In recent years, the most common and straightforward framework for assessing demand across the lithium battery value chain has been to anchor it to EV sales. The logic was simple: the more vehicles sold, the stronger the battery demand; conversely, a slowdown in vehicle sales would imply weaker battery demand. This relationship held true in the early stages of the industry, when EV penetration was rapidly increasing, product structures were relatively simple, and battery demand exhibited a strong linear correlation with vehicle sales. However, this linear relationship is now clearly weakening. Increasing evidence suggests that battery demand is no longer solely determined by vehicle sales , but is increasingly driven by multiple factors, including average battery capacity per vehicle, product mix, commercial vehicle electrification, and export dynamics. 1. The “Vehicle Sales = Battery Demand” Formula Is Breaking Down At its core, vehicle sales represent the number of units sold, while battery demand reflects total energy consumption, i.e., total installed battery capacity. These two metrics only move in tandem when the average battery capacity per vehicle remains stable. Once average battery size increases, or when the sales mix shifts across BEV vs. PHEV, passenger vs. commercial vehicles, the direct linkage between vehicle sales and battery demand begins to decouple. As a result, assessing battery demand today requires answering several additional questions beyond headline vehicle sales: What is the average battery capacity per vehicle? Which vehicle segments are driving incremental growth? Are export flows and regional differences amplifying demand volatility? In other words, the industry is transitioning from a “unit-driven” model to an “energy-driven” model . 2. Rising Battery Capacity per Vehicle: The Primary Driver The most direct reason for the decoupling is the continuous increase in battery capacity per vehicle. This trend is driven by three key factors. First, vehicle upsizing. Both in China and overseas, EV consumption is shifting from basic electrification to enhanced user experience. The rising share of SUVs, pickup trucks, larger sedans, and premium vehicles naturally drives higher battery capacity per vehicle. Larger vehicle size, longer range requirements, and higher performance expectations all translate into higher kWh configurations. Second, the range competition is not over. While the industry has moved beyond the most aggressive phase of “range-at-all-costs,” consumers still place strong emphasis on real-world range, low-temperature performance, highway efficiency, and charging convenience. Even amid intense price competition, automakers are reluctant to reduce battery capacity, as it remains a core determinant of product competitiveness. Third, the growth of premium BEVs and heavy-duty applications. Although EV sales growth is expected to moderate going forward, battery demand is still projected to grow at a faster pace, with increasing battery capacity per vehicle being a key contributor. This reflects a critical shift: vehicles may not be selling faster, but each vehicle is consuming more battery capacity. Therefore, relying solely on slowing vehicle sales growth to infer weaker battery demand may significantly underestimate the offsetting effect from rising battery capacity per vehicle. 3. Product Mix Matters More Than Total Sales Volume Beyond battery capacity, changes in product mix are also reshaping battery demand. For instance, selling one million EVs with a higher BEV share will result in stronger battery demand than the same volume with a higher PHEV share, due to differences in battery size. In other words, shifts between different powertrain technologies directly impact overall battery intensity. Globally, this structural divergence is becoming more pronounced. In Europe, policy adjustments have led to a temporary rebound in PHEVs, which dilutes average battery capacity per vehicle. In contrast, China continues to maintain a high share of BEVs and higher-capacity vehicles, supporting stronger battery demand intensity. Thus, evaluating battery demand today requires understanding not just how many vehicles are sold, but what types of vehicles are driving the growth . 4. Commercial Vehicle Electrification: The Most Undervalued Growth Driver If rising battery capacity per vehicle represents the first layer of demand restructuring, then the electrification of commercial vehicles represents the second—and arguably the most underestimated—layer. Passenger EVs typically carry battery packs in the range of tens of kWh, whereas electric heavy-duty trucks, construction vehicles, and specialty vehicles often require 300–600 kWh or more. This means that a single electric truck can generate battery demand equivalent to multiple passenger EVs . Even with a smaller sales base, incremental penetration in commercial vehicles can significantly amplify overall battery demand. Rising oil prices further accelerate this trend by improving the total cost of ownership (TCO) of electric commercial vehicles, particularly in high-utilization, heavy-load, and fixed-route applications. In such scenarios, electrification becomes economically compelling much faster. As a result, while commercial vehicles are not the largest segment by volume, they are likely to become one of the most powerful “energy leverage” drivers of battery demand in the near term. 5. Exports, Inventory Cycles, and Production Scheduling Are Increasing the Mismatch In addition to end-market dynamics, midstream factors such as exports, inventory cycles, and production scheduling are further widening the gap between vehicle sales and battery demand. On one hand, changes in export policies, overseas customer stocking behavior, and shifts in trade flows can either front-load or delay battery and materials production. On the other hand, inventory cycles are once again becoming a central analytical framework. Automakers and distributors are no longer maintaining stable inventory levels; instead, they dynamically adjust stocking based on sales trends and pricing competition. This means that battery production is increasingly influenced by inventory drawdowns, restocking cycles, and order visibility—rather than simply mirroring real-time vehicle sales. Analyst SMM Lithium Battery Analyst Lesley Yang yangle@smm.cn

EVE announced that the company planned to sign an Investment Cooperation Agreement with the Administrative Committee of Huizhou Zhongkai High-tech Industrial Development Zone regarding the company’s investment in and construction of the “EVE 60 GWh Energy Storage (Power) Battery Manufacturing Project” within the jurisdiction of the Zhongkai High-tech Zone Administrative Committee. The total investment in this project was approximately 6 billion yuan, with a land area of approximately 500 mu (subject to the actual land acquired through bidding, auction, and listing), for the construction of a 60 GWh energy storage (power) battery production site project.

On March 23 (local time), Toyota announced plans to invest $800 million in its Kentucky plant to prepare for a second battery electric vehicle (BEV) production line and expand capacity for the Camry and RAV4. The company will also invest $200 million across two facilities in Indiana to increase production of the Grand Highlander SUV, while advancing parallel efforts related to battery manufacturing.

In 2026, the correction in lithium carbonate prices drove up lithium battery production costs. Coupled with uncertainties in lithium resources supply, cost pressure across the new energy industry became increasingly prominent. Leveraging the advantages of abundant sodium resources, balanced distribution, and controllable costs, sodium-ion batteries have leapt from being a “backup option” for lithium batteries to a key direction for industry breakthrough...

This week (March 13, 2026–March 19, 2026), multiple enterprises in the solid-state battery sector were active: Dali Times commenced construction of a 2 GWh specialized semi-solid-state battery base; EVE’s Longquan Phase III/IV all-solid-state batteries rolled off the line in Chengdu; Chery released its 600 Wh/kg Rhino all-solid-state battery technology。

[Hyundai Motor Group and Huayou Cobalt Jointly Built a Power Battery Recycling System in Indonesia] Recently, Hyundai Motor Group signed a cooperation agreement with Zhejiang Huayou Recycling Technology Co., Ltd. (a subsidiary of Huayou Cobalt) to jointly build an EV power battery recycling system in Indonesia. The cooperation covered the recycling and utilization of battery production scrap and end-of-life batteries, aiming to achieve a closed-loop resource system throughout the entire battery life cycle.

Solid-state batteries were a hot topic at the 2026 Two Sessions, where delegates noted that the industry is at a critical inflection point, moving from “samples” to “products.”

Under the agreement, China’s BYD Battery, a global leader in green vehicles, will transferring technical expertise and transfer battery technology for the project while Vietnam’s Kim Long Motor will in charge of financing and developing energy battery manufacturing plant. The project is intended to help Vietnamese companies progressively develop their own battery production capabilities. After completion, the BYD battery facility is projected to enable Kim Long Motor to raise its localization rate to more than 80% by Q2 2026.

Recently, CALB showcased its 60Ah all-solid-state battery at the Two Sessions. During the Two Sessions, Deputy Liu Jingyu brought the newly developed automotive-grade 60Ah large-capacity all-solid-state battery from CALB to the meeting. Liu Jingyu stated that solid-state battery technology is a key breakthrough point for future industries such as the low-altitude economy and humanoid robots. CALB has taken the lead in establishing an industry-leading solid-state battery production line. In 2025, it completed the development of solid-state batteries for robots and aircraft, achieving an energy density of over 450Wh/kg. In the fourth quarter of this year, it will commence batch deliveries on a scale of a thousand robots.

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