In China, at the beginning of 2026, the lithium battery market may face a noticeable cooling. This conclusion was drawn by Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), noting that battery manufacturers will most likely have to adjust to weakened demand: cut output or even send staff on leave in order not to build up excess inventory in warehouses.
According to Cui, the key blow to demand will come from changes in tax policy when purchasing cars. He expects that sales of passenger NEVs in the first months of 2026 will be at least 30% lower than in the fourth quarter of 2025. An additional factor is related to commercial “green” vehicles: deliveries of these, it is claimed, were accelerated toward the end of the year in order to take advantage of subsidies and more favorable terms, and after such a “spurt” there is usually a sharp drop at the beginning of the next year.
Exports, in the CPCA chief’s view, will continue to grow at relatively high rates, but will not be able to fully offset the domestic decline. At the same time, demand for energy storage systems from the United States, as emphasized, has almost no impact on China’s battery exports, since shipments of batteries to the U.S. in 2025 fell noticeably.
CPCA statistics also show a slowdown in growth. In November, sales of traction batteries for passenger cars reached 57.1 GWh, which is 13% more than a year earlier, but this is significantly weaker than last year’s pace. For January–November, the total came to 478.7 GWh; growth was 23% and also turned out to be lower than the previous year’s figures.
The situation is further aggravated by the fact that in recent months a number of regions have suspended subsidies for NEVs, which is why the year-end turned out to be less brisk than usual. And from the new year, the purchase tax benefit is changing: instead of full exemption, a 5% levy is being introduced, i.e., half the standard rate. Against the backdrop of uncertainty in supply chains, it is also reported that Nio and FinDreams (a BYD unit) have put their battery cooperation on pause, since orders for the L60 are not sufficient to keep multiple suppliers busy at the same time (source: cnevpost.com).
