Quick Takeaways
- Domestic EV sales and exports are both losing momentum, creating a synchronized demand slowdown for batteries.
- Battery manufacturers face a shift from rapid expansion to capacity discipline and inventory control.
On Dec 28, recent industry commentary indicated that China lithium battery demand is expected to decline sharply in early 2026, driven by weakening domestic electric vehicle sales and slower overseas shipments. The outlook signals a challenging phase for battery manufacturers after several years of rapid expansion supported by policy incentives and export momentum.
China Lithium Battery Demand Set to Decline Sharply
According to industry assessments, demand for new energy batteries is projected to fall significantly from the end of 2025. Battery manufacturers are being advised to adjust production schedules and manage capacity more cautiously to navigate expected volatility in the market.
China remains the world’s leading producer and exporter of lithium batteries, supplying electric vehicles and power infrastructure globally. A sustained slowdown in demand would directly affect major battery producers, particularly those heavily reliant on domestic EV volumes and overseas markets.
EV Sales Slowdown Weakens Battery Consumption
A key factor behind the projected downturn in China lithium battery demand is the anticipated decline in passenger electric vehicle sales. Green vehicle sales are forecast to drop by at least 30 percent in early 2026 compared with the fourth quarter of 2025, as purchase tax incentives and subsidies are gradually phased out.
Commercial electric vehicles are also expected to see a notable contraction. Many buyers advanced purchases to the end of 2025 to benefit from expiring incentives, creating a demand pull-forward effect that is likely to depress sales in the following months.
Exports Unlikely to Offset Domestic Weakness
Battery exports are not expected to fully compensate for the loss in domestic demand. While shipments to the European Union increased modestly in 2025, exports to the United States declined significantly. This suggests that rising energy storage needs linked to artificial intelligence-driven data center growth are not translating into higher demand for Chinese lithium batteries.
With both domestic and export markets facing pressure, battery makers may need to recalibrate production plans, manage inventories carefully, and prepare for a more cyclical demand environment entering 2026.
China Lithium Battery Demand Set to Decline Sharply
According to industry assessments, demand for new energy batteries is projected to fall significantly from the end of 2025. Battery manufacturers are being advised to adjust production schedules and manage capacity more cautiously to navigate expected volatility in the market.
China remains the world’s leading producer and exporter of lithium batteries, supplying electric vehicles and power infrastructure globally. A sustained slowdown in demand would directly affect major battery producers, particularly those heavily reliant on domestic EV volumes and overseas markets.
EV Sales Slowdown Weakens Battery Consumption
A key factor behind the projected downturn in China lithium battery demand is the anticipated decline in passenger electric vehicle sales. Green vehicle sales are forecast to drop by at least 30 percent in early 2026 compared with the fourth quarter of 2025, as purchase tax incentives and subsidies are gradually phased out.
Commercial electric vehicles are also expected to see a notable contraction. Many buyers advanced purchases to the end of 2025 to benefit from expiring incentives, creating a demand pull-forward effect that is likely to depress sales in the following months.
Exports Unlikely to Offset Domestic Weakness
Battery exports are not expected to fully compensate for the loss in domestic demand. While shipments to the European Union increased modestly in 2025, exports to the United States declined significantly. This suggests that rising energy storage needs linked to artificial intelligence-driven data center growth are not translating into higher demand for Chinese lithium batteries.
With both domestic and export markets facing pressure, battery makers may need to recalibrate production plans, manage inventories carefully, and prepare for a more cyclical demand environment entering 2026.
Industry reports & Public disclosures | GAI Analysis
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