According to the report released by China Galaxy Securities, the lithium battery industry in Q1 2025 is not experiencing a typical off-season. The year 2025 may be a critical period for the domestic electrification rate to exceed 50% and initiate a new phase of high growth, with strong demand support. In Q1 2025, the installation of energy storage systems is expected to decline temporarily, and there may be short-term policy pains; however, in the medium to long term, the comprehensive promotion of the electricity spot market for new energy has enormous potential. Revenue in Q1 2025 is steadily increasing, mainly due to the high growth in battery cell shipments offsetting price declines, and price stabilization may lead to a resonance between shipment volume and revenue. Q2 2025 enters an important observation window, expected to maintain steady growth, with further increases in new energy penetration; overseas markets are expected to achieve overperformance against the backdrop of easing tariffs.
<h2>Key Points from China Galaxy Securities:</h2>
Q1 2025 Off-Season is Not Off-Season, Optimistic About Demand Situation
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<li>The off-season in Q1 2025 is not typical; the year 2025 may be a critical period for the domestic electrification rate to exceed 50% and initiate a new phase of high growth, with strong demand support. 2) The overseas market in the U.S. continues to show a sluggish trend in Q1 2025, with policy cooling and tariff risk uncertainties potentially suppressing market momentum. In Europe, there is some recovery in Q1 2025, and stricter carbon emission regulations will promote electric vehicle adoption. The high competitive situation domestically also forces car manufacturers to seek high-growth emerging markets overseas, with significant potential in South America and Southeast Asia. 3) In Q1 2025, the installation of energy storage systems is expected to decline temporarily, and there may be short-term policy pains; however, in the medium to long term, the comprehensive promotion of the electricity spot market for new energy has enormous potential. The strong position of domestic battery companies remains unchanged, and with the trend of companies going overseas, market share is expected to further increase, solidifying CATL's global leading position.</li>
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Strong Battery Cells, Seizing Leader Effect
Revenue in Q1 2025 is steadily increasing, mainly due to the high growth in battery cell shipments offsetting price declines, and price stabilization may lead to a resonance between shipment volume and revenue. Q2 2025 enters an important observation window, expected to maintain steady growth, with further increases in new energy penetration; overseas markets are expected to achieve overperformance against the backdrop of easing tariffs. Prices are expected to gradually bottom out, and as the industry crosses the cyclical low point, leading orders are full, capacity utilization is steadily increasing, and profitability is expected to further enhance. The competitive landscape is optimistic about the competitiveness of leading new products and flagship products; short-term fluctuations do not change long-term trends. Under the new technology wave of solid-state batteries and sodium batteries, leading competitive advantages are evident, and there is optimism about the performance of leading companies.
Performance &amp; Technology Anchoring Key Materials
By comparing the performance of Q1 2025 and considering various factors such as technology, the materials sector is welcoming a repair opportunity, and the following layouts are recommended: 1) Lithium iron phosphate, while expanding production capacity, still maintains a continuously rising operating rate; in a highly competitive situation, high energy density products and price elasticity from going overseas are promising. 2) Structural components, with a unique &#34;hedging&#34; attribute in the lithium battery industry, have strong operational stability, and will resonate with the demand market to realize performance. 3) Anode materials, the impact of high-priced inventory in Q1 2025 will extend into Q2 2025; there is optimism about the recovery capability of leading companies' profitability after price stabilization, with technologies such as fast charging and solid-state batteries having the greatest marginal impact on anodes, providing technological elasticity
4) Electrolytes, the industry is accelerating its clearing and gradually entering the final stage. Leading companies are crossing cycles, and it is recommended to pay attention to the technological progress of leading enterprises in the semi/full solid-state battery field. 5) Copper foil, price increases are strong, continuously delivering performance, and is expected to achieve growth that outperforms the industry and exceeds expectations. 6) NCM (Nickel Cobalt Manganese), market share is stabilizing with strong price resilience, and its trend relies on the growth of overseas demand as well as the development of low-altitude economy and embodied intelligence in the medium to long term. 7) Membranes, profitability is under extreme pressure, prices continue to explore the bottom, and under industry self-discipline, a neutral view is taken on the subsequent volume and price trends. Attention should be paid to the incremental changes in membrane material businesses of leading enterprises, such as in solid-state batteries and other fields.
Charging Equipment and Services: Recovery in Prosperity
In Q1 2025, installations increased significantly by 75.3% year-on-year and quarter-on-quarter. Under macro policy adjustments such as equipment updates, the industry's prosperity is expected to continue to recover. Fast charging technology may force further updates and iterations of charging infrastructure, providing greater space for related products and components. The market share of the top 5 operators slightly decreased year-on-year, intensifying market competition. In terms of revenue, Q1 2025 saw a year-on-year and quarter-on-quarter increase of +5% and +31%, respectively, while the non-recurring revenue saw a year-on-year increase of +20% but a quarter-on-quarter decrease of -16%, leading to intensified competition and differentiation within the sector.
Target Aspects
Investment Recommendations: Recommend CATL (300750.SZ), EVE (300014.SZ), Fulin Precision (300432.SZ), and others. It is suggested to pay attention to Keda Li (002850.SZ), BTR (835185.BJ), Shangtai Technology (001301.SZ), Tianci Materials (002709.SZ), Guangdong Jiayuan Technology (688388.SH), Xingyuan Material (300568.SZ), SUNWODA (300207.SZ), Yuneng New Energy (301358.SZ), Longpan Technology (603906.SH), Zhongke Electric (300035.SZ), and CNANO (688116.SH).
Risk Warning
Risks of lower-than-expected downstream demand for energy vehicles and energy storage installations. Risks of skyrocketing raw material prices and operational difficulties for enterprises due to shortages of resources or components

300750

300207

300014

301358

688116

688388

China Galaxy Securities released a research report indicating that the lithium battery industry will perform strongly in the first quarter of 2025. Despite being the off-season, cell prices have stabilized, shipment volumes have increased significantly, and revenue is steadily growing. It is expected that the domestic electrification rate will exceed 50% in 2025, initiating a new growth period. Although energy storage installations are expected to decline in the short term, the medium to long-term outlook for the new energy market is optimistic. The overseas market is expected to recover against the backdrop of eased tariffs, and domestic battery companies are highly competitive, with market share likely to increase

Zhitong

CATL

SUNWODA

Yuneng New Energy

CNANO

Guangdong Jiayuan Technology

LOPAL TECH

Senior

Fulin Precision

LOPAL

TINCI

HNZK Electric.

China Galaxy Securities: Q1 2025 Lithium Battery Industry Not Slow in Off-Season, Cell Prices Stabilize