China's power battery demand improved in May, with modest July production growth amid intensifying competition

Overview

The report tracks production plans, prices, production, shipments, installations, inventory, NEV sales, ESS shipments and the competitive landscape across China's power battery value chain. The core conclusion is that improved EV demand in May drove a month-on-month recovery in battery shipments and installations, while July production plans indicate continued modest growth among major companies and LFP continues to outperform NCM; meanwhile, battery prices remain stable, some upstream material prices have risen slightly, and competition for market share has intensified.

Core views

First, demand momentum is improving mainly due to EV batteries, with domestic EV battery shipments and installations both showing significant month-on-month growth in May, while OEM NEV sales growth also accelerated year on year. Second, July production plans on the supply side do not indicate a strong seasonal rebound; apart from CATL, most major companies plan to increase LFP output, with BYD's production plan rising approximately 12%. Third, on pricing, LFP and NCM battery prices are expected to remain stable month on month in July, while only cathode and electrolyte prices are expected to rise by approximately 1.8%-3.2%. Fourth, industry concentration is declining, with CATL under pressure in NCM share, while LGES, Sunwoda, Gotion High-Tech and Eve Energy have gained share in certain subsegments.

Analysis framework

The report uses a monthly chartbook approach, combining ICCSINO production plans and price samples, CABIA production and installation data, shipment and inventory indicators, NEV sales data and market shares by segment for major manufacturers to compare changes across LFP/NCM, EV/ESS, domestic/export and PV/CV dimensions.

Methodology notes

• Monthly industry trackingProduction Plans-Prices-Production and Sales/Installations-Competitive Landscape Framework

  Use production plans to observe short-term supply expectations, prices and material costs to assess profitability pressure, shipments, installations and inventory to verify underlying demand, and market shares to evaluate the competitive landscape.

  This framework is suitable for monthly power battery tracking because battery demand is transmitted across production, shipments, installations and inventory, while any single indicator may be affected by inventory cycles or export timing.

• Subsegment comparisonLFP/NCM and EV/ESS Segmentation

  Analyze battery technology routes and end-market applications separately.

  The report separately examines LFP, NCM, EV batteries, ESS batteries, domestic shipments and exports to identify growth sources and changes in competitive shares.

• Relative competitive analysisMarket Share and Concentration Analysis

  Assess industry concentration and competitive intensity through changes in the shares of the top five, top ten and major manufacturers.

  May data showed declining concentration among leading companies, with CATL's share falling month on month, while LGES, Sunwoda, Gotion High-Tech and Eve Energy gained share in certain subsegments.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• CATL

  Industry leader with exposure to multiple subsegments, including LFP, NCM, EV and ESS

  Strengths

  5M26 LFP/NCM production is expected to increase approximately 67% and 25% year on year, respectively; LFP share increased month on month, and share in the PV market benefited year on year.

  Weaknesses

  Total share declined 0.5 percentage points month on month in May, NCM share declined 8.2 percentage points, and CV market share remained under pressure.

  Comparison

  Compared with LGES, Sunwoda, Gotion High-Tech and Eve Energy, CATL lost share in certain subsegments in May.

  Risks

  Intensifying competition, declining NCM share and lower-tier players taking share in the CV market.

• BYD

  Major power battery and vehicle-related company, and an important participant in LFP production plans

  Strengths

  July 2026 LFP production is expected to increase approximately 12% month on month, standing out among LFP supply expansions.

  Weaknesses

  The report identifies BYD as one of the major year-on-year share losers in 5M26.

  Comparison

  The July LFP production increase is higher than the 1.5%-4.2% range for Eve, Gotion and CALB.

  Risks

  If share losses continue, battery business growth could be offset by changes in the competitive landscape.

• LGES

  Competitor in China's EV battery installation market

  Strengths

  Achieved a relatively large month-on-month increase in share in May, mainly from the PV subsegment.

  Weaknesses

  The report provides no details on its costs, capacity or profitability.

  Comparison

  LGES's share gain in the PV market contrasts with CATL's decline in May share.

  Risks

  Competition in the Chinese market is intense, and the sustainability of the share improvement remains to be seen.

• Sunwoda

  Power battery manufacturer competing in subsegments such as PV

  Strengths

  Achieved a relatively large month-on-month increase in share in May, mainly from PV.

  Weaknesses

  Listed as one of the major year-on-year share losers in 5M26.

  Comparison

  Short-term month-on-month improvement coexists with year-to-date year-on-year share pressure.

  Risks

  Uncertainty over the sustainability of share recovery and earnings quality.

• Gotion High-Tech

  Power battery manufacturer associated with LFP growth and improving CV share

  Strengths

  July 2026 LFP production is expected to increase month on month; 5M26 LFP production is expected to grow approximately 91% year on year, and CV share improved in May.

  Weaknesses

  NCM production is expected to decline year on year, indicating uneven growth across technology routes.

  Comparison

  LFP growth is stronger than that of CALB and Eve, but NCM performance is weaker than Eve's.

  Risks

  Weak NCM performance, intensifying competition and share volatility.

• Eve Energy

  Power battery and ESS-related manufacturer

  Strengths

  5M26 LFP production is expected to grow approximately 76% year on year, while NCM production is expected to surge approximately 170% year on year; CV share improved in May.

  Weaknesses

  July 2026 NCM production is expected to decline 4.8% month on month.

  Comparison

  Year-to-date NCM growth is stronger than that of Gotion and CALB, but short-term month-on-month production plans have weakened.

  Risks

  Production-plan volatility, CV market competition and uncertainty over the sustainability of share gains.

• ESS battery value chain

  Exposure to energy storage battery demand

  Strengths

  5M26 ESS battery shipments increased approximately 88% year on year, with both domestic and overseas markets maintaining growth.

  Weaknesses

  Month-on-month shipments were broadly flat in May, while exports declined 19% month on month.

  Comparison

  Year-on-year growth was faster than EV battery shipments, but month-on-month momentum was weaker than that of EV batteries.

  Risks

  Export timing, project delivery volatility and pricing competition.

Key data

• July 2026 LFP production plansMost major battery manufacturers, except CATL, are expected to increase output month on month; BYD is expected to grow approximately 12%, while Eve, Gotion and CALB are expected to grow approximately 1.5%-4.2%Source: ICCSINO production plan sample.
• July 2026 NCM production plansCATL and CALB plan to increase output month on month, BYD and Gotion are unchanged, and Eve is expected to decline 4.8% month on monthIndicating that short-term NCM production plans are weaker than LFP.
• Battery pricesLFP and NCM battery prices are expected to remain stable month on month in July 2026Cathode and electrolyte prices are expected to rise approximately 1.8%-3.2% month on month, while anode and separator prices are expected to remain stable.
• China power battery productionUp 4% month on month and more than 55% year on year in May 2026; cumulative 5M26 growth was approximately 52% year on yearThe month-on-month improvement in May was mainly driven by NCM.
• LFP productionUp 62% year on year in May 2026; cumulative 5M26 growth was approximately 56% year on yearYear-on-year growth remained faster than NCM.
• NCM productionUp approximately 31% year on year in May 2026; cumulative 5M26 growth was approximately 37% year on yearThe month-on-month improvement in May may have been influenced by stronger overseas EV sales.
• China power battery shipmentsUp 11% month on month and 47% year on year in May 2026; cumulative 5M26 growth was 48.5% year on yearEV battery shipments were the main month-on-month driver.
• EV battery shipmentsUp 16.6% month on month and 45% year on year in May 2026; cumulative 5M26 growth was approximately 35% year on yearDomestic shipments increased 20.5% month on month, while exports were broadly flat.
• ESS battery shipmentsUp approximately 53% year on year in May 2026; cumulative 5M26 growth was approximately 88% year on yearOverall month-on-month shipments were broadly flat in May; exports declined 19% month on month, while domestic shipments increased only 5%.
• EV battery installationsUp 15% month on month and approximately 26% year on year in May 2026; cumulative 5M26 growth was 7% year on yearLFP installations recovered to 6% year-on-year growth, while NCM installation growth accelerated to 13% year on year.
• Inventory ratioThe shipment/installation inventory ratio fell to 1.7x, but remained above the 1.3x averageInventory pressure has eased but has not yet returned to the average level.
• CATL shareTotal share declined 0.5 percentage points month on month in May 2026, NCM share declined 8.2 percentage points, and LFP share increased 1.2 percentage pointsLosses in EV share were partly offset by ESS.

Impact & implications

For investment implications, the short-term demand recovery and stable prices are supportive of sentiment across the power battery value chain, but modest production growth, inventory remaining above average and declining industry concentration mean that earnings leverage and share stability still need to be assessed company by company. Companies with LFP advantages, exposure to export or ESS growth, and strong cost-control capabilities should benefit relatively more; companies losing share or facing greater NCM competitive pressure may face pressure on valuation and earnings expectations.

Risks

• EV demand recovery may fall short of expectations, slowing shipments, installations and inventory digestion.
• Competition in the battery industry may intensify, causing leading companies' shares to continue declining.
• Although LFP and NCM prices are stable in the short term, cell margins could come under pressure if rising material prices cannot be passed through.
• The month-on-month decline in ESS exports indicates potential volatility in overseas demand or delivery timing.
• The inventory ratio remains above average; insufficient end-market demand could create pressure on prices or production plans.
• This is a monthly industry update, and some conclusions depend on ICCSINO and CABIA samples and statistical definitions.

What to watch

• Actual execution of July 2026 production plans, particularly changes in LFP/NCM production at BYD, CATL, Eve, Gotion and CALB.
• Whether LFP and NCM battery prices remain stable and whether rising cathode and electrolyte prices compress cell margins.
• Whether the EV battery shipment/installation inventory ratio continues to decline from 1.7x toward the historical average.
• Changes in CATL's share across the NCM, PV/CV and ESS subsegments.
• Whether domestic ESS shipments and exports recover month-on-month growth.
• Whether China's NEV sales growth can improve further from the low single digits recorded in 5M26.