research reports, I provide an in-depth analysis of the investment logic for the lithium battery sector to navigate the cycle, as well as CATL’s leading edge in solid-state battery technology built through R&D investment.

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The lithium battery industry chain experienced a significant cycle reversal in 2025. According to statistics from the GGII (High-Tech Industrial Research Institute), China’s total energy storage lithium battery shipments reached 430 GWh in the first three quarters of 2025, exceeding the full-year 2024 total by 30% [1]. For power batteries, Zhang Xiaofei, Chairman of GGII, predicts that power lithium battery shipments will exceed the 1 TWh mark for the first time in 2025 [1].

Driving Factor	Specific Performance
Demand Side	Explosive growth in the global energy storage market; the growth rate of global energy storage installation demand is expected to exceed 60% in 2026 [2]
Supply Side	Under the guidance of “anti-involution” policies, industry chain supply is accelerating towards leading enterprises, and the supply-demand relationship has substantially improved [2]
Price Side	The price of lithium hexafluorophosphate has risen by more than 240% from its low point this year, and the main contract of lithium carbonate futures has exceeded 120,000 yuan/ton [1]

After nearly two years of deep adjustment, the valuation bubble in the lithium battery and new energy sectors has basically been cleared, and the industry’s P/E ratio is in a historically low range. Institutional estimates show that total lithium battery demand will reach 2495 GWh in 2026, a year-on-year increase of 28% compared to 1944 GWh in 2025, still in a tight supply-demand balance range [2]. Once demand growth exceeds 30%, the supply side will quickly fall into a shortage, bringing significant opportunities for leading enterprises to increase both volume and price.

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###1. Market Position and Financial Strength

With its technological advantages, CATL has ranked first globally in power battery usage for 8 consecutive years (2017-2024), with a market share of 37.9% in 2024; its energy storage battery shipments have ranked first for 4 consecutive years, with a market share of 40% [3]. The company achieved operating revenue of 362 billion yuan in 2024 and ranked 250th in the Fortune Global 500 [3].

• Market capitalization: 1.65 trillion yuan
• ROE (Return on Equity): 22.84%
• Net profit margin:16.53%
• Current stock price up 44.69% from the beginning of the year

###2. R&D Investment Builds Technological Moat

CATL continues to increase R&D investment and has made breakthrough progress in the field of solid-state batteries:

Time Node	Milestone
April 2024	Announced R&D and mass production timeline for all-solid-state batteries
July 2025	Clearly predicted small-scale mass production of all-solid-state batteries in 2027
November 2025	Zeng Yuqun stated that the research and industrialization progress is at the global forefront [4]
Around 2030	Expected to achieve larger-scale production

• Condensed Matter Battery
  : Energy density of 500 Wh/kg, already in mass supply to NIO ET9 and Xiaomi SU8, supporting ultra-fast charging experience of “10 minutes charging for 400 km range” [5]
• Energy Density Comparison
  : Solid-state batteries (400-500 Wh/kg) vs traditional liquid batteries (200-300 Wh/kg) [5]
• Safety Performance
  : Resistant to 800℃ high temperature, no fire or explosion; cycle life over 5000 times; capacity retention rate over 80% at -30℃ [5]

###3. Industry Chain Layout and Ecological Collaboration

CATL has formed a complete solid-state battery industry ecosystem:

1. Power battery enterprises
   : CATL, BYD, Gotion High-Tech, LG Energy Solution
2. Vehicle enterprises
   : GAC Group, Chery Automobile, Toyota, etc.
3. Raw material and equipment enterprises
   : Lead Intelligent, Winhe Technology
4. Innovative battery technology enterprises
   : Weilan New Energy, Qingtao Energy [4]

• In 2025, signed a strategic agreement with Sinopec to build 10,000 swap stations
• In September 2025, the second phase of the Luoyang base was put into production, increasing annual capacity by 30 GWh
• Signed a 10-year deep cooperation agreement with Voyah to become the core battery supplier for all its models [6]

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##3. Competitive Landscape of Solid-State Battery Industrialization

###1. Industry Competition Fully Underway

Since 2025, the all-solid-state battery industry has seen many key breakthroughs, with multiple participants launching small-batch trial production one after another:

Enterprise	Progress and Timeline
CATL	Small-scale mass production in 2027, large-scale production around 2030
Gotion High-Tech	Entered pilot production stage, launched 2GWh mass production line design, planned small-scale mass production in Q3 2027
EVE Energy	“Longquan No.2” all-solid-state battery successfully rolled off the line; Chengdu mass production base has an annual capacity of nearly 500,000 cells
Farasis Energy	Pilot production line put into operation by the end of 2025; small-batch mass production and vehicle loading in 2026-2027
China Innovation Aviation	350 Wh/kg semi-solid-state large cylindrical battery planned to be launched in 2026 [4][5]

###2. Semi-Solid-State Batteries Have Entered the Large-Scale Vehicle Loading Stage

In 2024, domestic semi-solid-state battery shipments reached 7 GWh, a year-on-year increase of over 600%. Models such as NIO ET7 and IM L6 have achieved mass production and vehicle loading. According to the “Top 10 Technical Trends of China’s Automobile Industry in 2026” released by the China Society of Automotive Engineers, the number of semi-solid-state batteries installed in China will rise to 100,000 units in 2026 [5].

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##4. Investment Recommendations and Risk Warnings

###1. Core Investment Logic

1. Technological leadership
   : All-solid-state battery R&D progress is at the global forefront; condensed matter batteries have been commercialized
2. Scale advantage
   : 37.9% market share in power batteries, 40% in energy storage batteries, with significant cost advantages
3. R&D barrier
   : Continuous R&D investment builds a deep technological moat; Wu Kai was elected as an academician of the Chinese Academy of Engineering in 2025 [3]

###2. Industry Chain Opportunities

• Upstream materials
  : New processes such as solid-state electrolytes, dry electrodes, and isostatic pressing bring equipment update demand
• Midstream manufacturing
  : Leading enterprises continue to benefit from technological accumulation and scale effects
• Downstream applications
  : Energy storage demand exceeds expectations; expected to maintain 30-50% compound growth in 2026

###3. Risk Warnings

• Solid-state battery technology industrialization progress is less than expected
• Volatile raw material prices affect profitability
• Risk of industry overcapacity reappears
• Uncertainty risk of overseas policies

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##References

[1] Shanghai Securities News - “Lithium Battery 2025: From Deep Correction to Rapid Recovery” (https://finance.sina.com.cn/roll/2025-12-24/doc-inhcvrry0296280.shtml)

[2] East Money - “Daily Research Selection on December 24 | Lithium Battery Market Rebounds Again: How Will It Go in 2026?” (https://finance.eastmoney.com/a/202512243600133762.html)

[3] Baidu Encyclopedia - “Contemporary Amperex Technology Co., Limited” (https://baike.baidu.com/item/宁德时代新能源科技股份有限公司)

[4] 36Kr - “Solid-State Battery Heat Rises: How Far Is the Commercialization Road?” (https://eu.36kr.com/zh/p/3581059653303429)

[5] Sina Finance - “China’s Semi-Solid-State Battery Commercialization Process Accelerates, Entering the ‘Countdown’ Stage of Large-Scale Vehicle Loading” (https://finance.sina.com.cn/stock/relnews/cn/2025-12-01/doc-infzfwnq3369130.shtml)

[6] CATL Official Website - “Boosting High-End Electric Vehicles! CATL Signs 10-Year Deep Cooperation Agreement with Voyah” (https://www.catl.com/news/9498.html)

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: The lithium battery sector is experiencing a key turning point from the bottom of the cycle. CATL occupies a leading position in the next-generation battery technology competition through continuous R&D investment (condensed matter batteries with 500 Wh/kg energy density, 2027 all-solid-state battery mass production target). The company’s years of global market share leadership and strong technical reserves provide solid protection for it to navigate cycle fluctuations. Driven by the explosion in energy storage demand and the industrialization of solid-state batteries, CATL is expected to continue leading the new energy revolution and become a core asset for long-term allocation.

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