Sinolink Securities released a research report indicating that China's energy storage industry experienced an "explosive period" of orders in the first half of 2025, with cumulative orders exceeding 250GWh—a significant year-on-year leap. Energy storage system shipments reached 167GWh in H1, up 86% YoY. Since the beginning of the year, 10GWh-scale large orders have become the industry norm, with strong performance in both domestic and international markets.

With energy storage demand exceeding expectations, the supply-demand dynamics of the lithium battery industry continue to improve. Multiple segments are showing signs of price increases, driven by growing demand and constrained supply expansion. A sustained price hike cycle is expected next year, creating a favorable "volume-price dual growth" scenario. Key insights from Sinolink Securities include:

**Market Review** Since October 2025, most segments in the lithium battery sector have rebounded from declines. Lithium mining led gains with a 7% increase, while the smart driving sector saw the largest drop at -7.6%. Trading volumes for most lithium-related segments declined this month, except for a slight uptick in the new energy vehicle (NEV) sector. Over half of lithium-related segments currently trade at high historical valuation percentiles, reflecting strong market interest.

**NEV Sector: Strong September Sales, China & Europe Lead, US Demand Rises** September NEV sales in China, Europe (10 countries), and the U.S. reached 1.37 million, 330,000, and 170,000 units, up 22%, 36%, and 37% YoY, with penetration rates of 54%, 32%, and 14%, respectively. China’s cumulative YoY growth exceeded expectations due to policy support and pre-holiday vehicle launches. Europe’s September sales outperformed forecasts with sharp YoY and MoM increases, boosted by post-holiday market recovery and EV subsidy policies in the UK and Spain. U.S. sales rebounded in August as consumers rushed to buy before subsidy cuts, while dealers reduced inventories through promotions, temporarily boosting demand.

**Energy Storage: Domestic Installations Dip, U.S. Volumes Decline** China’s September energy storage installations fell to 4.0GWh (+69% YoY, -68% MoM), with Jan-Sep cumulative installations at 68.1GWh (+45% YoY). U.S. grid-connected storage dropped to 2.3GWh (-21% YoY, -33% MoM) in September, with Jan-Sep cumulative installations at 27.4GWh (+36% YoY). The revised U.S. ITC法案 signed in early August marginally improved storage economics, leading to accelerated project grid connections and a subsequent September decline. ABIA data shows China’s September battery sales (including storage) at 36.0GWh (+36.1% YoY, +1.0% MoM), with Jan-Sep cumulative sales at 281.1GWh (+78.9% YoY), maintaining high growth.

**Lithium Battery Production: October Peak Season Sees 3%-9% MoM Growth, 21%-50% YoY Rise** Jan-Oct 2025 production forecasts for lithium carbonate, batteries, cathodes, anodes, separators, and electrolytes suggest cumulative YoY growth of 27%-58%, with October battery, anode, and electrolyte output surging over 40% YoY. MoM production adjustments reflect seasonal demand growth as manufacturers ramp up orders.

**Lithium Material Prices Rise Amid Peak Season** Prices for lithium resources, battery cells, electrolytes, cathodes, and separators increased, with lithium hexafluorophosphate up 66% MoM, while graphite prices declined due to lower upstream raw material costs.

**New Technologies: Solid-State Batteries & Composite Current Collectors Enter Critical Phase** From H2 2025, solid-state batteries and composite current collectors are entering key industrialization phases. Pilot lines and equipment orders for automotive-grade solid-state batteries have surged, with mass adoption expected by 2026-2027. Composite current collectors may begin scaled production in Q4 2025, presenting opportunities for related firms.

**Investment Recommendations** The 2025 lithium battery expansion wave and solid-state tech breakthroughs are driving industry capex acceleration. Top picks include sector leaders and solid-state innovators: CATL (300750.SZ, 03750), Eve Energy (300014.SZ), Kedali (002850.SZ), and Xiamen Tungsten New Energy (688778.SH).

**Risks** Potential shortfalls in NEV and energy storage demand, and policy sanctions in Europe/U.S.