Lithium battery sector’s cyclical turnaround: only selecting the right stocks can truly generate profits.

【Answer 1】 1. Lithium Battery Cycle From 2019 to 2025, the lithium battery industry has undergone a complete cycle: 2019–2022: Driven by the ‘dual carbon’ goals (carbon peak and carbon neutrality), new-energy vehicles entered an explosive growth phase—from infancy to scale—sparking a massive wave of capacity expansion across the entire industry. 2023–2024: The aftermath of aggressive capacity expansion hit hard: the entire industry plunged into fierce price wars, entering a brutal phase of inventory reduction and large-scale consolidation. 2025: Supply-side reform is bearing fruit—lagging production capacity is being rapidly eliminated, supply-demand fundamentals are improving at the margin, leading firms’ profitability is rebounding, and the industry is embarking on a new upward cycle. 2. Industrial Chain and Subsector Leaders The lithium battery industrial chain comprises three main segments—upstream, midstream, and downstream—spanning resource extraction, materials manufacturing, end-use applications, and circular recycling, forming a fully integrated closed loop. Upstream segment: Primarily involves mining and processing of lithium, nickel, cobalt, and other critical raw materials. Lithium resources are dominated globally by Albemarle (U.S.), SQM (Chile), and domestically by Tianqi Lithium and Ganfeng Lithium. Nickel supply is led by Vale (Brazil), Norilsk Nickel (Russia), Tsingshan Holding Group (China), and Nordic Nickel. For cobalt, Huayou Cobalt and CMOC (China Molybdenum Co.) are the key players—these raw materials form the foundational inputs for battery manufacturing. Midstream segment: Centers on the production of four core battery materials—cathode, anode, separator, and electrolyte. Cathode materials follow multiple technical routes—including NMC (nickel-manganese-cobalt), LFP (lithium iron phosphate), LMO (lithium manganese oxide), and LCO (lithium cobalt oxide). Leading NMC producers include Ronbay Technology and Easpring Materials; top LFP players are Hunan Yuteng and Longpan Technology. Anode materials: Natural graphite and artificial graphite dominate today; silicon-based anodes represent the next generation. Key manufacturers include BTR New Energy Materials, Putailai, Shanshan Technology, and Hitachi Chemical. Separators: Include dry-process, wet-process, and coated separators. Domestic leaders are Enjie Co., Ltd., Shanghai Senior Material, Jinli New Energy, and Sinoma Science & Technology. Electrolytes: Encompass conventional organic liquid electrolytes as well as next-generation solid-state electrolytes. Top domestic players include Tianqi Chemical (Tianqi Materials), Capchem Technology (Xinzhoubang), and Guotai HuaRong. Batteries themselves fall into three major categories: power batteries (for EVs), energy storage batteries, and battery recycling. Power batteries primarily use NMC or LFP chemistries, with emerging technologies including sodium-ion and solid-state batteries. Industry leaders include Contemporary Amperex Technology Co. Limited (CATL), BYD, LG Energy Solution, CALB (China Aviation Lithium Battery), Eve Energy, and NARDA Power Source. Additionally, as the first generation of new-energy vehicle batteries reaches end-of-life, battery recycling is gaining increasing importance. GEM Co., Ltd. is the leading firm specializing in resource recovery from retired lithium batteries. 3. Performance of Leaders Across Segments Reviewing recently released annual reports and earnings forecasts across the entire value chain reveals clear signs of industry-wide recovery—but performance disparities among segments and individual companies remain stark. Some firms are riding the upswing successfully, while others remain mired in difficulties: some report hundred-billion-yuan profits and over 100% year-on-year growth, whereas others post losses exceeding 100%.

Lithium battery sector surges: analysis of the top 10 core enterprises.

【Answer 2】 Over the past year, market expectations for lithium prices have swung dramatically—from euphoric optimism to extreme pessimism. However, with unexpectedly resilient demand and concentrated supply-side uncertainties erupting simultaneously, the fundamental value center for lithium carbonate is now rising significantly. We believe lithium carbonate has entered a phase of strong demand coupled with constrained supply—a true resonance period—and the re-rating of lithium-mining equities has only just begun. I. Demand-Side Multi-Dimensional Resonance, Acceptance Significantly Rising First, consider the power battery segment. Growth momentum for new-energy vehicles remains robust—not weakening, but rather exhibiting dual improvement in both quality and quantity. On one hand, continuously rising battery capacity per vehicle offsets concerns about slowing penetration-rate growth; on the other, export demand has far exceeded expectations. Especially against the macro backdrop of elevated global oil prices, rising fuel-car operating costs are strongly stimulating overseas markets’ restocking demand for electric vehicles. This demand is not short-term pulse-driven—it reflects long-cycle, structural growth. Even more noteworthy is the energy storage segment. With widespread adoption of large-format cells, cost per watt-hour has dropped by approximately RMB 0.04, and extended project loan tenors have further widened profit margins for downstream power station operators. As a result, the price tolerance threshold for lithium carbonate in the energy storage sector has risen sharply—from just over RMB 100,000/ton previously to RMB 180,000/ton today. So long as lithium prices stay below RMB 180,000/ton, internal rates of return (IRR) for energy storage projects remain healthy. Production scheduling data shows March industry output reached a new all-time high, and April output rose slightly month-on-month. We forecast full-year lithium battery demand growth will sustain at a high level of 30%–35%—this persistently robust demand forms the most solid foundation underpinning the upward shift in lithium’s price floor. II. Supply-Side Uncertainties Intensify, Resource Value Becomes More Prominent In sharp contrast to this strong demand stands mounting supply-side volatility—frequent ‘braking’ events. Zimbabwe, a major recent source of incremental supply, continues to feel the impact of its export ban. Currently, the government’s determination to localize downstream processing remains firm—meaning export resumption remains distant, and future producers must commit substantial capital expenditures (CAPEX) to build local processing facilities, directly raising long-term lithium salt production costs. Estimates indicate Zimbabwean ore inventories held domestically will be largely depleted by late April, creating a supply shortfall exceeding 10,000 tons in May. If the ban remains unresolved in the near term, global supply could face a direct ~10% shock—roughly 20,000 tons of lost output. Domestically, disruptions to Jiangxi’s spodumene (petalite) mines are also significant. Constrained by mine permit transfers, safety assessments, and environmental inspections, resumption timelines across major mines have lagged expectations.

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3 Stocks Riding the Smackover Lithium Rush in the U.S.

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