According to industry analysis, as of September 2025, the lithium battery supply chain has witnessed over 20 projects involving termination, suspension, or delays, with total investment exceeding 110 billion yuan. The scope of terminations and adjustments covers virtually all segments including anode materials, electrolytes, cathode materials, ternary materials, separators, batteries, energy storage, and even solid-state batteries.

Inevitable contraction emerges at the cycle turning point. During the rapid expansion of the upward cycle, 2025 has seen "expansion and contraction occurring simultaneously."

According to industry research, from January to August 2025, China's lithium battery supply chain signed and commenced 183 new expansion projects with total investments of approximately 400 billion yuan, focusing on high-end technology routes such as high-density lithium iron phosphate, high-nickel ternary materials, and solid-state batteries. Simultaneously, some mid-to-low-end capacity has been forced to hit the pause button or exit entirely.

On one side, high-end capacity is accelerating deployment; on the other, low-end capacity is accelerating clearance. The industry has entered a brutal phase of structural elimination.

From an overall trend perspective, at least four characteristics have become clear:

First, the elimination race is accelerating, with low-end capacity being cleared out. Sectors with previously high homogenization levels, such as precursors, iron phosphate, and electrolytes, are bearing the brunt. As competition intensifies, industry thresholds for cost control, market orders, and environmental compliance have risen overall, making it difficult for lagging projects to continue, forcing them to halt construction or exit. To survive, companies must upgrade through transformation and seek differentiated competitive advantages to withstand this cycle's screening. Additionally, as lithium iron phosphate technology continues to expand its influence, ternary material capacity is contracting in line with terminal demand rhythm.

Second, demand remains high-growth, but growth dividends are no longer evenly distributed. Both energy storage and power batteries maintained strong momentum in 2025: energy storage systems now account for 27% of global battery shipments and over 40% in the LFP segment; pure electric vehicles' battery capacity per unit increased 16.4% year-over-year, driving demand elasticity release. However, the ability to truly capture demand depends on market development and product structure. Companies with scaled delivery capabilities and cost advantages enjoy full order books, while those lacking competitiveness may face idle capacity even in high-prosperity tracks.

Third, technological iteration is accelerating, with resources concentrating toward high-end segments. High-density lithium iron phosphate, high-nickel ternary materials, and solid-state batteries have become primary targets for capital and capacity expansion. Correspondingly, investment enthusiasm for mid-to-low-end routes has plummeted. Companies no longer blindly pursue scale but are shifting toward technological barriers and product upgrades to avoid price war quagmires. However, the industry has also seen solid-state battery project terminations, indicating that such projects have high thresholds and long cycles, with success depending on solving substantial industrialization challenges.

Fourth, overseas expansion risks are rising, with frequent setbacks in cross-border projects. Projects in Indonesia, the United States, South Korea, and other locations are frequently halted, involving amounts of tens of billions or even hundreds of billions of dollars. Uncertainties in tariffs, subsidy policies, and localization requirements have sharply narrowed overseas factory investment returns. For cross-border layouts, 2025 has become a turning point, with geopolitical risks being reintegrated into core investment decisions, making companies more cautious about international expansion.

Major termination and adjustment dynamics in the 2025 lithium battery industry:

**Anode Materials** - Putailai project: Originally planned to build a 100,000-ton high-performance anode material project, announced delay to December 2026 in January 2025 due to supply-demand mismatches, low product prices, and technology upgrade needs. - Yicheng New Energy project: Originally planned 200,000-ton high-performance anode material project (Phase II) with supporting photovoltaic project, terminated in May 2025, involving 2.305 billion yuan in terminated investment.

**Electrolytes and Upstream Materials** - Jiangsu Cathay project: Originally planned 1.538 billion yuan investment in Ningde for 400,000-ton lithium-ion battery electrolyte project, terminated in August 2025 before formal construction began. - Sanmei Corporation project: Originally planned 62,000-ton/year electrolyte and supporting engineering project, delayed to June 2027 in September 2025.

**Lithium Iron Phosphate Cathode Materials** - Chuanjinnuo project: Originally planned approximately 455 million yuan investment in "50,000-ton/year battery-grade lithium iron phosphate cathode material precursor iron phosphate and supporting 600,000-ton/year sulfur acid production project" and "100,000-ton/year battery-grade lithium iron phosphate cathode material project (Phase I)", terminated in June 2025, with subsequent funds redirected to Egypt projects. - CNNC Titanium White project: Originally planned 1.666 billion yuan investment in 500,000-ton iron phosphate project, terminated in June 2025, with remaining funds used to supplement liquidity. - Lomon Billions Group: Revealed at end of 2024 that it had scaled back subsequent investments in iron phosphate and lithium iron phosphate. - Wanrun New Energy project: Originally planned 5 billion yuan investment in Wuhan for lithium-ion battery, sodium-ion battery, and solid-state battery R&D and mass production base.

**Ternary Materials and Precursors** - CNGR Advanced Material project: Nickel refinery project in Indonesia in cooperation with POSCO Holdings terminated, with original planned investment of 2.2 billion yuan. - Huayou Cobalt project: Originally planned expansion of 100,000-ton ternary precursor project suspended in June 2025, with company shifting toward high-nickel product lines. - Zhenhua New Material project: Originally planned 150,000-ton ternary material project delayed to 2026 production due to slowing downstream power battery demand growth and product prices falling below cost lines. - Rongbai Technology project: Originally planned over 1 million tons of ternary cathode material capacity scaled down to 600,000 tons in August 2025 due to insufficient industry capacity utilization and intensified technological iteration pressure. - GEM project: Originally planned 1.5 billion yuan investment in Korean Pohang ternary precursor factory suspended in March 2025 due to geopolitical risks and weak European market demand. - Bangpu Recycling project: Announced closure of Hunan base's 30,000-ton low-end ternary material production line in May 2025 to focus on high-nickel product development.

**Aluminum Plastic Film** - Enjie Corporation project: 1.6 billion yuan total investment Jiangsu Ruijie aluminum plastic film industrialization project terminated in September 2025 after completing 62.6% of investment due to supply chain price downward pressure, high technical barriers, long payback periods, and potential loss risks from continued investment.

**Batteries** - LG Energy Solution: Announced withdrawal from an $8.45 billion electric vehicle battery manufacturing project in Indonesia in 2025. - Wanxiang Technology project: Announced on September 26 termination of "New Micro Lithium-ion Battery and Precision Components Production Project" with remaining raised funds permanently supplementing working capital, originally planned total investment of 1 billion yuan. - Sunwoda project: Originally planned 12 billion yuan investment in Zhuhai for 30GWh power battery production base, terminated in April 2025. - Gotion High-Tech project: Originally planned $2.36 billion (approximately 17 billion yuan) investment in Michigan electric vehicle battery factory, suspended in May 2025 due to geopolitical pressure, uncertain U.S. battery subsidy policies, and weak overseas market demand. - Haisida project: Originally planned 10.2 billion yuan investment in 30GWh sodium-ion and lithium-ion battery and system production base, terminated in June 2025 due to intensified energy storage market competition and technology route iteration risks.

**Solid-State Batteries** - Anfu Technology project: 300MWh sulfide all-solid-state battery pilot R&D project with partners terminated in June 2025 due to insufficient technology maturity and overly long industrialization cycles. - Lihu Corporation project: Announced in June 2025 the transfer of 45.45% equity in Gaoneng Lihu at zero consideration, exiting solid-state battery cooperation project due to technology route disagreements and unclear commercialization prospects.