In the second half of last year, ahead of the halving of the NEV purchase tax rebate, ternary cathode orders climbed steadily, hitting record highs month after month. At that time, the market generally expected ternary demand growth for 2026 to be within 10%. But the actual results for the first half of this year came in much stronger. According to SMM, domestic ternary cathode production reached 493,000 metric tons in H1 2026, up 40% YoY, while global ternary cathode output reached 611,500 metric tons, up 24% . Meanwhile, CAAM data shows that NEV sales in China (including exports) reached 7.445 million units in H1 2026, up only 7% YoY, with domestic sales actually contracting by 13%. Given such modest growth in vehicle sales, where did the strong performance of ternary cathode come from? The answer lies in two key factors: a rising share of premium vehicle models and a rapid increase in battery capacity per vehicle . The halving of the purchase tax rebate has had a greater impact on low-priced vehicles. For A00-class models priced under RMB 50,000, the exemption was a major selling point—now, buyers face an additional tax payment of several thousand yuan, significantly eroding their cost advantage. In contrast, for mid-to-high-end models priced between RMB 200,000 and 300,000, the RMB 15,000 rebate cap still covers most of the tax, so the actual cost increase perceived by consumers is limited . At the same time, trade-in subsidy rules shifted from a fixed-amount structure to a tiered system based on the new vehicle price—higher-priced purchases yield subsidies closer to the cap, effectively steering consumer demand toward the premium segment . As a result, the share of B-segment, C-segment, and SUVs in China's NEV passenger car mix rose from 68.3% in 2025 to 73.6% in H1 2026—and these are precisely the models that predominantly use ternary battery cells. The rising share of premium models also directly lifted average battery capacity per vehicle . In May, the average battery capacity of BEV passenger cars reached 62 kWh, up 11% year-on-year, while PHEV passenger cars reached 37 kWh, up 37%. While automakers have been proactively increasing battery sizes to meet market demand, the more significant driver has been the compositional shift toward premium vehicles. This explains the apparent paradox: vehicle sales growth has been moderate, yet cathode material demand has surged—the key lies in the increase in battery capacity per unit . Overseas markets also contributed to the growth. European NEV sales rose approximately 30% year-on-year in the first half of the year, supported by local subsidy policies, high oil prices that favor NEVs, and the aggressive expansion of Chinese brands. Given that ternary batteries still account for more than 60% of Europe's NEV passenger car market , leading battery manufacturers serving the European market—such as CATL, EVE, AESC, and LGES—have maintained high procurement volumes of ternary cathode materials from China this year. Another notable feature of this year's production schedule has been its atypical seasonal pattern, largely influenced by raw material price volatility and policy shifts. On the raw material front, pricing between domestic ternary battery manufacturers and cathode producers is generally settled using a M-1 month metal price mechanism. This gives battery makers a strong incentive to build inventories ahead of anticipated price increases . For instance, in January, the SMM average monthly price of lithium hydroxide (coarse grains) surged to RMB 147,100 per ton, but the settlement price referenced the December price of RMB 88,800 per ton. This translated into a cost saving of more than RMB 26,000 per ton of cathode material, which is why production remained robust even during a traditionally slow month. A similar pattern played out in May, when the monthly average lithium hydroxide price rose by about RMB 20,000 per ton from the previous month, prompting another wave of restocking and driving cathode orders beyond expectations. On the policy side, the most significant impact came from the removal of the VAT rebate on ternary cathode exports, which pulled a large volume of export orders forward into Q1, breaking the typical seasonal slowdown. Domestic production in Q1 reached 236,000 metric tons, up 47% YoY. Notably, after the rebate was officially withdrawn, overseas orders did not drop sharply—Q2 still posted 34% YoY growth. This resilience can be attributed to two factors: first, overseas battery makers remain heavily reliant on Chinese cathode suppliers , who offer clear advantages in product quality, stable mass-production capabilities, and cost, making it difficult to switch suppliers in the short term. Second, overseas end-market demand remains solid , with popular models in Europe (Volkswagen ID series, BMW Neue Klasse, Renault, Hyundai IONIQ series, Tesla, etc.) and key models in Japan and Korea (Toyota, Hyundai, Kia, Tesla, etc.) continuing to rely on ternary chemistries. With order books full and procurement needs urgent, customers have little room to qualify new suppliers, which has only reinforced existing partnerships. Looking ahead to the second half of the year, the upcoming removal of the VAT rebate on lithium battery exports next year is expected to bring some orders forward into 2026. However, the market has already priced this in, and battery manufacturers have ample time to plan their inventory strategies, so a concentrated surge similar to the one seen ahead of the ternary rebate cancellation is unlikely. The purchase tax rebate will remain at the halved level next year and will not be fully phased out until the year after, so there is no additional pull-forward effect for Q4 2026. With orders already exceeding expectations in the first half and battery makers continuing to build inventories, the traditional "Golden September-Silver October" peak may be less pronounced this year. Still, seasonal patterns persist, and the market's inherent restocking momentum remains, so Q4 still warrants attention. SMM currently forecasts: 1.02 million metric tons of domestic ternary cathode production for 2026, up 24% year-on-year; 240,000 metric tons overseas, down 2%; and a global total of 1.26 million metric tons, up 18% .

[SMM Analysis: Samsung SDI’s “Contrarian Big Bet” — 25 Trillion Won Staked on Next-Generation Batteries Could Rewrite Global Energy Landscape] Samsung SDI disclosed a regulatory filing on July 3, announcing an investment of approximately 16 trillion won (about 88 billion yuan) into its Ulsan plant by 2040, to build large-scale production sites for all-solid-state batteries, LFP batteries for ESS, and sodium-ion batteries. A day earlier (July 2), the company had announced an investment of 9 trillion won into its Cheonan plant, for setting up a mother production line for next-generation battery technology verification and R&D facilities. Combined, the two investments total 25 trillion won, spanning a period of 14 years and lasting until 2040.

German automaker Volkswagen plans to terminate its collaboration with automotive supplier Bosch in the field of autonomous driving, according to a report by German newspaper Bild citing multiple sources. The move is part of the company's broader efforts to cut costs and enhance competitiveness. The partnership with Bosch began in 2022, when Volkswagen's software unit Cariad joined forces with Bosch to develop driver‑assistance and autonomous driving software for Volkswagen's various brands.

According to media reports, Volkswagen Group plans to terminate its partnership with automotive parts supplier Bosch in the field of autonomous driving. The collaboration project began in 2022, led by Volkswagen's software subsidiary Cariad, aiming to develop driver assistance and autonomous driving software for all Volkswagen brands. An internal evaluation showed that after a cumulative investment of €1.5 billion (equivalent to about $1.7 billion), the developed technology was not yet market-competitive and failed to meet the established expectations. In response, Cariad and Bosch issued a joint statement stating that they would not comment on market rumors, but confirmed that both parties regularly review their R&D partnerships and continuously assess whether they align with strategic technology goals and current market trends. It is reported that Volkswagen is currently seeking new alternative partners, plans to purchase hardware and software for autonomous driving systems from new suppliers, and is expected to complete the signing of a new contract by September.

Leveraging the dual-carbon strategy and the development trend of circular economy, China's recycled metal industry leads the world in scale while facing numerous development challenges. To help enterprises seize policy and market opportunities and address industry challenges, SMM will host the 2026 SMM Recycled Metal Industry Summit Forum & Casting Technology Special Session in Ningbo, Zhejiang Province from August 17 to 18, 2026 . Wuhan Hongjin Metal Aluminum Co., Ltd. cordially invites you to jointly witness and participate in building an international platform for exchange, cooperation, resource sharing, and collaborative innovation, contributing to the construction and improvement of a global resource recycling system and supporting the transition to a green economy. Click the to sign up now. Booth No.: E6 Hongjin New Materials Group , with 30 years of expertise in cast aluminum alloy, is a 10-billion-yuan industry leader integrating R&D, production, and services. The group operates 10 modern production sites globally and two provincial-level new materials research institutes, with low-carbon aluminum capacity exceeding 1.2 million mt in 2025. We are committed to providing one-stop lightweight solutions, including aluminum alloy ingots, molten aluminum supply, and proprietary large integrated die-cast heat-treatment-free aluminum alloys ready for mass production. Our products are widely used in cutting-edge fields such as NEVs and 5G communications, serving as designated suppliers for top automakers like Tesla, BYD, and BBA, as well as tech giants like Google and Amazon. Hongjin New Materials fully embraces green and low-carbon practices, partnering globally to "cast the future." I. Core Strengths 1.5 million mt+ : Annual low-carbon aluminum capacity in 2025 10 billion yuan+ : Group annual revenue 10 production sites : Based in China (south/central/east China) and expanding ex-China 2 research institutes : Two provincial-level new materials research institutes II. Core Products & Services One-stop lightweight solutions from materials to processes: Key Services : Premium aluminum alloy ingots | molten aluminum supply | melting and holding integrated services Proprietary Materials : High thermal conductivity, high electrical conductivity, high strength, and high wear-resistant aluminum alloys Industry Frontiers : Large integrated die-cast heat-treatment-free aluminum alloys (approved by OEMs with mass production capability) Full Alloy Coverage Standard Series : Main alloys including ADC12, A380, A356, and ALSI10MNMG. Exclusive Patented Series : HJ Series (HJ03-16), HCS09, HS330, and other proprietary grades. III. World-Class Partner Network Products are widely applied in core sectors such as automotive, new energy, low-altitude economy, and 3C electronics. Global Leading Automakers : BMW, Mercedes-Benz, Audi, Volkswagen, General Motors, Toyota, Honda, Nissan. New Energy Pioneers : Tesla, BYD, NIO, XPeng, Xiaomi, Geely. Technology and Ecosystem Giants : CATL, DJI, Inovance ( Google and Amazon qualified supplier ). IV. Green, Low-Carbon, and Quality Commitment Safeguarding your supply chain security with the highest international standards: System Certifications : IATF 16949, ISO 9001 / 14001 / 45001 / 50001:2018. Green Development : Carbon footprint and greenhouse gas verification completed, deeply engaged in ESG and ASI (Aluminium Stewardship Initiative) advancement. Contact Information Sales Center: South China Team - Sales Head - He Chijia 138 2754 9148 Central China Team - Sales Head - Li Hongwei 136 1832 5655 East China Team - Sales Head - Han Yaobin 159 5327 5580 Hongbang Team - Sales Head - Yang Zhenjiang 139 2263 2929 Website: SMM Conference Contact Zhou Shiyang Phone: 17278238856 Email:

[SMM Tin Morning Brief: The Most-Traded SHFE Tin Contract Held Firm Above the 430,000 Yuan Mark, Spot Market Trading Volume Remained Limited]

[German Union Calls for Cautious Approach to Allowing Chinese Automakers to Use Idle Volkswagen Factories] A spokesperson for IG Metall, Germany's powerful metalworkers' union, told Reuters that the union was not opposed to Volkswagen opening its underutilized factories to Chinese automakers, but believed that such cooperation must be evaluated with extreme caution.

According to SAIC Volkswagen, SAIC Volkswagen and CAR Inc. recently signed an annual procurement framework agreement and simultaneously completed the delivery of the first batch of vehicles. The car models covered in this signing and delivery included the Volkswagen Lavida Fresh, Passat, Tharu Fresh, Teramont Pro, and Audi E5 Sportback.

Volkswagen's CFO, commenting on Middle East volatility, stated that raw material costs were well hedged, but second-wave impacts on demand and costs could not be ruled out.

The CEO of Volkswagen Group stated that the production network must be adjusted to adapt to market realities, with a target annual capacity of 9 million units.