As more and more automakers begin to produce their own batteries, solid-state battery technology shows great promise but still faces technical obstacles. The industry's unified safety standard is expected to be implemented in July 2026.
In 2025, Chinese companies will continue to dominate the global electric vehicle (EV) battery market, with CATL and BYD together accounting for 55.6 percent of installed capacity. This leadership position also extends to the field of energy storage batteries, with Chinese companies accounting for more than 90% of global shipments. Industry sources pointed out that as of the fourth quarter of 2025, capacity utilization has increased significantly, and manufacturers' orders in 2026 have basically been saturated, thanks to strong growth in demand for electric vehicles and energy storage batteries. However, this rapid expansion has also raised concerns about a potential supply glut that could undermine the profitability of the industry as a whole.
Over-expansion has led to financial difficulties in the upstream supply chain, especially for lithium iron phosphate (LFP) battery cathode material manufacturers. Industry data show that the capacity utilization rate in 2024 is only 50%, resulting in a sharp drop in the price of cathode materials, from 173000 yuan per ton at the end of 2022 to 34000 yuan per ton (about US $4940) in August 2025, putting severe financial pressure on manufacturers. The Chinese government has pledged to strengthen capacity management and curb excessive subsidies, but also acknowledged the challenges posed by overall industry problems and aggressive corporate investment.
Intense price competition and fluctuations in the raw material market have prompted battery manufacturers such as Ningde Times and BYD to increase their investment in global lithium resources. From mid -2020 to the end of 2022, the price of lithium carbonate soared from 40000 yuan per ton to 600000 yuan per ton, encouraging companies to invest in mining projects in South America, Africa and China. Ningde-era projects include the shelved Bolivian project and its operations in China, while BYD is involved in several mining initiatives. In order to ensure stable supply, battery manufacturers are increasingly using long-term procurement contracts, in which about 70% of the key materials in the Ningde era are obtained through such means.
Automakers have begun to develop their own batteries to enhance bargaining power with suppliers. Companies such as Geely, Chery and Ideal Motors have established or are building battery factories, and some of the lithium iron phosphate batteries in this model plant have been loaded for application. With the maturity of China's automobile industry chain, the multiple strategies of combining self-production, joint venture and third-party procurement are becoming more and more common in mainstream car companies. Industry experts pointed out that as car companies increase their independent research and development efforts, battery manufacturers must continue to invest in technological innovation to maintain a competitive advantage.
Technological innovation is still the core focus. Lithium iron phosphate batteries are approaching the energy storage limit and are affected by the new national standard that prioritizes higher energy density. Major manufacturers such as Ningde Times, BYD and GAC are investing in solid-state battery technology because it is expected to achieve breakthroughs in energy density, safety, service life and charging speed. Although GAC and SAIC have ambitious plans for mass production of solid-state batteries, experts warn that challenges such as chemical instability may delay commercialization beyond 2030.
Battery safety is a growing concern, with a number of recent lawsuits involving defective batteries in vehicles adding to public concerns. Measures taken to reduce costs in response to intense competition, such as reducing fire protection system configurations or using low-grade materials, are considered to increase risk and recall probability. Regulatory authorities have introduced stricter safety standards, requiring batteries to pass stringent safety tests to curb vicious competition and improve industry safety.
In summary, China's EV battery industry in 2025 presents a high global market share, rapid expansion, upstream supply chain issues, aggressive mineral investment, a rising proportion of self-research by car companies, the pursuit of technological breakthroughs, and urgent safety concerns under cost pressures and regulatory reforms. Stakeholders are striving to strike a balance between profitability, innovation and security to address changing supply chains, markets and policy challenges.