Lithium Battery Cycle Upward, Solid-State Technology Leads

In 2025, driven by downstream EV and energy storage sectors, lithium battery demand rose with significant profit recovery. The industry is expected to enter a new growth cycle in 2026, characterized by optimized supply-demand dynamics and accelerated technological breakthroughs. The Shenwan Battery Index rose 53.43% in 2025, outperforming the CSI 300, yet valuations remain low. Industry profitability fully recovered, with total operating revenue up 16.12% and net profit up 40.37% in Q1-Q3 2025. Demand is driven by both EV and energy storage sectors, with global lithium battery shipments reaching 2280.5 GWh, a 47.6% increase. Power battery growth stabilizes with structural increments from increased battery capacity per vehicle, overseas demand, and heavy truck electrification. Energy storage batteries see domestic market transformation and overseas large-scale storage ramp-up. Two core themes are recommended: cyclical recovery of the industry chain, focusing on leaders with improved capacity utilization and valuation recovery, and solid-state battery technology breakthroughs, now in the technology verification phase with intensive pilot line establishment, driving industry chain upgrades. Focus on companies with leading layouts in equipment, electrolyte, anode, and auxiliary materials.