In 2024, the domestic new energy vehicle market will show rapid development momentum under the strong promotion of consumer subsidy policies. The implementation of a series of policies such as trade in, tax incentives, and car purchase subsidies has boosted the power battery industry chain.

According to market data, the domestic retail penetration rate of new energy vehicles in December 2024 was 49.4%, an increase of 9 percentage points compared to last year.

Looking ahead to 2025, the market expects the wholesale volume of new energy passenger vehicles to reach 15.28 million units, a year-on-year increase of 26%, and the penetration rate is expected to increase to 53%.

Of particular note is that at the beginning of 2025, the National Development and Reform Commission and the Ministry of Finance jointly issued the "Notice of the National Development and Reform Commission and the Ministry of Finance on Strengthening the Implementation of Large scale Equipment Renewal and Consumer Goods Trade in Policy in 2025". This notice clearly includes eligible new energy vehicles in the key support category, continues to provide subsidies for trade in, and injects a stimulant into the development of the new energy vehicle market in the second year.

Previously, Gaogong Lithium Electric Appliances made a systematic review of the ten major changes in the lithium battery industry in 2024, including capacity expansion and differentiation, stabilizing competition, stabilizing prices, restructuring the value of the industry chain, rapid breakthroughs in the installation of lithium iron phosphate, the first year of fast charging batteries, diverse application boundaries, collective overseas expansion of the industry chain, continuous landing of zero carbon factories, and innovation in battery business models.

On this basis, in response to the rapid development of the new energy industry chain in 2025, Gaogong Lithium Battery summarizes ten major trends and changes. This article is the previous one:

ONE、 The price war in the lithium battery industry chain has eased

In 2024, the price of the lithium battery industry chain will undergo a change in the "L" structure. After some car companies and battery manufacturers fired the first shot of price reduction at the beginning of the year, the price of the entire industry chain will rapidly decline, and the price of battery cells will also drop from 0.5 yuan/Wh at the beginning of the year to 0.3 yuan/Wh.

However, by the end of the second quarter of 2024, the rate of price decline across the entire industry chain will slow down, coupled with the bullish sentiment of enterprises in different links of the industry chain throughout the year, and even a slight increase in prices may occur.

For 2025, lithium battery companies realize that excessive price competition not only harms their profits, but also affects the research and promotion of new technologies. At the national level, it has also been mentioned to strengthen industry self-discipline and prevent vicious competition in the form of internal competition.

Based on this, building a sustainable and profitable industrial chain has become a common direction in the industry. In the short term, the cost of the lithium battery industry chain has hit bottom, and prices in some links are expected to rise slightly in 2025, leading to a recovery in corporate gross profit.

Gaogong Lithium believes that by 2025, the gross profit margin of different links in the lithium battery industry will be further balanced on the basis of 2024, and the average gross profit margin of each link in the industry will return to 10-20%. Among them, due to supply and demand structure factors, the price of lithium salt is expected to be supported by the cost of spodumene, with a slight downward trend; The gross profit of positive electrode and copper foil materials has slightly rebounded, the separator material has undergone minor repairs, and the price of negative electrode materials has remained stable.

TWO、 The overall profit of the industrial chain has bottomed out and rebounded

For the profit of the industrial chain, Gaogong Lithium Battery has conducted in-depth tracking before.

According to the profit statistics of 80 major lithium battery companies by Gaogong Lithium Battery, the overall profit of the industry chain has decreased from 209.5 billion yuan in 2022 to 65.2 billion yuan in Q1-Q3 of 2024. Considering that the fourth quarter has a driving effect on the overall profit of the industry chain of more than 30% and combined with the proportion of profits in the fourth quarter of the industry in the past, it is expected that the annual profit of the lithium battery industry in 2024 will reach about 100 billion yuan.

This also means that from 2022 to 2024, the overall profit of the industrial chain will decline by nearly 50%.

The decline in industry chain profits is partly due to price wars, and another important factor is that during the downward cycle of the industry chain, the inventory of lithium battery companies has always been in a depreciating state, resulting in significant provision for inventory asset impairment in quarterly and annual periods, seriously affecting the company's profit performance.

According to statistics from Gaogong, the inventory level of lithium battery companies is mostly around one month, and stocking up during peak seasons may increase to two months, which has significantly decreased compared to the period of rapid industrial expansion.

Considering the stabilization of prices across the entire industry chain and the expected gross profit recovery in some links, it is expected that lithium battery companies will eliminate the profit reduction caused by inventory impairment in 2025. At the same time, with stable gross profit and expected shipment growth in 2025, the profits of the entire industry chain are expected to rebound from the bottom.

THREE、 The proportion of plug-in hybrid models has exceeded 50%

In the past two years, plug-in hybrid vehicles have grown rapidly. According to market data, domestic plug-in hybrid vehicles will increase by 82.5% and 76.3% year-on-year in 2023 and 2024, respectively. Against the backdrop of a slowdown in the overall growth rate of the new energy vehicle market, it has become the key to supporting its penetration rate increase.

Plug in hybrid models, due to their combination of gasoline and pure electric characteristics, have excellent performance in practical scenarios, range and other aspects. Plug in hybrid models have gained recognition in the end market, which has also forced car models to accelerate the research and production of plug-in hybrid models and plug-in hybrid battery cells. Car companies such as BYD, Geely, Great Wall Motors, and Guangzhou Automobile Group, as well as battery manufacturers such as CATL, Honeycomb Energy, and Guoxuan High tech, have all laid out their plug-in hybrid products.

In the global context, the slowdown in the growth rate of China's pure electric market is not an isolated case. The growth rate of pure electric vehicles in major electrification markets such as North America and Europe has also shown signs of slowing down. Compared with China, the transformation cost of overseas pure electric vehicle models is relatively high, and the related industrial chain foundation is not perfect. Many international car companies have begun to switch to plug-in hybrid models, such as Ford and General Motors, which have stated that they will invest more resources in the research and development of plug-in hybrid vehicle models, while General Motors has postponed the release time of some pure electric vehicle models.

Gaogong Lithium Battery expects that plug-in hybrid models will continue to maintain rapid growth in 2025 and quickly seize market share in the mid to low end passenger car market. The proportion of plug-in hybrid models in the new energy vehicle market will also break through from 42% in 2024 to 50% in 2025.

In terms of exports, due to Europe's restrictions on the export of domestic pure electric products, plug-in hybrid models are not affected, and it is expected that overseas plug-in hybrid models will increase in volume and accelerate.

FOUR、 The installed proportion of lithium iron phosphate batteries has exceeded 80%

Along with the growth of plug-in hybrid models, the proportion of installed lithium iron phosphate batteries will rapidly increase from 2023 to 2024.

According to statistics from Gaogong Lithium Battery, the installed capacity of lithium iron phosphate accounted for 62.4%, 67.3%, and 73.6% in 2022, 2023, and January November 2024, respectively. Among them, in November 2024, the installed capacity of lithium iron phosphate batteries reached 79.7%.

The rapid increase in the installed proportion of lithium iron phosphate batteries is due to the significant decrease in their overall supply chain prices in the past two years. At the same time, the safety and cost advantages of lithium iron phosphate batteries are more favored by consumers.

Compared to ternary batteries, lithium iron phosphate batteries are mainly used in the mid to low end market, and the increase in installed capacity of lithium iron phosphate batteries is also related to the structure of the mid to low end market.

According to market data, the proportion of domestic passenger car sales below 300000 yuan exceeds 80%, and the rapid decline of the lithium iron phosphate vehicle market also determines its rapid increase in the proportion of terminal installed capacity.

Gaogong Lithium Battery expects that by 2025, with further penetration into the mid to low end market, the installed proportion of lithium iron phosphate is expected to exceed 80%.

FIVE、 Fast charging performance "C" level improvement

If 2024 is the first year for the popularization of fast charging batteries, then 2025 will be the year for the full penetration of fast charging batteries.

According to the product and market plans previously released by battery manufacturers and car companies, the fast charging performance of lithium iron phosphate batteries is entering the 4C stage as a whole, and the fast charging of ternary batteries is developing towards 5C and 6C. At present, lithium iron phosphate phosphate batteries with 4C fast charging and ternary batteries with 4C and above fast charging are mainly used in the high-end market, while mid to low end pure electric models are concentrated in 2-3C, and plug-in hybrid models are mainly below 2C.

On the basis of 2024, mid to low end models are expected to move towards 3-4C in 2025, while plug-in hybrid models are expected to enter the 2C stage as a whole, and the fast charging performance of new energy vehicles is expected to improve by one C-level.

In addition, in some segmented tracks, the penetration speed of fast charging batteries is expected to accelerate, such as heavy-duty trucks, eVTOL and other scenarios that require high battery doubling performance. Fast charging batteries will have good growth performance.