On June 5, 2026, Helios Horizon achieved the world’s first crewed fixed-wing flight powered by solid-state batteries. The test validated solid-state technology in real aviation conditions, showing a 60% energy density improvement (410 Wh/kg) and 15‑minute fast charging. While cost and certification remain challenges, the milestone recalibrates industry expectations and offers a clearer path forward for electric aviation.

By 2026, China's new energy vehicle market has evolved from an early-stage race over electric motors, batteries, and electronic controls into a systemic contest centered on battery technology roadmaps, supply chain depth, and cost-control capabilities. Leading domestic players — NIO, Li Auto, XPeng, BYD, and Leapmotor — have each charted a distinctly different path in their battery strategies. What lies beneath these divergent choices is not merely a matter of technical preference, but a reflection of fundamentally different business models, brand identities, and competitive philosophies. NIO: Anchored by Battery Swapping, Building a Multi-Supplier, Multi-Chemistry Matrix NIO's battery strategy stands apart within the industry. At its core is not the choice of a single supplier or chemistry, but rather a battery-swapping network serving as infrastructure, upwardly compatible with battery packs of varying capacities, chemistries, and suppliers. Currently, NIO's lineup runs primarily on 75 kWh and 100 kWh packs, while a higher-energy-density 150 kWh semi-solid-state pack, produced by WeLion New Energy, has already entered volume production and deployment. On the chemistry front, certain NIO models employ a hybrid cell arrangement blending ternary lithium and LFP cells — the LFP cells provide foundational range and cost advantages, while the ternary cells serve as a state-of-charge reference, addressing the well-known pain point of inaccurate SOC estimation inherent to LFP's flat voltage curve. On the supplier side, CATL has long held a core position, with CALB and WeLion also playing significant roles in the supply chain. In early 2026, NIO and CATL further signed a five-year comprehensive strategic cooperation agreement covering long-life batteries, swap-station compatibility, and overseas market expansion. For the full year 2025, NIO Group delivered 326,000 vehicles, up 46.9% year-on-year, and achieved its first quarterly operating profit in Q4 — signaling that its battery-swapping business model is beginning to enter a virtuous cycle. The ramp-up of its two sub-brands, ONVO and Firefly, has further amplified the scale effects of the swapping ecosystem, diluting the per-unit cost of infrastructure. Li Auto: EREV-Led, BEV in Pursuit — Deep Supplier Ties and the Shift Toward In-House Development Li Auto's battery strategy presents a sharp contrast to NIO's. Where NIO pursues breadth in its swapping network and flexibility in battery pack compatibility, Li Auto places greater emphasis on deep ties with top-tier suppliers and meticulous cost-side management. Li Auto's EREV models have long relied on ternary lithium batteries as their primary solution and are now progressively introducing LFP to optimize vehicle cost structures. In the pure-electric domain, the flagship MPV MEGA carries a high-performance ternary pack co-developed with CATL; in 2025, the i6 electric SUV formally adopted a dual-supplier model, sourcing from both CATL and Sunwoda for complementary supply. More significantly, in September 2025, Li Auto and Sunwoda jointly established a battery company, marking a definitive shift from a procurement relationship to one of equity-linked co-development. In May 2026, Li Auto delivered 33,350 vehicles, with the i6 surpassing 20,000 monthly deliveries for the third consecutive month and ranking among the top three electric SUVs by volume, while the EREV L-series remained its sales backbone. With "family comfort" as its core brand proposition, Li Auto's battery strategy has always served a single through-line: eliminating range anxiety while optimizing total cost of ownership — pragmatic and focused. XPeng: LFP as the Mainstay, a Three-Supplier Landscape Taking Shape, and the Dual-Powertrain Strategy Accelerating XPeng's battery strategy is centered on LFP, with a stable landscape of three core suppliers: CALB, EVE Energy, and FinDreams Battery (BYD). CALB has been one of XPeng's first-tier battery suppliers since 2021 and has long held the dominant share. In September 2025, EVE Energy formally entered XPeng's MONA series supply chain, providing prismatic cell solutions for base MONA variants, while longer-range versions continue to use BYD FinDreams cells. XPeng's technology identity has always revolved around full-stack self-developed AI — spanning advanced intelligent driving, proprietary chips, and large-model integration — which gives its battery strategy a notably pragmatic character: choose a mature, safe, and cost-controllable LFP route so that more resources can be concentrated on its core competence in intelligence. Since 2025, XPeng has fully embraced a dual-powertrain strategy of BEV plus EREV, with the addition of range-extender models introducing new variables to its battery demand structure. In May 2026, XPeng Group delivered 32,158 vehicles, with the flagship SUV GX becoming a core incremental contributor right from its debut, while the MONA series and P7+ continued to scale, validating the market appeal of its "technology for all" positioning. BYD: Full Vertical Integration as the Ultimate Moat If NIO, Li Auto, and XPeng respectively embody the brand paths of "service-driven battery swapping," "family comfort," and "technology intelligence," then BYD's defining label points squarely at vertical integration. From FinDreams battery cells and FinDreams Powertrain motors and electronic controls, to in-house IGBT and SiC power semiconductors, BYD has mastered the manufacturing of virtually every core component in a new energy vehicle — a level of supply chain depth unmatched both domestically and globally. The Blade Battery, BYD's signature technology, builds on an LFP foundation and achieves a balance of safety and energy density through structural innovation; it has now achieved scaled deployment across the entire lineup. On the cost side, the scale effects of selling 4.6 million units in 2025 have endowed BYD with extreme supply chain bargaining power. On the technology side, the "Eye of the Gods" advanced driver-assistance system has been deployed in over 2.5 million vehicles, generating more than 160 million kilometers of real-world driving data daily — a data flywheel that competitors will find difficult to replicate. In 2025, BYD's battery-electric vehicle sales reached 2.26 million units, surpassing Tesla (approximately 1.63 million) for the first time to claim the global BEV sales crown. From the Seagull at RMB 70,000 to the Yangwang at over RMB 1 million, from city commuters to hardcore off-roaders, BYD has built the world's most complete new energy product matrix, with its multi-brand strategy covering every mainstream price band and use case. Leapmotor: Full-Stack Self-Development Driving Extreme Value, Multi-Supplier Strategy Fueling the Volume Leap Leapmotor has emerged as a dark horse that can no longer be ignored among China's new-energy startups. Its battery strategy is defined by a clear formula: all-LFP plus parallel multi-sourcing, with core cell suppliers including Gotion High-Tech and CALB, among others — different batches of the same model may mix cells from different brands, but core parameters remain consistent. In November 2025, Leapmotor and CALB jointly established a battery factory, signaling Leapmotor's progression from multi-source procurement toward equity-linked core-supplier relationships. Leapmotor's true moat lies in its full-stack self-development approach — over 65% of core components are developed in-house, spanning electric drives, battery BMS, intelligent cockpits, and autonomous-driving chips. This is what enables Leapmotor to deliver extreme value in the RMB 100,000–200,000 mainstream price band. In May 2026, Leapmotor delivered 81,569 vehicles, up 81% year-on-year, holding the new-energy startup sales crown for multiple consecutive months, with the one-million-unit annual target now within reach. Leapmotor's product matrix has expanded into four series — A, B, C, and D — covering sedans, SUVs, and MPVs, while overseas exports have rapidly climbed to over 37% of total volume, becoming a second engine for growth. The Industrial Logic Behind Divergent Strategies When the battery strategies of these five automakers are examined side by side, several clear industrial patterns emerge. First, LFP's dominance in the mainstream market continues to strengthen. Whether it is BYD's Blade Battery, XPeng's all-LFP lineup, Leapmotor's extreme value proposition, or Li Auto's progressive LFP adoption in its EREV models, all point to the same trend: in the RMB 100,000–250,000 core consumption band, LFP's combined advantages in cost, safety, and cycle life have made it an unshakable baseline. Second, supply chain relationships are upgrading from simple buyer-seller transactions to capital-linked co-development. The joint ventures between Li Auto and Sunwoda, between Leapmotor and CALB, and the five-year agreement between NIO and CATL are all reflections of this trend. Third, battery strategy choices are increasingly dictated by each automaker's business model: NIO's battery-swapping system demands pack standardization and compatibility; BYD's vertical integration demands in-house production; Li Auto's EREV approach imposes unique requirements on battery capacity and cost. For participants in the upstream lithium resource and battery materials industries, understanding the battery strategies of leading automakers — and the direction in which they are evolving — is a critical entry point for gauging mid- and downstream demand structures, the cadence of technology-route shifts, and the changing landscape of supply chain dynamics. In this industrial contest that remains very much at halftime, the divergence in battery strategies not only determines each automaker's cost structure and product competitiveness, but will also profoundly reshape the value distribution across the entire lithium battery supply chain.

Volkswagen, Europe’s largest automaker, is expanding the ambitions of its battery business from EVs into utility ESS and energy trading, as global EV demand has fallen short of previous expectations. On Monday, Volkswagen launched its first utility ESS facility in Salzgitter, Germany. The project belongs to Volkswagen’s energy subsidiary Elli and can supply power to up to 20,000 households for about two hours. The facility is directly connected to the power grid and will also be used for energy trading on the European power exchange EPEX SPOT. The batteries used come from Volkswagen’s in-house PowerCo division. As battery suppliers cut prices and EV growth slows down, Volkswagen is seeking new sources of battery revenue.

CATL, Schroders Greencoat, and Lochpine Capital, both under Schroders Group in the UK, jointly signed a strategic cooperation memorandum of understanding. The three parties will collaborate to explore and develop battery energy storage projects in Europe and carry out related investment activities. Under the framework of the memorandum, CATL will participate in the cooperation as a battery supplier.

For NEVs, the core impact of Project Vault does not lie in how much it drives up mineral prices in the short term, but in the following: improved certainty of subsidy compliance, reduced supply disruption risks at key nodes, and the formation of a more stable structural price spread between the compliant and non-compliant supply chains.

SMM January 30: Lead prices remained low, and the scale of production halts at secondary lead smelters expanded. Recycling enterprises were highly cautious of price declines. Coupled with their need to recoup funds before the holiday, the willingness to sell scrap batteries was relatively good during the week. Meanwhile, secondary lead smelting enterprises conducted routine pre-holiday stockpiling, leading to a significant increase in raw material inventory. SMM data showed that the raw material inventory of secondary lead enterprises increased by 34,000 mt WoW this week. Next week, as some scrap battery suppliers gradually enter the holiday period, while some secondary lead smelting enterprises still have stockpiling demand, SMM expects scrap battery prices to hold steady. Due to weak spot cargo digestion in the domestic market, the inflow enthusiasm for imported crude lead supplies declined, resulting in fewer offers this week. As of January 30, 2026, the ex-factory VAT-exclusive offers for domestic secondary crude lead were 15,450-15,550 yuan/mt, and transactions were also weak. As downstream enterprises gradually enter the holiday period, purchase willingness remained sluggish. SMM expects activity in the secondary crude lead market to decline further next week. 》Order to View SMM Metal Spot Historical Prices

SMM January 16 news: During the week, secondary lead smelters sold at large discounts due to poor transactions, and lowered purchase prices for raw material scrap batteries to ease cost pressure; scrap battery suppliers, fearing price declines, sold off goods, and secondary lead enterprises generally reported improved raw material arrival. SMM data shows that raw material inventory at secondary lead smelters increased by over 25,000 mt WoW. Environmental protection-related controls led to production restrictions at smelters, slowing down the digestion of raw material inventory at secondary lead smelters; coupled with lead prices retreating after a rapid rise, SMM expects scrap battery prices to follow the downward trend. However, as smelter stockpiling demand persists before the Chinese New Year holiday, the decline is expected to be limited. It is reported that imported crude lead arrived at ports this week, with the mainstream tax-inclusive port self pick-up price at a discount of 100-0 yuan/mt against the SMM #1 lead average price; the antimony and tin content of the supply is average, lacking attractiveness; meanwhile, domestic consumption performance is weak, and suppliers indicated low purchase willingness from downstream, putting transactions under pressure. As of January 16, 2026, domestic secondary crude lead ex-works tax-exclusive offers ranged from 15,750-15,900 yuan/mt, with sales also performing poorly. From a fundamental perspective, supply in the secondary crude lead market is expected to remain loose next week, and there is a probability that offers for arrived port cargo may soften. 》Order to view SMM metal spot historical prices

SMM January 12: The most-traded SHFE lead 2602 contract opened at 17,445 yuan/mt. At the beginning of the session, affected by the retreat of bears, SHFE lead fluctuated rangebound, touched a high of 17,515 yuan/mt, then pulled back slightly toward the end, and finally closed at 17,440 yuan/mt, up 85 yuan/mt or 0.49%. The daily chart recorded two consecutive positive closes. To ensure raw material supply, some smelters kept their scrap battery offers stable or slightly higher. Scrap battery suppliers' reluctance to sell weakened, and their willingness to sell generally increased. Several large smelters in central and east China reported relatively sufficient arrivals recently. However, downstream battery industry performance was weak, and end-user new battery sales were under pressure, leading to a decline in battery enterprises' operating rates and low purchasing enthusiasm for lead ingots. Against this backdrop, finished product inventories at primary lead and secondary lead smelters gradually accumulated, which is expected to exert some pressure on lead prices' rise. Moreover, caution is needed against the risk of further inventory pressure after delivery. Data source statement: Except for public information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and not constituting decision-making advice.

On January 9, 2026, China's Ministry of Finance and the State Taxation Administration announced that, from April 1, 2026, to December 31, 2026, the VAT export rebate rate for battery products would be reduced from 9% to 6%; starting January 1, 2027, the VAT export rebate for battery products would be abolished. The introduction of this policy appears to reduce export subsidies for the battery industry. However, at a deeper level, the policy implies multiple intentions behind industrial transformation. This article presents only a personal interpretation of the policy; readers should not take it as definitive guidance. Before formally analyzing the policy's intentions, we must first clarify in which segment the reduction in the rebate rate results in decreased earnings. I. Customer Self Pick-Up: Tax Burden Shifted to the Customer (This is the predominant method for battery exports) Under the self pick-up model, the export responsibilities of battery enterprises are relatively reduced, and the tax burden is shifted to the customer. However, although battery producers are not directly responsible for tax issues, this model still has significant impacts on both parties. 1) The Customer Bears the Tax Burden: For customers, the reduction in the VAT export rebate rate means they need to bear more tax costs. The rebate decreases from the original 9% to 6% (from April 1, 2026, to December 31, 2026), increasing the tax burden on enterprises, which directly leads to customers having to pay for these additional expenses. For customers reliant on Chinese battery suppliers, this change will directly increase the procurement costs of products, thereby affecting their overall profits. In the short term, this policy adjustment may stimulate a new round of export rush for Chinese batteries. a. Cost Increase Pressure: Particularly in overseas markets, customers may need to adjust product pricing to account for the increased tax costs or seek alternative suppliers to replace existing battery producers. For small and medium-sized customers, the increased costs may lead to reduced market competitiveness, especially in regions with intense price competition. b. Demand for Price Reduction: After customers bear the tax portion, they may request battery producers to lower product prices to offset the increased tax burden. As battery producers face their own cost increase pressures (including raw material and production costs, etc.), they may not compromise on pricing. If battery producers do make pricing concessions, they must seek other cost control measures while maintaining profitability. 2) Strategic Adjustments by Battery Enterprises: For battery enterprises, although they do not directly bear the tax issues, the customers' demands for price reductions and market pressures cannot be ignored. Battery producers may need to: a. Enhance product added value: While ensuring product quality, increase the technological content and added value of products to maintain competitiveness in the high-end market. For example, develop more efficient power batteries or ESS batteries, focusing on NEVs or large-scale ESS projects. b. Optimize supply chain management: To cope with customers' price reduction demands, battery producers need to further optimize supply chain management, reduce production costs, and increase R&D investment to enhance product competitiveness through technological innovation. 3) Market pressure and customer relationship management: Battery producers need to strengthen customer relationship management to ensure the provision of price-competitive products while maintaining long-term cooperative relationships with customers. By establishing stable supply chains and favorable long-term cooperation agreements, battery producers can reduce market uncertainty caused by short-term price fluctuations. II. Battery Producers Shipping Overseas Independently: Tax Pressure Directly Impacts Profits Compared to the customer self pick-up model, under the model where battery producers ship overseas independently, they bear higher tax costs as they are responsible not only for domestic VAT but also for handling tax issues during the export process. This means battery producers will face direct cost pressure, which may affect their profit margins and market pricing strategies. 1) Battery producers bear the tax burden: Under the model where battery producers ship overseas independently, producers must bear the increase in tax costs, which directly impacts their pricing strategies. With the tax rebate rate dropping from 9% to 6%, battery producers will pay more VAT, but these costs are not borne by customers. This change directly compresses producers' profit margins. a. Cost increase and price adjustments: Battery producers must consider how to pass on the additional tax burden to customers. With prices already near the global market floor, producers may find it difficult to address cost increases through simple price hikes. Therefore, producers must make greater efforts in production efficiency, technological innovation, and operational cost control. b. Tax complexity in international operations: For battery producers operating across borders, dealing with VAT and tariffs becomes more complex due to varying tax systems and policies in different countries. Tax compliance issues not only increase operational costs but may also cause delays and compliance risks in cross-border transactions, further affecting producers' market responsiveness. 2) Ongoing market competition pressure: Price competition among battery producers in the international market will intensify. Especially in the face of the price and technological advantages of top-tier enterprises, battery producers need to enhance their competitiveness in multiple aspects: a. Technological Innovation and High Value-Added Products: In addition to price adjustments, battery producers must increase the market appeal of their products through technological innovation. For example, improving battery energy density, charging speed, and lifespan, as well as developing more environmentally friendly battery technologies. b. Cost Optimization: Battery producers also need to optimize production processes, reduce resource waste, and lower production costs. By scaling up production and automating production lines to improve efficiency, they can alleviate cost pressure. Personal Interpretation: The "Capacity Reduction" and "Anti-Involution" Effects of Tax Cuts and Subsidies: Beyond short-term tax adjustments, the deeper goal of this policy shift is to address the issue of involution in the battery industry. China's battery sector, particularly in power batteries and ESS batteries, has experienced years of excessive competition. Low-price competition, technological imitation, and over-reliance on policy subsidies have made it difficult for many small and medium-sized enterprises to stand out, leading to a lack of technological innovation. In this context, the government aims to indirectly raise battery prices by lowering tax rebate rates, forcing the industry to reduce low-end capacity and shift toward higher-technology, higher value-added products. However, some industry insiders worry that excessive policy adjustments in the short term may exacerbate market instability, especially as the lithium battery industry's capacity still needs gradual digestion. Overly rapid capacity clearance could impose unbearable burdens on enterprises, further impacting the industry's healthy development. For the government, balancing the relationship between "capacity reduction" and "industry stability" to ensure healthy industrial growth will be a core challenge in future policy regulation. This goal of "capacity reduction" has precedents in other industries such as PV and chemicals, where involution is severe. Although such short-term "pain" is inevitably a prelude to long-term industrial structure optimization, for the battery industry, balancing short-term cost pressures with long-term strategic objectives will be key to a successful transformation. China's battery industry is currently in a phase of intense price competition and relatively small technological gaps. To capture market share, enterprises often resort to price cuts, and this involution has gradually affected the healthy development of the entire industry. By reducing fiscal support for low-end capacity, the government hopes that "natural selection" through market competition will eliminate enterprises lacking technological innovation and reliant on low-price strategies, thereby driving the industry toward high-quality, high-technology, and sustainable development. SMM Lithium Battery Analyst Yang Le +86 13916526348

SMM January 9: The most-traded SHFE lead 2602 contract opened at 17,260 yuan/mt today. It consolidated near the low of 17,235 yuan/mt in early trading, then rose rapidly as bears exited the market. After a brief pullback in the afternoon session, it climbed again to hit the day's high of 17,400 yuan/mt, finally closing at 17,355 yuan/mt, up 20 yuan/mt or 0.12%. The daily chart formed a small bullish candlestick. Although lead prices showed signs of stabilizing after yesterday's sharp decline, some secondary lead smelters remained cautious about the subsequent trend and had lowered their raw material purchase offers accordingly. Scrap battery suppliers generally adopted a wait-and-see approach, with their willingness to sell weakening compared to yesterday. Downstream battery producers' procurement demand remained sluggish this week, prompting most secondary lead smelters to widen discounts to boost sales. Although lead prices are expected to have some room for a rebound before next week's delivery date, caution is still warranted as weak downstream procurement may lead to an accumulation of lead ingot finished product inventories, which could weigh on prices. Data source statement: Except for public information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and not constituting decision-making advice.