CICC: Demand recovery and production cuts catalyze a bullish outlook for the lithium battery sector in the spring rally

CICC Research Report: Battery Production Ratio Significantly Increased Post-Holiday, Demand Rebound and Export Rush Drive Industry Recovery, Accelerating Industry Revival

CICC released a research report stating that the proportion of battery production has greatly increased, combined with demand recovery after the holiday, export rush, and a fundamental improvement, the battery industry is expected to accelerate its recovery pace. Under the influence of improved supply and demand, the bank is optimistic about the spring offensive of the lithium battery sector driven by three catalysts: 1) demand rebound leading to main chain beta recovery; 2) continuous progress in solid-state battery industrialization, with leading battery manufacturers gradually initiating tenders for solid-state and traditional lithium battery equipment; 3) mild inflation beginning in the industry chain, with fundamental resilience accelerating release.

CICC’s main views are as follows:

Post-holiday demand recovery combined with export rush may increase the industry’s recovery slope. Following the holiday, the release of new vehicle models and intensified policies for replacing old cars are expected to drive demand recovery for domestic new energy vehicles; additionally, the decline in export tax rebates and adjustments in US tariffs are likely to boost lithium battery export rush demand, further accelerating the recovery slope. Based on Xinluo information and industry chain surveys, the bank expects battery production in March to increase by 20-30% month-on-month and 40-100% year-on-year, showing a high recovery slope.

Solid-state battery industry trend is upward, with potential resonance with the main chain. On one hand, solid-state batteries are highly compatible with space applications, and the bank believes space-grade solid-state batteries could open new application scenarios, further enhancing valuation and market space for solid-state batteries. On the other hand, leading battery manufacturers are gradually initiating tenders for solid-state pilot lines and accelerating vehicle testing, with a clear pace of industrialization. Core equipment in the solid-state battery industry chain includes dry electrode, isostatic pressing, and laser equipment; key materials such as sulfides, lithium metal anodes, and current collectors are expected to benefit first.

Gradual inflation across the entire industry chain, with fundamental resilience expected to accelerate release. The bank believes that driven by improved supply and demand, a mild inflation trend will gradually emerge in the industry chain in Q4 2025: upstream materials are expected to see price reversals first, with some segments like 6F, separators, foils, and iron-lithium cathodes establishing a fundamental turning point; after price adjustments, the battery segment will also enter a recovery phase.

Risks

Global new energy vehicle sales underperform expectations; global energy storage installation demand underperforms; intensified market price competition leads to profit decline; delays in the industrialization of new technologies.