Continued Expansion of Lithium Battery Production: CATL and Guoxuan High-Tech Invest in Solid-State and Large Cylindrical Batteries

The expansion of the lithium battery industry continues unabated, with leading companies such as China Innovation Aviation and Guoxuan High-Tech making significant investments that underscore this trend. At the same time, there is a noticeable trend of increasing competition in the market for large cylindrical batteries, solid-state batteries, and related new materials.

China Innovation Aviation has announced a large-scale expansion plan. The second phase of its Chengdu project commenced construction at the end of March, with an investment of 12 billion RMB. The goal is to begin production by the second quarter of 2026, which will add approximately 30 GWh of annual capacity for power batteries and energy storage systems. By 2030, the total planned capacity for China Innovation Aviation is expected to reach 500 GWh. Additionally, in February, the company launched a 15 billion RMB project for high-performance lithium batteries in Xiamen, with a planned capacity of 30 GWh.

In April, Guoxuan High-Tech adjusted its standard cell project plan for Volkswagen, with an annual production target set at 28 GWh (including 12 GWh of NCM and 16 GWh of lithium iron phosphate and PACK), with expected production to start in December 2026. According to GGII data, in 2024, China Innovation Aviation and Guoxuan High-Tech are projected to rank third and fourth in the domestic market with installed capacity of 35.74 GWh and 22.12 GWh, capturing 6.73% and 4.17% of the market share, respectively.

Recent financial reports from both companies reveal differing business focuses and growth trajectories. China Innovation Aviation reported a slight decline in power battery revenue (19.55 billion RMB), while its energy storage business saw a remarkable 72.4% year-on-year growth, bringing its revenue share from 17.6% to 29.6%. With a global ranking of fifth in energy storage cell shipments and contracts totaling 12.2 GWh with clients such as Sungrow, Saudi Arabia, and European partners, this highlights the company’s strategic focus on the energy storage market.

Guoxuan High-Tech’s power battery business maintained an 11.3% year-on-year growth, with revenue of 25.65 billion RMB. The company is clearly accelerating its shift towards lithium iron phosphate technology, with the share of NCM batteries plummeting to 2.3% in the first quarter of 2025. Although actual supply to Volkswagen was still in its early stages, customized production in response to Volkswagen’s demands may reflect confidence in future orders.

The expansion actions of these leading companies indicate a differentiated strategy based on market judgment, aiming to consolidate and enhance their competitiveness in the power and energy storage sectors. However, the large-scale capacity expansion has raised concerns regarding capacity utilization rates across the industry. In response, Yiwei Lithium Energy has indicated it is adapting production lines and actively seeking new customers to improve utilization. Its factory in Qujing is focusing on household energy storage and two-wheeled vehicles, with a projected full capacity of 7-8 GWh by 2025.

In parallel with the investment surge in new technologies, the landscape for new materials and technologies in the industry is also becoming increasingly crowded. In the solid-state battery sector, Ganfeng Lithium continues to expand its presence. The company announced a collaboration with local governments and state-owned enterprises to establish a research and development and industrialization base for high-energy solid-state batteries in Hangzhou. This initiative builds on Ganfeng’s recent comprehensive layout in solid-state batteries, covering key materials (sulfide/oxide electrolytes, lithium metal anodes) to cell production and systems.

In terms of technological advancements, Ganfeng has achieved energy densities of 320-450 Wh/kg with its silicon-based products, and its lithium metal anode cells have surpassed 800 cycles at 400 Wh/kg. They also claim to have achieved small-scale production of the world’s first 500 Wh/kg 10 Ah product. Ganfeng has stated its intention to accelerate the commercialization of solid-state batteries in sectors such as new energy vehicles, low-altitude economies, and consumer electronics.

The cylindrical battery format, particularly large cylindrical batteries, has attracted substantial investments. Recently, Sichuan Shihong has welcomed an investment of 5.8 billion RMB from Chongqing Tianhui Energy, while Anhui Xiangyuan New Energy plans to invest 6 billion RMB to produce various models of cylindrical batteries, including large cylindrical specifications.

Lithium manganese iron phosphate (LMFP) cathode materials have become the focus of a new wave of material expansion, with significant investments from new entrants. The Gansu Baiyin Shidai Ruixiang project plans an impressive total of 100,000 tons of LMFP production, with the first phase already partially operational (20,000 tons). This joint venture combines technical expertise (manganese-based materials patents) and resource advantages (lithium carbonate, supply chain) and claims to have solved key technical challenges (conductivity, manganese leaching), achieving a capacity of 152 mAh/g right from the start of production.

In summary, the lithium battery industry in China is witnessing a comprehensive and large-scale capacity expansion. Notably, in emerging technology areas such as solid-state batteries, large cylindrical batteries, LMFP, and silicon-carbon anodes, investment is highly concentrated, and planned capacities are substantial, indicating a clear trend of increasing competition and signaling that future technological iterations and market competition will become even more intense.