Cui Dongshu: In January, China's battery supply and demand gradually improved, with a surge in heavy truck batteries

Crypto Finance APP has learned that on February 22, the Secretary General of the China Passenger Car Association, Cui Dongshu, stated that the trend of power batteries in January 2026 is relatively weak, with both export and domestic sales performing below average. The high growth in new energy vehicle installations at the end of the year, which previously drove battery growth, has fallen short, and the actual situation is quite poor. In January, China’s total production of power and other batteries was 168 GWh, a year-on-year increase of 25%. The growth rate of batteries has decreased from over 40% to 25%, and supply and demand are gradually improving. The demand for vehicle-mounted batteries in January was heavily dependent on the surge in heavy truck batteries supported by ultra-high subsidies.

Power Battery Installation Share

In January, China’s total production of power and other batteries was 168 GWh, up 25% year-on-year. The growth rate of batteries has decreased from over 40% to 25%, with supply and demand gradually improving.

Currently, the proportion of power batteries used for vehicle installation in total production is continuously decreasing. In 2021, the installation rate of power batteries was 70%; in 2022, it was 54%; in 2023, it was 50%; in 2024, the installation proportion of power batteries increased to 50%; in 2025, it remained at 44%; and in January 2026, the installation rate dropped to 25%, with ternary batteries at 30% and lithium iron phosphate batteries at 24%. The installation boom for power batteries has reached its lowest point of the year.

With the development of energy storage and other industries, especially due to the global energy crisis caused by the Russia-Ukraine conflict, demand for batteries in energy storage and related sectors has grown rapidly, leading to a noticeable decline in the proportion of batteries installed in vehicles. However, the market retreat at the beginning of the year has also contributed to this decline. Both power and energy storage batteries are under pressure from overcapacity and relatively high inventory levels. In 2021 and 2022, the growth of power batteries was lower than that of vehicle production. In 2023 and 2024, the installation of power batteries remained relatively low, with production matching the growth in installation. In 2025, battery production was high, but vehicle installation started low, and in January 2026, the installation rate fell to a recent low.

Recovery of Ternary Battery Share in Domestic Vehicle Certification

The demand for power batteries in vehicle installation is experiencing rapid growth. In 2019, demand increased by 10%; in 2020, domestic vehicle certification for power batteries reached 64 GWh, a 2% increase; in 2021, it surged to 155 GWh, a 143% increase; in 2022, it reached 295 GWh, up 91%; in 2023, 388 GWh, up 32%; in 2024, lithium battery installation was 548 GWh, a 41% increase; in 2025, lithium battery installation reached 770 GWh, up 42%. In January 2026, lithium battery installation was 42 GWh, an 8% increase.

Continued Strong Growth in Vehicle Battery Demand

Demand for passenger car batteries continues to grow strongly, with pure electric passenger vehicles increasing by 29% in 2025, and plug-in hybrid vehicles increasing by 17%, maintaining robust growth. The demand for batteries in pure electric trucks also increased significantly, reaching 169 GWh.

In January 2026, battery installation grew by 8%, with commercial vehicles showing strong growth—especially pure electric trucks, which surged by 42%, and plug-in hybrid trucks, which increased by 220%.

Looking at the installation share, the demand structure for power batteries has been changing rapidly in recent years. In 2020, the dominant pattern was pure electric passenger cars first, followed by pure electric buses second, and pure electric special vehicles third. Plug-in hybrid passenger cars ranked fourth. By 2026, pure electric passenger cars remain first, plug-in hybrid passenger cars rise to second, pure electric trucks move to third, pure electric buses stay fourth, and plug-in hybrid special vehicles remain fifth.

In recent years, the market for pure electric buses has sharply declined, while pure electric special vehicles have maintained rapid growth in battery usage. Currently, the battery consumption for pure electric passenger cars and plug-in hybrid passenger cars has decreased significantly, while the battery demand for heavy trucks has surged. The high subsidies for new energy trucks have led to a differentiated trend in battery usage.

Automobile Certification Production

Based on certification battery volume estimates, in 2025, the domestic certification for new energy vehicles reached 14.5 million units, a 24% increase year-on-year, with 8.6 million pure electric passenger cars (up 35%), 5.03 million plug-in hybrid passenger cars (up 7%), and 780,000 pure electric special vehicles and trucks, showing strong production figures.

In January 2026, domestic new energy vehicle installations totaled 700,000 units, down 12% year-on-year, including 398,000 pure electric passenger cars (down 17%), 269,000 plug-in hybrid passenger cars (down 6%), and 29,700 pure electric special vehicles, with significant divergence in data.

Supporting Battery Companies Are Still Not Fully Competitive

In recent years, the competitive landscape of the battery market has not changed significantly. In January 2026, supporting battery suppliers numbered only 33, at a low point. Due to relatively slow technological progress in power batteries and clear scale growth characteristics, battery companies have achieved strong growth in production and installation volumes.

The existing battery landscape remains largely unchanged—those investing more tend to gain larger market shares, leading to a continued expansion of major battery companies. Small and medium-sized battery firms also have opportunities to grow through technological breakthroughs or other advantages. Overall, the battery landscape has remained relatively stable amid rapid growth, though there was a slight decline in January 2026.

However, future changes in the battery industry present considerable opportunities. The trend of automakers jointly developing batteries with related enterprises is becoming increasingly evident, and battery companies are gradually forming core supporting products for vehicle manufacturing.

Differentiation in Battery Capacity for Various Vehicle Types

As battery prices decline, electric vehicle range continues to increase. Currently, the high-end demand in the EV market is very strong, with a trend toward upgrading older models into micro-vehicles, driven by policy pressures, leading to a clear high-end shift. In the second half of 2024, policies promoting old-for-new replacements revived the small car market, with micro electric vehicles booming, which reduced overall battery installation volume. As the cost advantage of EVs becomes more apparent, the structure of pure electric special vehicles is shifting toward heavy trucks, resulting in a surge in battery capacity.

From a supply chain perspective, future automakers will become increasingly powerful, further strengthening control over battery suppliers and upstream industries, while also enhancing downstream brand marketing capabilities. Under the new energy system, the “vehicle-centric” characteristic will continue to be prominent.

High Energy Density Batteries Need to Rise

Currently, the main energy density range for pure electric vehicle batteries is between 125 and 160 Wh/kg. Notably, in the first quarter of 2026, batteries with an energy density of 140 to 160 Wh/kg accounted for 38%, an increase of 11 percentage points year-on-year.

In the first quarter of 2026, vehicles with an energy density above 160 Wh/kg made up 13%, a significant rise from 9% in 2025, mainly driven by increased demand for high-end ternary batteries. Conversely, products with energy densities below 125 Wh/kg decreased to 0% in 2026.

Battery Company Landscape

The competition among battery companies has formed a pattern dominated by CATL and BYD. In the first quarter of 2026, CATL’s market share increased to 50.1%, with other battery companies also showing clear differentiation. The industry is witnessing a slowdown in the concentration of leading companies; from 72% in 2022 (top two companies, CATL and BYD), the combined share remains at 68% in 2026, leaving about 30% for other players. Companies like Guoxuan High-tech, EVE Energy, Geely YaoNing, and ChuNeng New Energy performed strongly.

LFP (lithium iron phosphate) batteries show obvious product differentiation advantages. BYD remains relatively strong but is in a period of adjustment early this year. CATL’s share of LFP batteries surpassed BYD’s starting in 2024. EVE Energy and Guoxuan High-tech also performed well. Xinnova, Ruipu LanJun, Hive Energy, and Ji Electric New Energy have made notable improvements.

As BYD fully transitions to LFP batteries, the advantages of ternary batteries from CATL, Hive, Zhongchuan XinHang, and LG become more pronounced. Recently, companies like Juyuan Jiyan and EVE Energy have performed well. LG New Energy’s performance appears relatively weak due to a decline in Tesla’s domestic sales ratio.