Pylon Technologies Faces Profit Decline Amid Intensifying Lithium Battery Market Competition in Q1 2025

In the first quarter of 2025, Pai Neng Technology reported a significant decline in net profit, which dropped to -38.17 million yuan, marking a staggering year-on-year decrease of 1054.23%. Despite a slight increase in revenue to 392 million yuan—up 1.72% from the previous year—the company is facing intense competition in the lithium battery market. The management expressed that while short-term profits are impacted by pricing competition and investments in new business areas, there is optimism for recovery in both volume and profit as demand in the home energy storage market begins to rebound.

Pai Neng Technology, once hailed as the “first stock in energy storage,” disclosed its first-quarter report, revealing that although revenue growth has resumed, net profit has taken a severe hit. The company indicated that short-term profit pressures stem from competitive pricing and new business developments. However, it anticipates a dual recovery in volume and profit bolstered by an uptick in home storage demand and the rollout of commercial energy storage projects, combined with cost reductions in lightweight power batteries and sodium-ion batteries.

The company is striving to expand into lightweight power and commercial energy storage markets. In the first quarter, it achieved a sales volume of 401 MWh, reflecting a year-on-year growth of 60.28%. This increase is primarily attributed to significant breakthroughs in both lightweight power and commercial energy storage sectors.

Pai Neng Technology has successfully integrated into the supply chains of leading companies in the lightweight power market, particularly for electric two-wheelers, and has developed tailored solutions for the commercial energy storage sector, leveraging its previous market expansion and customer resource accumulation to generate new sales growth.

It is important to note that despite a 60% increase in sales volume, revenue saw only a modest rise of less than 2%, indicating a marked decrease in the average selling price per watt-hour. The company has yet to clarify whether the gross margins from its lightweight power and commercial energy storage segments are significantly lower than those from its home energy storage business, as attempts to reach the investor relations office for comments were unsuccessful.

In an investor relations document dated April 22, Pai Neng Technology acknowledged that the drop in average product prices in the first quarter was mainly due to the increased proportion of domestic lightweight power business. Currently, its lightweight power products are primarily used in two-wheeled, three-wheeled vehicles, and battery-swapping markets. Due to rapidly growing market demand, capacity at its Yizheng factory is nearing its limits. To address this, the company plans to fully utilize its Hefei factory’s capacity starting in May to better meet the demands of the lightweight power market and the sodium-ion battery sector.

The competition in the lightweight power lithium battery market is becoming increasingly fierce. While Pai Neng Technology’s lightweight power and commercial energy storage segments have helped stabilize revenue declines, this has come at the cost of reduced average product prices. The company’s 2024 annual report indicated that it offers dual-system solutions featuring lithium iron phosphate and manganese-based technologies, primarily focusing on lithium batteries in the lightweight power segment. Moreover, Pai Neng has introduced sodium-ion batteries tailored for lightweight vehicles and has developed low-temperature sodium batteries to meet the needs of northern markets.

In the competitive landscape of lightweight power batteries, the intensity of competition rivals that of the energy storage market. For instance, leading player Tian Neng Co., Ltd. reported a gross margin of -30.71% in its lithium battery business for 2024, a decrease of 12.29 percentage points year-on-year. In contrast, its lead-acid battery segment maintained a gross margin of 16.15%.

Interestingly, the competition in the lithium battery segment is harsher than that in lead-acid batteries, with Tian Neng admitting in its annual report that competition in the lithium industry has intensified. In comparison, Pai Neng Technology enjoys a significantly higher gross margin of 28.90% in its energy storage business, although this has decreased by 1.54 percentage points year-on-year.

It is also worth noting that Tian Neng is venturing into the energy storage sector, particularly in home energy storage. The company announced a successful development of 100Ah/150Ah home storage and communication-related products in 2024, becoming an approved supplier for companies like ZTE Corporation.