Core Viewpoint - The lithium battery industry is facing intense internal competition, referred to as "involution," which is a major concern for industry leaders like CATL's chairman, Zeng Yuqun [3][5][10]. Industry Growth and Challenges - The lithium battery industry has experienced explosive growth over the past decade, driven by the new energy wave, making it a focal point for capital investment [4]. - However, issues such as blind capacity expansion, price signal failure, severe technological homogeneity, and market structure distortion have emerged, leading to a deepening of the industry's involution [5]. Government Response - The government has increased regulatory efforts to address the issues of vicious competition in the industry, with clear policy directions established in 2024 and 2025 [6][7]. - New regulations, including the revised Anti-Unfair Competition Law, prohibit selling below cost, providing legal support for governance [7]. Market Dynamics - Despite government interventions, the market still exhibits significant competition, indicating that the effects of macro-control measures may take time to materialize [8]. - The industry may need to return to market-driven solutions to break the current deadlock [9]. Innovative Business Models - CATL is focusing on innovative business models to avoid price wars, particularly through the introduction of battery swapping technology, which separates battery costs from vehicle prices, reducing the upfront cost for consumers by over 30% [10][11]. - The battery swapping model promotes industry collaboration and standardization, as it requires cooperation among various stakeholders, enhancing the overall value of batteries throughout their lifecycle [12][13]. Competitive Landscape - The battery swapping model redefines competitive standards in the industry, shifting the focus from manufacturing capabilities to comprehensive strengths such as standard-setting and network coverage [15]. - CATL's planned "eight horizontal and ten vertical" battery swapping network exemplifies this strategic advantage [15]. Future Directions - In addition to battery swapping, Vehicle-to-Grid (V2G) technology is seen as another disruptive business model, with a focus on Battery-to-Grid (B2G) to transform batteries into revenue-generating assets [16][17]. - The innovation in B2G technology not only enhances the product's value but also redefines the relationship between users and batteries, expanding the market for battery companies into energy services [17]. Conclusion - The crisis awareness expressed by industry leaders and the strategic practices of companies like CATL suggest that business model innovation may be key to overcoming the challenges of involution in the lithium battery industry, paving the way for a new cycle of value reconstruction [17].