Cui Dongshu, Secretary-General of the China Passenger Car Association (CPCA), said that domestic demand for new-energy lithium batteries is likely to fall sharply at the beginning of 2026 compared with the fourth quarter of 2025. In response, battery manufacturers are expected to cut output and take extended production breaks to adjust to the seasonal and policy-driven downturn.
He cited several key factors behind the expected decline:
- Policy impact on passenger vehicles: Adjustments to the vehicle purchase tax for new-energy passenger cars are expected to reduce sales by at least 30 percent quarter-on-quarter from the fourth quarter of 2025.
- Post-subsidy slump in commercial vehicles: New-energy commercial vehicles are likely to see a steep quarter-on-quarter drop after year-end rushes to secure subsidies and tax exemptions.
- Limited export spillover: While exports of new-energy passenger vehicles may remain relatively strong in early 2026, they are unlikely to significantly boost battery demand for independent battery suppliers.
- Weak U.S. energy storage pull: Demand from the U.S. energy storage market offers little support for China’s battery exports. Battery shipments to the U.S. fell sharply in 2025, and AI-driven storage demand in the U.S. provides minimal upside for Chinese producers.
- Pressure from low domestic storage prices: Domestic energy storage tender prices have dropped well below 300 yuan per kilowatt-hour, dampening incentives for price increases. At the same time, vehicle batteries cannot offset losses incurred in the energy storage sector.
Together, these factors point to a challenging start to 2026 for China’s new-energy battery industry.
Source: Stock Times, December 28, 2026
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