China Battery & Materials Demand resilience despite lithium price volatility; CATL extends production lead in 2Q26

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China Battery & Materials Demand resilience despite lithium price volatility; CATL extends production lead in 2Q26

Limited/

recently downgraded Yunnan Energy to Neutral and are now positioned Neutral J.P. Morgan Broking (Hong Kong) Limited

or Underweight across our battery materials coverage (JPM note). Sabrina Liu

(852) 2800-8535

• CATL has significantly outpaced industry peers since 4Q25, with growth sabrina.liu@jpmorgan.com

momentum accelerating in 2Q2026 (Figure 1). CATL’s battery production J.P. Morgan Securities (Asia Pacific) Limited/ J.P. Morgan Broking (Hong Kong) Limited

growth rose from ~40% y/y in 2Q/3Q25 to nearly 60% in 4Q25/1Q26, marking

Frankie Fong

a substantial divergence from the peer group, which posted only 20–27%

(852) 2800-8574

growth over the same periods. In 2Q26, CATL’s production growth surged to frankie.fong@jpmorgan.com

>80% y/y, compared to 43% for the top six players excluding CATL. This J.P. Morgan Securities (Asia Pacific) Limited

result echoes the thesis that CATL is positioned to gain market share in 2026 Shirley Feng

along with aggressive capacity expansion (JPM note). (86-21) 6106-6149

shirley.x.feng@jpmorgan.com

• CATL’s 2Q26 earnings expectation: We expect 50-60% y/y growth in sales SAC Registration Number: S1730524040001

volume and a stable unit economics, translating to Rmb23-24bn net profit (40- J.P. Morgan Securities (China) Company

45% y/y, 10-15% q/q). Limited

Nick Lai

• At what lithium carbonate price level might ESS demand start to be (65) 6801-3176

affected? As lithium spot prices approach Rmb200k/t, market debate has nick.yc.lai@jpmorgan.com

resurfaced. Industry views vary widely depending on participants’ positions in J.P. Morgan Securities Singapore Private

Limited/ J.P. Morgan Securities (Asia Pacific)