Core Viewpoint - The lithium battery industry is expected to enter a new growth cycle starting in 2026, driven by stable supply-demand dynamics and advancements in solid-state battery technology [2][4]. Demand - A new growth cycle is emerging, with energy storage expected to become a core growth driver. The domestic market for new energy vehicles (NEVs) is benefiting from increased battery capacity and the expansion of new application scenarios, leading to sustained high growth in demand for power batteries [7][10]. - In 2026, the average battery capacity for domestic passenger vehicles is projected to continue increasing, supported by policy adjustments and the introduction of high-capacity fast-charging models [7]. - The European market is anticipated to see accelerated demand recovery in 2026, driven by the launch of new platform models and continued subsidies for NEVs [10]. Supply and Demand - The supply-demand inflection point is approaching, with a confirmed trend of price reversal. By 2025, the demand driven by energy storage is expected to exceed expectations, leading to improved supply-demand relationships and price increases in various segments of the lithium battery supply chain [11][17]. - The overall capacity utilization rate in the industry is expected to rise, with leading manufacturers operating at near full capacity by the third quarter of 2025 [17]. New Technology - The solid-state battery industry is accelerating towards commercialization, with several manufacturers expected to achieve small-scale production by 2026. The focus is on solid-state sulfide batteries, which are anticipated to reach mass production levels [30][31]. - Semi-solid batteries are also gaining traction due to their higher safety and energy density, with commercial production expected to ramp up in various sectors, including electric vehicles and energy storage [29][30]. Investment Strategy - The investment strategy includes focusing on energy storage demand exceeding expectations, which will drive a reversal trend in the sector. Key recommendations include lithium battery materials, batteries, and related components [5]. - New technologies, particularly solid-state and sodium batteries, are highlighted as high-growth investment directions, with significant breakthroughs expected in 2026 [5][34]. International Expansion - The lithium battery supply chain is accelerating its global manufacturing layout, with significant production expected to come online in 2026 across Europe and Southeast Asia. This expansion is anticipated to mitigate risks associated with geopolitical tensions and trade frictions [25][26]. - Companies are adopting new business models, such as technology licensing, to facilitate entry into markets with high trade barriers, exemplified by CATL's LRS model in the U.S. [27]. Charging Infrastructure - The domestic charging station construction is expected to benefit from supportive policies, while the U.S. market may see a surge in installations due to preemptive actions ahead of tariff impacts [39].

Core Insights - The global power battery installed capacity reached 307.3 GWh in Q3 2025, representing a year-on-year increase of 31.1%, driven by higher single-vehicle battery capacity and faster battery demand growth [1][2] - The revenue of the entire power battery industry chain increased by 20.7% year-on-year and 11.4% quarter-on-quarter in Q3, while net profit attributable to shareholders rose by 59.4% year-on-year and 25.8% quarter-on-quarter, indicating an accelerating improvement in the industry fundamentals [1][3] Downstream New Energy Vehicle Demand - Global sales of new energy vehicles reached 5.4198 million units in Q3, a year-on-year increase of approximately 20.0%, with China, the US, and Europe showing year-on-year growth rates of 22.8%, 27.0%, and 28.8% respectively [2] - The domestic and European markets continued to show strong growth, while the US market experienced a rebound due to pre-purchase activities following subsidy reductions [2] Midstream of New Energy Vehicles - The midstream sector has established a fundamental turning point, with expectations of price reversals across the industry chain [3] - The upstream resources benefited from the rebound in lithium prices, leading to significant year-on-year profit improvements [3] - Certain segments, such as energy storage cells and 6F, are entering a trend of simultaneous volume and price increases [3] Charging Equipment and Services - The construction of public charging stations in China saw an increase of 84% year-on-year in Q3, indicating a recovery in market conditions [4] - Public charging volume reached 23.5 billion kWh, a year-on-year increase of 53%, supported by rising ownership and seasonal demand [4] - The overall revenue of the charging sector grew by 8.7% year-on-year, with net profit excluding non-recurring items increasing by 35.3% [4] Recommended Stocks - Recommended stocks in the midstream of new energy vehicles include CATL (300750), Yiwei Lithium Energy (300014), Zhongxin Innovation (03931), Putailai (603659), Hongfa Technology (600885), Zhongrong Electric (301031), and Xidian New Energy (603312) [5] - Stocks to watch include Xinwanda (300207), Shangtai Technology (001301), Enjie (002812), and Xingyuan Material (300568) [5] - In the charging equipment and services sector, recommended stocks include Teruid (300001) and Wanma Co. (002276), with a watch on Shenghong Co. (300693) [5]

Group 1: New Energy Vehicles - The new energy vehicle sector is expected to enter a new upward cycle starting in 2025, driven by improvements in supply-demand structure and price stabilization within the industry chain [6][7] - Key drivers include changes in demand structure, diversification of application scenarios, and the release of a new vehicle cycle overseas [6] - The introduction of high-voltage fast-charging and extended-range models is expected to increase the battery capacity per vehicle, expanding applications beyond passenger cars to include heavy trucks, engineering machinery, and electric ships [6][7] Group 2: Energy Storage - The energy storage market is anticipated to grow significantly due to declining prices of lithium batteries, inverters, and photovoltaic components, making "photovoltaic + energy storage" economically viable in many countries [4][10] - The global energy storage market is projected to maintain an upward trend, with expected annual shipments surpassing 600 GWh and growth rates exceeding 20% by 2026 [10] - The domestic energy storage market is expected to reach an economic turning point following policy reforms, while emerging markets in Asia, Africa, and Latin America are becoming new growth areas [10][11] Group 3: Industrial Automation - The industrial automation sector is experiencing stable growth, with structural opportunities arising from the recovery of the new energy sector since 2025 [14][15] - The demand for high-performance power supply for AI data centers is driving growth in AIDC (Automated Identification and Data Capture) and robotics [15] - Companies are extending their existing technology into robotics, with a focus on humanoid robots and advanced motor technologies such as axial flux motors [15][16] Group 4: Power Equipment - The investment climate for domestic power grids is expected to remain positive, with a projected CAGR of around 7% for grid investment from 2026 to 2027 [17][19] - The focus on high-voltage direct current (HVDC) and flexible direct current transmission is expected to drive significant investment in the power grid [17] - The export potential for power equipment remains strong, with a 23% year-on-year increase in exports from January to August 2025, driven by global demand for renewable energy and grid modernization [19]