China's Lithium Battery Industry Surges Back: Policy Support and Resurgent Demand Drive Recovery
Policy and Demand Synchronization: The Threefold Logic Behind China’s Lithium-Ion Battery Industry’s Explosive Rebound
On October 26, the A-share market exhibited a striking structural reversal: while the broader index advanced modestly, the lithium-ion battery sector erupted collectively with rare intensity. Rongjie Co., Ltd. achieved four consecutive trading limits (i.e., daily price caps); Sinomine Resource Group, Jiangte Motor, Yongxing Materials, and over ten other constituent stocks hit the daily upper limit outright; the main contract of lithium carbonate futures surged 6.2% in a single day—the largest one-day gain in nearly five months; Ganfeng Lithium’s A-shares recorded a staggering RMB 7.7 billion in daily trading volume, while its H-shares jumped 12.3% simultaneously. This “lithium-ion frenzy” is no isolated event—it reflects the powerful convergence of three forces: the implementation of low-altitude economy policies, a rebound in electric vehicle (EV) exports, and clear signals that lithium prices have bottomed out. It marks a substantive turning point in both market sentiment and earnings expectations for the new-energy sector.
New Regulations for the Low-Altitude Economy: Unleashing a Second Growth Curve for Drone Batteries
On October 25, the Standing Committee of the Beijing Municipal People’s Congress approved the Regulations on the Management of Unmanned Aircraft in Beijing, stipulating that, effective May 1, 2026, the entire administrative area of Beijing will be designated as a controlled airspace, requiring prior approval for all outdoor drone flights. Superficially, this tightens regulation—but in reality, it sends a strong industrial signal: standardization is the prerequisite for commercialization. The regulations also mandate the establishment of a full-chain safety assessment system and impose compulsory technical standards for storage and transportation of core components—including high-rate lithium-ion battery modules and battery management systems (BMS). This directly pressures battery manufacturers to accelerate adoption of aviation-grade safety certifications and thermal runaway prevention solutions.
According to calculations by the CCID (China Center for Information Industry Development), part of the Ministry of Industry and Information Technology, China’s fleet of industrial-grade drones exceeded 850,000 units in 2024, growing at a compound annual growth rate (CAGR) of 32%. Logistics delivery, power line inspection, and agricultural/forestry pest control account for 78% of total demand. Over 90% of current mainstream drone models rely on ternary lithium batteries (NCM523/622), requiring battery pack energy density exceeding 220 Wh/kg and cycle life surpassing 800 cycles—placing stringent demands on cathode material consistency and flame-retardant performance of electrolytes. Beijing’s new rules effectively establish a dual-track mechanism—“market access thresholds + standards-driven guidance”—that will accelerate the elimination of inefficient, small-scale battery producers and benefit industry leaders such as Contemporary Amperex Technology Co. Limited (CATL), Eve Energy, and Gotion High-Tech, all of which hold advanced aviation-battery certification capabilities. Notably, Rongjie’s surge—including its consecutive trading limits—is underpinned by its equity stake in Wuhu Tianyi Energy, which has already secured preliminary airworthiness review qualifications for eVTOL (electric vertical take-off and landing) batteries from China’s Civil Aviation Administration—confirming that policy dividends are rapidly flowing upstream along the value chain.
Export Data Recovery: Overseas Demand Restoring Midstream Profitability
Latest data from China’s General Administration of Customs shows that in September, China exported 128,000 new-energy vehicles—a 19.3% month-on-month increase and a 41.7% year-on-year rise—setting a new monthly high for 2024. Exports to Europe, Southeast Asia, and the Middle East rose by 27%, 53%, and 68%, respectively. More critically, export structure is improving: high-end models priced above USD 30,000 now account for 31% of total exports—up 9 percentage points from the first half of the year—pushing average battery capacity per vehicle up to 68 kWh (compared to 52 kWh in the same period last year). This significantly strengthens the pricing power of midstream materials suppliers: as automakers pass cost pressure upstream, high-value-added materials—including high-nickel cathodes, silicon-based anodes, and next-generation electrolytes—are the first to benefit.
Meanwhile, signals indicating that lithium carbonate prices have bottomed are becoming increasingly clear. According to Shanghai Steelhome Information & Technology Co., Ltd., the spot average price for battery-grade lithium carbonate has remained stable at RMB 92,000 per ton for 11 consecutive weeks—only RMB 3,000 above its April 2024 trough. Brine-extracted lithium producers’ operating rates have rebounded to 82%, while the average production cost for spodumene-derived lithium has declined to RMB 85,000 per ton. Price stabilization, coupled with recovering demand, is directly improving gross margin expectations for midstream players: for example, Sinomine’s Q3 earnings preview indicates that gross profit per ton of lithium salts increased by RMB 18,000 quarter-on-quarter. If lithium carbonate futures sustain prices above RMB 100,000 per ton, Q4 gross margins could return to 2022 levels. The market responded swiftly—Sinomine’s single-day trading limit reflects institutional investors’ re-rating of its “lithium salt + lithium mining” dual-driver business model.
Ganfeng Lithium’s RMB 7.7 Billion Turnover: The Deeper Drivers Behind Valuation Re-Rating
Ganfeng Lithium’s RMB 7.7 billion daily turnover ranked first among A-share lithium-ion battery stocks—far exceeding CATL’s RMB 5.2 billion on the same day. This phenomenon reflects the market’s renewed appreciation of lithium resource assets: first, Ganfeng’s self-sufficiency rate for lithium resources reached 58% in the first three quarters—well above the industry average of 39%; second, its Cauchari-Olaroz salt-lake project in Argentina commenced Phase II expansion in September, increasing designed annual lithium carbonate equivalent (LCE) capacity from 40,000 tons to 80,000 tons. Upon completion in 2025, it is expected to become one of the world’s lowest-cost brine-lithium sources, with estimated cash costs of USD 4,200 per ton.
Even more noteworthy is Ganfeng’s global resource footprint. Despite foreign media fabrications—such as baseless claims about SMIC supplying equipment to Iran (which the Chinese Foreign Ministry has explicitly refuted)—Ganfeng’s progress on key overseas projects remains robust: its Sonora lithium clay project in Mexico and the Goulamina lithium mine in Mali, West Africa, are advancing smoothly. Its resource portfolio now spans South America, Africa, and Australia—the three primary global lithium-producing regions. Against intensifying geopolitical volatility, resource autonomy and controllability have acquired heightened valuation premiums. Data from Stock Connect (Hong Kong) show that Northbound funds increased their holdings in Ganfeng’s H-shares by 2.3% in October—the highest level in three years. This is not merely a trading action, but a vote of confidence in the strategic value of “resource security.”
Sustainability of the Rebound: Guarding Against Short-Term Overheating, Focusing on Long-Term Divergence
Although this lithium-ion battery rebound is exceptionally strong, its sustainability warrants sober assessment. The sector’s current trailing-twelve-month (TTM) P/E ratio stands at 28.6x—within the 35th percentile of its three-year range—not yet signaling bubble territory. However, signs of short-term overheating are evident: some multi-day limit-up stocks exhibit clear signs of position loosening. For instance, Rongjie’s trading data reveals that four institutional trading desks collectively net-sold RMB 210 million—indicating widening disagreement among major players. Ultimately, what determines the depth and duration of this rally is technological iteration and the pace of capacity rationalization: the commercialization progress of solid-state batteries, sodium-ion battery penetration in two-wheeled EVs and energy storage applications, and the number of small- and medium-sized lithium-salt producers filing for bankruptcy will jointly define the next phase’s winners and losers.
When policy standardization opens up the blue ocean of low-altitude applications; when upgraded export structures reshape profitability models; and when resource barriers regain valuation premiums—the lithium-ion battery sector’s rebound ceases to be mere sentiment-driven speculation. Instead, it becomes a tangible manifestation of fundamental recovery. Perhaps the ultimate destination of this explosive rebound lies not at a stock-price peak—but in China’s lithium-ion battery industry making a historic leap: from “scale leader” to “standard setter.”