Thrilling Leap, Complete Reversal, This Established Leading Brand Enters a New Stage of Sustainable Development

Ask AI · How did Kelon Electronics achieve strategic transformation after Midea’s acquisition?

This is the 1292nd original article on the front line of new energy

Last March, at nearly the lowest point, a series of changes following Midea’s takeover of Kelon Electronics indicated that the company had reversed its predicament, with very high expectations. Almost a year has passed, and the industry and company’s judgments at that time have been validated. Today, I revisit this with the company’s 2025 annual performance report.

01

Energy Storage Becomes a New Engine: From Reversal to Sustainable Development

According to the financial report, the company’s 2025 revenue is 6.31 billion yuan, a 42.4% increase year-over-year. Q4 revenue reached 2.725 billion yuan, with both quarter-on-quarter and year-on-year growth, continuing a strong growth trend.

Why focus on revenue? Because revenue growth is the most important indicator; many problems can be solved through growth (the reason why the country emphasizes maintaining GDP growth). For companies that have reversed their difficulties, this is especially true—if revenue is increasing, it indicates the company is on a positive, ongoing trajectory.

Over the past two or three years, the most direct reason for sustained revenue growth is the continuous breakthrough and volume increase in energy storage business. In 2022, energy storage revenue was less than 700 million yuan; by 2025, it reached nearly 3.8 billion yuan, a year-over-year increase of over 160%, accounting for more than 60% of total revenue. Energy storage has begun to become the company’s new growth engine!

The fundamental reason behind this is the rapid growth of the energy storage industry.

The explosive growth of new energy installations has driven the rapid takeoff of the energy storage sector. In China alone, by the end of December 2025, the cumulative installed capacity of new energy storage reached 144.7 GW, an 85% increase year-over-year, mainly dominated by lithium battery storage. Overseas markets in Europe, North America, Southeast Asia, etc., also show explosive growth in demand. Orders in high-value markets like North America and Europe continue to rise, providing broad opportunities for energy storage companies with strong technology and channel capabilities.

Meanwhile, energy storage applications are expanding from traditional grid-side and power generation to industrial and commercial, residential, data centers, microgrids, and other fields. The application boundaries are continuously broadening, greatly increasing storage penetration and creating both growth opportunities and challenges for industry players.

Grid-side energy storage focuses on large capacity and long-duration needs, with high requirements for device stability and safety; industrial and commercial storage aims to reduce electricity costs and achieve peak-valley arbitrage, paying more attention to investment payback periods and system efficiency; residential storage, especially in overseas markets (Europe, North America), has strong demand, with core competitiveness in cost-performance and brand recognition; data center storage emphasizes uninterrupted power supply and energy efficiency, requiring high reliability and smart features.

The stage is set. Kelon Electronics only needs to stay focused, follow its own rhythm, work steadily, and hone its core competencies. The future will surely see it perform well in its industry. In fact, this is exactly what Kelon Electronics is doing.

In 2025, the company launched innovative products such as the integrated photovoltaic-storage cabinet Aqua-EX and AquaE series, as well as the 522kWh commercial energy storage system. Its self-developed AquaC2.5, a new generation containerized energy storage system, has achieved large-scale shipments. In terms of channels and markets, it won bids for China General Nuclear Power Group’s 2025 energy storage system framework procurement, China State Shipbuilding Corporation’s 350MWh framework procurement, Mianyang Portqing’s 200MWh energy storage system, and expanded into Greece, Czech Republic, Poland, and other markets, covering grid-side and industrial-storage applications. Capacity-wise, the Yichun energy storage base has an annual capacity of 12 GWh, and the initial capacity of the Indonesia plant is about 3 GWh, with plans to start operation in 2026.

Shipments were strong: in 2025, total shipments reached 6.9 GW. According to Polar Star Energy Storage Network, the company ranked in the top ten globally for source-side energy storage system shipments in 2025! Additionally, according to GGII, Kelon Electronics ranked 11th globally in AC-side energy storage system shipments, and 9th overseas, quickly becoming a leading manufacturer.

Order-wise, the company signed new energy storage projects with a total capacity of about 11.6 GWh in 2025.

To put this in perspective, in 2024, energy storage shipments were only 1.4 GWh, with new orders of just 2.4 GWh. The breakthrough in 2025 is remarkable.

Looking into 2026, order performance remains vigorous. In February, Kelon Electronics was shortlisted for China General Nuclear Power’s 2026 energy storage system framework procurement, with a bid of 618 million yuan, roughly 0.515 yuan/Wh. Other shortlisted companies include Envision, BYD, CRRC Zhuzhou Institute, NARI Group, and Tiancheng Tongchuang.

In March, Kelon Electronics also signed a contract with China Sodium Battery, which will supply full energy storage equipment for the “Qinhuangdao 20MW/80MWh sodium-ion energy storage project.” According to reports from Gushen Photovoltaic Storage and Digital Energy Network, the scope includes full sodium-ion energy storage systems such as power conversion and step-up systems, battery modules with polymer anion technology, BMS, thermal management, fire protection, and other key components.

This means Kelon Electronics has also developed sodium-ion battery technology, aligning further with top-tier manufacturers! This is why Leo has always emphasized that Kelon Electronics’ technological strength is seriously underestimated by the market.

Looking back now, it’s clear how wise Midea’s acquisition was—further divesting non-core assets, focusing on electrochemical energy storage and smart grids. The company has successfully caught the fast train of energy storage.

Of course, this is also because Kelon Electronics has a solid technical foundation in energy storage. In fact, its technical strength in energy storage is seriously undervalued!

With nearly 30 years of experience in power technology and being one of the earliest companies in energy storage, Kelon Electronics is among the few that have fully developed control core units such as PCS (power conversion system), BMS (battery management system), EMS (energy management system), DC/DC (DC-DC converter), and O&MS (operation & maintenance system).

The company continues to increase R&D investment, from 217 million yuan in 2021 to 377 million yuan in 2024, and over 400 million yuan in 2025, with a R&D expense ratio of 6.35%. Especially, in R&D, the company has achieved technological synergy with Midea Group, establishing a “Central Research Institute + Industrial Technology Research Institute + Kelon Laboratory” three-tier R&D system, focusing on key issues like liquid cooling/heating management (reducing flow resistance by 30%) and active battery balancing (improving maintenance efficiency by 40%). In 2024, it filed 128 patents; in 2025, it obtained 145 patents. By the end of 2025, the company had applied for 2,461 patents and received 1,649.

Consistent high-intensity R&D yields strong product and solution capabilities, enabling full coverage of multiple energy storage scenarios. It can provide customized solutions for different clients, with products covering large grid-side systems and industrial-storage cabinets. In 2025, Kelon Electronics again ranked among Bloomberg NEF’s Q4 global Tier 1 energy storage manufacturers.

Years of accumulation and strategic foresight have not only allowed Kelon Electronics to benefit from the energy storage boom and reverse its difficulties but also turned energy storage into a new growth engine, heading toward sustainable development.

While energy storage is booming, the smart grid business remains steady.

In products, last year launched high-precision standard meters, portable metering devices, carbon meters, and smart power grid terminals, further enriching the product matrix.

Order-wise, the company continues to deepen its domestic grid market, winning bids from State Grid, and actively expanding into African markets by developing new clients. It also seizes overseas opportunities, with AMI project orders exceeding 200 million yuan in the first half of the year; South Africa’s market has also seen breakthroughs, with its smart meters successfully shortlisted by Eskom; shipments to Europe remain stable.

02

Don’t listen to the rustling leaves and branches—why not sing and walk at ease

A common trap in corporate tracking and analysis is over-focusing on financial data while ignoring strategic decisions, industry trends, and long-term development. This can lead to being overly driven by financial figures.

Financial data only reflect past operational results and are influenced by many non-recurring items and legacy factors.

Therefore, when analyzing a company, we must consider operational behavior, industry context, and verify key indicators to avoid false conclusions and truly understand long-term opportunities.

For example, the company’s net profit attributable to shareholders still shows a loss in 2025.

Looking at the data alone, it’s disappointing—revenue grows, but profit doesn’t keep pace. But a detailed analysis shows this is mainly due to industry factors, asset disposals, impairments, and non-recurring items. Compared to previous years, losses have significantly narrowed, and the company is still on a positive trajectory.

The lack of profit despite revenue growth is largely due to rising upstream raw material costs.

In 2025, lithium carbonate prices experienced a deep V-shape, declining from the start of the year, hitting a low in June, then rebounding strongly, reaching a high in December, with a cumulative increase of over 120% from the low.

According to industry data, lithium carbonate accounts for 8%–12% of total energy storage system costs. The sharp rise in lithium prices in the second half increased costs, which is normal for industry gross margins to be under pressure.

Additionally, competition in the energy storage industry intensified in 2025, especially in Q4, with increasing internal competition, further squeezing margins. Companies in the industry inevitably felt the impact.

Despite some short-term performance in the secondary market of the energy storage sector in 2025, the industry remains challenging. Competition intensifies, upstream raw materials rise, and energy storage manufacturers face temporary pressure.

According to industry estimates, the total liabilities of 100 major domestic energy storage listed companies exceeded 2 trillion yuan, with a 11716 billion yuan increase by the third quarter of 2025 compared to 2021.

The industry’s difficulties are evident. When evaluating company performance, it’s essential to consider industry conditions for objectivity.

Considering Kelon Electronics’ own delivery schedule, energy storage proportion, and the impact of non-recurring items like equity incentives, fluctuations in net profit are normal.

Compared to short-term performance swings, we should focus more on long-term operational changes. From the financial reports, this improvement is quite clear.

Since focusing on electrochemical energy storage and smart grids, and divesting non-core assets, Kelon Electronics has visibly transformed. Orders increased, revenue grew, R&D investment intensified, and the high-tech, R&D-driven company has returned; Midea’s empowerment has gradually optimized sales and financial costs.

With the expansion of energy storage orders, scale effects will emerge, and combined with ongoing product structure optimization, higher proportion of high-value products, and Midea’s supply chain support—through global procurement, cost locking, and process optimization—the company’s gross margin is expected to improve sustainably. Future performance is likely to continue improving.

Main business remains steady, especially with the rapid breakthrough in energy storage, confirming the company’s strategic and operational correctness. Other indicators are just normal fluctuations, even noise.

As long as the core business continues to improve, there’s no need to worry about secondary market performance—because capital markets trade on future expectations.

Don’t listen to the rustling leaves and branches; why not sing and walk at ease?

Once you understand this, looking at Kelon Electronics, there’s no need to mind the fleeting rain and wind—just sing loudly and continue to move forward calmly.

03

Looking back at the desolate places, there’s neither wind nor rain nor sunshine

Whether individuals or companies, most growth processes are not smooth sailing. We inevitably take some detours, some even costly. But as long as we don’t give up, identify problems, face them directly, and return to the right path, the story isn’t over, and everything remains possible.

Kelon Electronics has undoubtedly taken some detours and carried historical burdens.

Fortunately, after two or three years of Midea’s involvement, the company’s long-term development strategy was fundamentally clarified. Non-core assets were eliminated, focusing on electrochemical energy storage and smart grids. Heavy R&D investments helped regain its technological advantages. Moreover, Midea Group has empowered the company in R&D, manufacturing, supply chain, channels, and branding. By sharing Midea’s global supply chain resources and channel management, procurement costs were optimized, delivery cycles shortened, and operational efficiency improved.

Key point: Midea’s support over the past few years is just the beginning.

Last December, Midea officially established the New Energy Business Unit, reorganizing core resources from the former Industrial Technology Business Unit, including new energy product companies and energy technology firms. Wang Jianguo was appointed president, overseeing strategic planning and implementation, aiming to carve out a second growth curve in the trillion-yuan new energy market.

Wang Jianguo is now Midea’s Executive President and widely regarded as the next leader after Fang Hongbo. Midea’s emphasis on the new energy business unit is evident.

As a core part of Midea’s new energy division, especially in energy storage, Kelon Electronics bears significant responsibility. Future group-level support will likely increase, not decrease. Coupled with the historic opportunities in energy storage, Kelon Electronics’ turnaround is just the beginning; achieving long-term sustainability and leapfrog development—similar to Midea’s—remains the ultimate goal.

Of course, while recognizing the industry’s long-term opportunities and Kelon’s positive changes, we must also be mentally prepared for the current phase of difficulties. Industry competition remains fierce, upstream raw materials are still rising, and energy storage companies may face short-term pressures. Performance may continue to fluctuate during this period—like the saying goes, “The future is bright, but the road is rugged.”

But what does it matter? Knowing the future is bright, we shouldn’t fear temporary hardships. As long as we keep walking steadily, we can reach success. Even if Q1, Q2, or all of 2026 sees fluctuations, the global trend of green energy transition is unstoppable. Energy storage, as a key part of this transition, has a future that’s already certain.

Looking back many years later, the current industry difficulties are just occasional storms on the journey. Nothing surprising.

As the poem says, “The faint spring breeze awakens the wine, slightly cold; the mountain’s slanting sunlight greets us. Looking back at the bleak places, return, and there’s neither wind nor rain nor clear sky.” That’s how it is.

Author’s note: Personal opinions only, for reference.