China’s power battery industry is transitioning from a period of rapid expansion to one of steadier growth and structural upgrading as growth in the country’s new energy vehicle (NEV) market moderates, according to Ma Xiaoli, Deputy Director of the National Innovation Center of Power Battery. Speaking at the 2026 annual forum of the China Automotive Battery Innovation Alliance (CABIA) on June 30, Ma said domestic power battery demand is expected to continue reaching record levels despite a slower pace of growth than in previous years. According to Ma’s latest forecast, China’s power battery installation demand is expected to reach 888.7 GWh in 2026, representing year-on-year growth of 15.8%. BYD’s blade battery Although the growth rate is significantly lower than during the industry’s rapid expansion over recent years, total demand is still projected to reach an all-time high. Passenger vehicles will remain the largest source of battery demand, although growth is expected to moderate. Battery installations for new energy passenger vehicles are forecast to reach 672.7 GWh this year, up 10.8% year on year. Demand from the commercial vehicle sector is projected to reach 216.1 GWh, increasing 34.7% from a year earlier, substantially outpacing passenger vehicles and emerging as the industry’s primary growth driver. The shift reflects broader trends across China’s NEV market. Over the past several years, rapid increases in passenger vehicle electrification fueled strong battery demand. As NEV penetration among passenger vehicles continues to rise, the industry is entering a new phase focused on structural optimization, with logistics vehicles, heavy-duty trucks and buses becoming the next major sources of battery demand growth. SANY’s electric truck Data from China’s National Bureau of Statistics showed that domestic NEV production increased 25.1% year on year in 2025, driving lithium-ion power battery output up 41.7%. CABIA data showed China’s cumulative power battery installations reached 769.7 GWh in 2025, up 40.4% year on year. Combined production of power batteries and energy storage batteries totaled 1,755.6 GWh, a 60.1% increase, indicating that manufacturers continued expanding capacity at a rapid pace. China’s NEV market has continued growing in 2026, although at a more moderate pace. In May, China produced 1.554 million NEVs and sold 1.496 million units, up 22.4% and 14.4%, respectively. NEVs accounted for 56.9% of total new vehicle sales during the month. The continued increase in NEV sales also supported battery demand. Domestic power battery installations reached 71.9 GWh in May, up 25.9% from a year earlier. However, cumulative growth has moderated noticeably. During the first five months of 2026, China’s cumulative power battery installations totaled 259.1 GWh, up 7.3% year on year. Battery electric vehicles (BEVs) remained the dominant application, accounting for 82.8% of total installations, while plug-in hybrid electric vehicles (PHEVs) represented the remaining 17.2%. By vehicle category, battery installations for new energy passenger vehicles reached 193.8 GWh during the first five months, while new energy commercial vehicles accounted for 65.2 GWh. Although passenger vehicles continue to represent the larger market, demand for high-capacity batteries from electric heavy-duty trucks, logistics vehicles and buses is rising rapidly, providing an increasingly important source of industry growth.
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