Author: 24Chao Industry Research Institute, Editors: Chao Yi, Du Peng, Shui Jing
The rapidly surging energy storage industry is entering a dangerous zone.
In terms of capacity, according to data from the China Investment and Industry Research Institute, the planned domestic energy storage battery capacity in 2025 has exceeded 1TWh, far surpassing the expected global demand of about 450GWh in 2026. Additionally, according to incomplete statistics from the Gaogong Industry Research Institute (GGII), in the first half of 2026, nearly 20 energy storage projects were implemented in China, with planned capacity exceeding 500GWh and total project investment surpassing 47 billion RMB, a year-on-year increase of over 110%.
Zhongyuan Securities analysis suggests that the newly commissioned capacity for energy storage lithium batteries in 2026 is expected to exceed 500GWh, concentrated in companies such as CORNEX, CATL, Hithium, Envision AESC, EVE Energy, REPT BATTERO, and CALB. It is estimated that by the end of 2026, the total domestic capacity for energy storage lithium batteries will exceed 1200GWh.
Will the concentrated release of future capacity face the risk of overcapacity?
At the 2025 World Energy Storage Conference, Zeng Yuqun, founder and chairman of CATL, stated that the energy storage industry is currently at a critical stage of transformation, with the industry facing five major challenges, including safety hazards, fierce price competition, and disorderly expansion.
According to Zeng Yuqun, there are currently over 300,000 registered energy storage companies. Over the past three years, the price of China's energy storage systems has dropped by about 80%, and the winning bid price for a certain centralized procurement project has even severely deviated from the cost. He believes that low prices will inevitably lead to material and configuration reductions, planting hidden quality and safety risks for the industry.
In fact, in the centralized procurement of energy storage systems by large central state-owned enterprises such as CGN and China Huadian in the first half of the year, the winning bid unit price for LFP energy storage systems was generally around 0.5 RMB/Wh, with the lowest even touching 0.499 RMB/Wh.
What does 0.5 RMB/Wh mean? The industry consensus is that the reasonable cost line for current energy storage system integration is above 0.5 RMB/Wh. This cost is comprehensively calculated based on the procurement cost of 314Ah large cells, PCS, BMS, EMS, thermal management and fire protection, as well as integration and manufacturing costs, and warranty costs. A quote below 0.5 RMB/Wh means that even if costs are compressed to the extreme through scaled procurement and technical optimization, the gross profit margin is basically squeezed dry, and the embarrassing situation of "losing money on every order sold" may even occur. Therefore, in the face of such ultra-low quotes, the industry generally considers it malicious competition.
Statistics from the 24Chao Industry Research Institute (TTIR) reveal that in 2025, the gross profit margins of the energy storage businesses of industry leaders such as CATL, Gotion High-Tech, EVE Energy, and Sungrow have all declined. Among them, the gross profit margin of EVE Energy's energy storage business dropped to 12.28%. In addition, the gross profit margins of strong players such as HyperStrong, Ginlong Technologies, Hoymiles, and APsystems have also fallen below 20%.
In fact, the severe situation of the industry dark horses that have risen in recent years, as well as small and medium-sized enterprises, exceeds the imagination of many people.
Take the household energy storage leader Sigenergy as an example. Its operating performance has maintained fierce growth for many consecutive years. In 2025, its revenue and net profit increased by 576.81% and 3381.22% respectively. However, its operating cash flow (blood-making ability) has been in a state of net outflow (blood loss) for at least three consecutive years. In 2025, while generating a profit of 2.919 billion RMB, its net operating cash flow was only -200 million RMB (a year-on-year decrease of 108.74%). As of the end of March 2026, it held 1.109 billion RMB in "cash and cash equivalents," while the scale of "short-term borrowings and current portions of long-term borrowings" reached 1.71 billion RMB, leaving a funding gap of 601 million RMB between the two.
Let's look at the relevant data of another household energy storage dark horse, Daqin Digital. According to the prospectus, in 2025, Daqin Digital's revenue and net profit were 2.525 billion RMB and 125 million RMB respectively, while the net operating cash flow was only 81 million RMB. By the end of 2025, its asset-liability ratio was as high as 103.66%. =1.0366
The prospectus of QingTao Energy, a leader in solid-state batteries, shows that QingTao Energy, with a valuation of nearly 28 billion RMB and the world's first market share, has accumulated losses of over 3.1 billion RMB in three years, with a cash drain of over 1.5 billion RMB and an asset-liability ratio of 165%.
The release of a policy a few days ago may further impact the profitability of energy storage companies. On July 16, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration jointly issued Announcement No. 20 of 2026, announcing that from September 1, consumption tax will be restored in stages on lithium-ion batteries—first at 2% for one year, and rising to 4% in September 2027.
The real history of modern business has long told us that at any time, financial health is the most core cornerstone for the sustainable survival and development of an enterprise.
Over the turbulent past 20 years, countless star enterprises and even industry giants have gone bankrupt due to debt problems. For example, HNA and Evergrande, which were once powerful and later fell into bankruptcy reorganization, are lessons from the past. Looking at the 20-year development history of China's energy storage industry, especially over the past decade, the industry has experienced several rounds of crazy wild growth and cruel reshuffling. Those fallen star enterprises, or even industry giants, mostly died from "capital crises triggered by broken cash flow."
"Competition has reached the deep-water zone, and many companies are on the edge of life and death." We believe that under the current industrial situation, the importance of financial health cannot be overemphasized. Facing the industry winter, financially healthy companies will have sufficient ammunition to cross the cycle and become winners, while financially fragile companies will face severe tests, and there is no excluding the risk of debt default or even bankruptcy.
Therefore, the 24Chao Industry Research Institute (TTIR) believes that at the current point in time, researching and analyzing the financial health index of China's listed energy storage companies holds great significance for operators, creditors, investors, the government, and all other aspects.
In this article, the 24Chao Industry Research Institute (TTIR), referring to practices related to entity credit ratings and bond credit ratings, and based on:
Capital structure, covering the asset-liability ratio and total debt capitalization ratio;
Debt repayment ability, covering the quick ratio, operating cash flow to current liabilities ratio, cash and cash equivalents to short-term debt, EBITDA interest coverage ratio, total debt to EBITDA, and total debt to net operating cash flow;
Net cash (cash and cash equivalents + trading financial assets - total debt) and other three major dimensions, has formulated the "China Listed Energy Storage Enterprise Financial Health Index Ranking" (excluding listed companies in the mid-to-upstream industrial chain such as lithium battery materials). The data shows that many enterprises' finances are indeed in the "pressure/risk" zone.
We believe this article can provide some reference value for readers to more intuitively and deeply understand the financial health of enterprises. For specific indicator weights and scoring, please refer to the table below. Readers are also welcome to correct and supplement it.
Note: This article is for reference only and does not constitute investment advice. If there are any omissions, readers are welcome to supplement and correct them.