Major Chinese battery producers are increasing prices on lithium-ion energy storage units after a rebound in lithium costs, potentially signalling the end of a prolonged price war. Lithium is crucial for manufacturing rechargeable batteries. Prices for the mineral have rebounded by 70% after suffering a dip earlier in the year. This can be attributed to the global investment boom in AI and the surge of EV purchases primarily in China. Chinese energy storage firms are now projected to start increasing their prices, with a battery startup, Deegares already announcing a 15% increase to its prices. Another major battery manufacturer, Farasis Energy is also expected to increase prices across its product portfolio, with certain products already experiencing increased prices. Both companies cited short-term material cost fluctuations as one of the primary reasons for this decision.
At least three other battery manufacturers also announced similar plans which may signal the first step towards breaking free of the so-called involution cycle where companies compete primarily by price-cutting. This move comes as part of the central government’s anti-involution campaign and is expected to continue for some time with the investment bank, Bocom International forecasting that the overall campaign will continue despite recent rallies.
The change in battery prices will not only affect the EV industry as countries with ageing energy infrastructures have also increased their purchase of energy storage systems to accommodate the AI data centers they have or are investing in. Chinese battery manufacturers commonly work under 15 to 20% profit margin for their domestic market, which is significantly lower than the 40 to 50% margins expected in American companies. This may contribute to the high demand. In January to November 2025, China has exported 4.25 billion units of lithium batteries, which is valued at approximately $69 billion. The export destinations are primarily to the US and Germany, which contributed to 18% and 16% of the overall shipments individually.
As China phases out subsidies for EV purchases, demand for batteries and energy storage systems also grows, with the Shenzhen-listed energy solutions company, Sungrow forecasting an increase in global demand for batteries by 40 to 50% in 2026. However, with the US cap of 25% on the share of Chinese components in battery imports, some Chinese firms may have to source replacements from South Korea. At the time of writing, a number of Chinese battery manufacturers have actively expanded their production capacity to make sure that they can keep up with the growing demand. While a number of supply surplus still exists, the projected demand increase is certainly something to consider for these companies.
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