Core Viewpoint - The entry of major automotive battery manufacturers into the small power battery market, particularly for electric two-wheelers, is driven by the need to escape the saturated automotive business and leverage excess production capacity [1][3][4]. Group 1: Market Dynamics - Gotion High-Tech's subsidiary signed a cooperation agreement to enter the small power battery market, aiming to establish a vertical industrial chain hub [1]. - The electric two-wheeler market is expected to experience explosive growth in 2025, with a projected domestic sales volume of 32.3 million units in the first half of the year, a year-on-year increase of 29.5% [4]. - The penetration rate of lithium batteries in the electric two-wheeler sector was 22.4% in 2020 but dropped to 4.9% in 2023 due to market policy changes and rising lithium prices [5]. Group 2: Competitive Landscape - Major players like CATL and BYD have already established their presence in the electric two-wheeler battery market, with CATL's battery installation volume reaching 151.72 GWh in the first seven months of 2025, a year-on-year increase of 34.5% [2]. - The battery industry is facing declining gross margins due to intensified competition, with CATL's gross margin dropping to 22.41% in the first half of 2025, down 4.49 percentage points from the previous year [2]. - The market for electric two-wheeler batteries is currently dominated by lead-acid battery manufacturers, with a duopoly formed by Tianneng and Chaowei, holding over 70% of the market share [7]. Group 3: Technological and Policy Influences - New national standards and tightening environmental regulations are creating a significant market for lithium battery replacements for lead-acid batteries, with a projected increase in demand [5]. - The cost of lithium iron phosphate batteries has decreased to below 0.5 yuan/Wh, making them economically viable compared to lead-acid batteries, which presents an opportunity for automotive battery companies [5]. - Sodium batteries are emerging as a potential solution for the electric two-wheeler market due to their cost advantages, with expectations that they could capture 20% to 30% of the market share [6]. Group 4: Future Outlook - By 2027, the expected shipment volume of lithium-powered two-wheelers in China is projected to reach 28 million units, with a penetration rate approaching 40% [5]. - The low-altitude economy is becoming a new market for automotive battery companies, with applications in electric aircraft and other emerging sectors [8][9].

Company Insights - BYD's subsidiary, Fudi Battery, is launching a full range of electric batteries for two-wheeled and three-wheeled vehicles, promoting the slogan "Lead-acid exit, Lithium Iron Phosphate new start" [1] - Fudi Battery has already established partnerships with several electric vehicle brands, including LIMA and Tailg, to develop customized lithium batteries with higher energy density [2] - The company aims to leverage its research and development from passenger vehicles to enhance the safety and performance of batteries for two-wheeled vehicles [1][2] Industry Trends - The market for lead-acid batteries in two-wheeled vehicles is mature, but there is an opportunity for lithium battery market growth due to the lack of significant market leaders [2] - The cost of lithium batteries is higher than lead-acid batteries, with replacement costs for lead-acid batteries ranging from 300 to 400 yuan, while lithium batteries can exceed 800 yuan [3] - The competition between lead-acid and lithium batteries is ongoing, with lead-acid batteries currently favored for their safety and lower cost, despite lithium batteries offering better longevity and performance [2][6] Market Dynamics - China's production of lead-acid batteries accounts for over 40% of global output, with production figures reaching 7.843 million tons in 2023, slightly declining to approximately 7.451 million tons in 2024 [5] - The electric two-wheeler market in China has over 400 million units, with nearly 100 million new batteries sold annually, indicating significant growth potential [5] - The export of electric three-wheeled vehicles reached 650,000 units in 2024, with a total export value of nearly 5.5 billion USD, reflecting a growth of about 10% [5]