Core Insights - The lithium battery industry is experiencing a paradoxical situation where lithium carbonate prices surged to 80,000 RMB per ton, boosting raw material prices, but this price increase has not translated into higher battery prices due to weak end-user demand [3][4][5] - The anticipated supply clearing in the industry has shifted to demand fluctuations, leading to profit squeezes and adjustments in expectations [3][4] Supply Chain Dynamics - In July, China's lithium salt production exceeded 70,000 tons, with a month-on-month growth rate of over 7%, particularly driven by a 40% increase in Sichuan's production [4] - The CIF price of imported lithium spodumene rose by approximately 18% in July, confirming the economic principle that price increases stimulate supply [4] - Despite rising raw material costs, the cost pressure has not effectively transmitted to the downstream lithium battery sector, leading to a price competition that tests the profitability of the entire supply chain [5] Market Demand Challenges - The sales of new energy vehicles are shifting from "slowing growth" to "decreasing scale," with a 12% month-on-month decline in retail sales of new energy vehicles in the first 20 days of July [6][7] - Major companies like BYD and Li Auto have reported production cuts and significant sales declines, indicating a broader trend of weakening demand [6][7] - The "trade-in" subsidy policy is transitioning to a more orderly approach, limiting monthly stimulus and creating a "subsidy gap" in July [7] High-End Market Opportunities - The industry is exploring ways to penetrate the remaining 50% of the market, particularly targeting the high-end electric vehicle segment priced above 300,000 RMB [7][8] - Successful models like NIO ES6 and Xiaomi YU7 Max have demonstrated market potential in this segment, with expected new releases from Tesla and other brands likely to further stimulate this market [7][8] - The shift to high-end markets requires addressing safety concerns, as consumer preferences in this segment prioritize safety over battery characteristics [7][8] Future Outlook - The inertia of upstream production increases may collide with the reality of downstream demand in the second half of the year, leading to market volatility and uncertainty [9]