By Chao Yi, Edited by Shui Jing
According to data from multiple authoritative institutions, in the first half of 2026, the global market share of China's energy storage battery cells has exceeded 95%, and the global market share of energy storage system integration has surpassed 82%, leaving no doubt about its formidable strength.
However, an analysis by the 24Chao Industry Research Institute (TTIR) reveals that alongside the robust growth of China's energy storage sector, immense risks are also accelerating and accumulating.
Among these, the frantic influx of capital is a critical variable in this crisis.
Looking first at primary market data, according to statistics from the Beijing Institute of Green Finance and Sustainable Development, from 2014 to 2025, a total of 3,557 financing events occurred in the primary market of China's energy storage sector, with a disclosed total financing amount of approximately 325.1 billion RMB.
In terms of single financing scale, the average amount per financing event in the early stage (2014-2018) was about 15 million RMB, which increased to approximately 25 million RMB after 2021. In 2025, multiple large-scale financing events emerged, such as Ganfeng Lithium Battery securing a 2.5 billion RMB strategic financing and Ningxia Baichuan obtaining 1.8 billion RMB in financing, reflecting that the energy storage industry is evolving from a 'small and fragmented' startup phase to a 'large and strong' scale-up stage.
In addition, central state-owned enterprises (SOEs) with substantial capital strength are also rushing into the market. According to incomplete statistics from Energy Storage Headlines, in 2025 alone, the number of energy storage-related enterprises newly established or funded and invested by central and state-owned SOEs reached 392, with a cumulative registered capital exceeding 50 billion RMB.
Driven by strong financial support, as of now, there are approximately 23 unicorn enterprises in China's energy storage sector, with valuations exceeding 500 billion RMB. (See 'China Energy Storage Unicorn Enterprise Ranking' for details.)
Undeniably, the strong rise of energy storage in recent years is inseparable from the powerful boost of capital. However, as more and more capital frantically pours in, the sustainable development of the energy storage industry is facing severe impacts and challenges.
In terms of production capacity, according to data from the China Investment Industry Research Institute, the planned domestic energy storage battery capacity in 2025 has already exceeded 1TWh, far surpassing the global demand expectation of about 450GWh in 2026. Will the industry face the risk of overcapacity after the concentrated release of future capacity?
Additionally, according to incomplete statistics from GGII (Gaogong Industry Research Institute), in the first half of 2026, nearly 20 energy storage projects were implemented in China, with planned capacity exceeding 500GWh. The total project investment exceeded 47 billion RMB, a year-on-year increase of over 110%.
Central China Securities analyzes that the newly put-into-operation capacity of energy storage lithium batteries in 2026 is expected to exceed 500GWh, concentrated in enterprises such as Chuneng New Energy, CATL (Contemporary Amperex Technology Co., Limited), Hithium, Envision AESC, EVE Energy, REPT BATTERO, and CALB (China Aviation Lithium Battery). It is estimated that by the end of 2026, the total domestic capacity of energy storage lithium batteries will exceed 1200GWh.
From the above, it can be seen that a new wave of industrial supply-demand mismatch is approaching.
As early as the 2025 World Energy Storage Conference, Robin Zeng, founder and chairman of CATL, stated that the energy storage industry is currently at a critical stage of transformation, with five major challenges mainly including safety hazards, fierce price competition, and disorderly expansion.
According to Robin Zeng, there are currently over 300,000 registered energy storage enterprises. 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 seriously deviated from the cost. He believes that low prices will inevitably lead to material reduction and configuration downgrade, planting hidden quality and safety risks for the industry.
In fact, in the first half of the year, during the centralized procurement of energy storage systems by large central SOEs such as CGN (China General Nuclear Power Group) and China Huadian, the winning bid unit price for LFP (Lithium Iron Phosphate) 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 general consensus in the industry 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 battery cells, PCS (Power Conversion System), BMS (Battery Management System), EMS (Energy Management System), temperature control and fire protection, as well as integration manufacturing costs and warranty costs. A quotation below 0.5 RMB/Wh means that even if costs are extremely compressed through scaled procurement and technological optimization, the gross profit margin is basically squeezed dry, and the awkward situation of 'losing money on every order sold' may even occur. Therefore, facing such ultra-low quotations, the industry generally considers it as vicious competition.
Statistics from 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 like Highstar, Ginlong Technologies (Solis), Hoymiles, and APsystems have also fallen below 20%.
In fact, the severity of the situation for the industry dark horses that have risen in recent years, as well as small and medium-sized enterprises, exceeds the imagination of many people.
Taking the residential energy storage leader Sigenergy as an example, its operating performance has maintained fierce growth for consecutive years. In 2025, its revenue and net profit increased by 576.81% and 3381.22% respectively. However, its operating cash flow (blood-making capacity) has been in a state of net outflow (blood loss) for at least three consecutive years. In 2025, despite 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 during the same period, leaving a funding gap of 601 million RMB between the two.
Let's look at the relevant data of another residential 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 reached as high as 103.66%. =1.0366
The prospectus of QingTao Energy, a leader in solid-state batteries, shows: QingTao Energy, valued at nearly 28 billion RMB and ranking first globally in market share, has accumulated losses of over 3.1 billion RMB in three years, with a cash burn of over 1.5 billion RMB, and an asset-liability ratio reaching 165%.
The release of a policy a few days ago may further impact the profitability of energy storage enterprises. 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 the phased resumption of the consumption tax on lithium-ion batteries starting from September 1—first implemented 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 enterprises.
Over the turbulent past 20 years, countless star enterprises and even industry giants have gone bankrupt due to debt issues. For example, HNA and Evergrande, which were once powerful but later fell into bankruptcy restructuring, serve as warning examples. 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 frantic wild growth and cruel reshuffling. Those fallen star enterprises, or even industry giants, mostly died from the 'capital crisis triggered by cash flow rupture.'
'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 the risk of debt default or even bankruptcy cannot be ruled out.
Tian Qingjun, Senior Vice President of Envision Group and President of Envision Energy Storage, once warned: '80% of the global energy storage system shipments come from China, and in the future, it may even exceed 90%. When the entire industry pushes prices extremely low and profits are dismal, it ultimately harms national interests. Anti-involution is imminent.'
This is not alarmist. According to the '2025 Annual Statistical Data of Electrochemical Energy Storage Power Station Industry' released by the China Electricity Council (CEC): in 2025, electrochemical energy storage power stations experienced 1,922 unplanned outages throughout the year, an increase of 186.44% compared to 2022. The report explicitly points out that quality issues in key equipment, systems, and integrated installation are the main causes of unplanned outages in power stations, accounting for over 75% of the total unplanned outages. This reflects that the current energy storage industry chain still has obvious shortcomings in equipment reliability and system integration capabilities.
In addition to this, we must also pay attention to and be vigilant about global policy and trade risks. Today, Western countries led by the US and Europe are wielding the stick of trade, attempting to raise the cost of 'Made in China' through industrial policies to constrain the competitiveness of China's power batteries.
After the Trump administration took office, it officially signed the 'One Big Beautiful Bill' (OBBB) on July 1, 2025, significantly tightening restrictions on 'Foreign Entities of Concern' (FEOC). The most impactful on Chinese lithium battery enterprises is the introduction of a complex, stringent, and more detailed 'Prohibited Foreign Entity' system, building upon the original 'Foreign Entity of Concern' rules in the IRA (Inflation Reduction Act).
Through comprehensive restrictions on equity, supply chain, and technology, the bill lists enterprises exporting products to the US, overseas subsidiaries of Chinese enterprises established in third countries, and Chinese enterprises or their overseas entities supplying materials, parts, accessories, or semi-finished products to the US as 'US-involved Chinese enterprises.'
Starting in 2026, the use of critical minerals, components, technology licenses, or equipment provided by restricted entities will not be eligible for tax credits; for components from China used in projects, it must be ensured that the proportion of non-Chinese components reaches at least 60%, and gradually increases to 85% before 2030; if a restricted entity participates in a project through a subsidiary or joint venture, and the equity penetration reveals a shareholding of over 25%, it will still be recognized as an FEOC project.
In addition, the highly watched technology cooperation methods are also subject to key restrictions. If a technology licensing agreement signed between an enterprise and an FEOC exceeds 1 million US dollars, it will result in the project losing its tax credit eligibility. This move is intended to restrict high-value technology cooperation, especially technology transfers that may affect national security.
In other words, the original expectations of entering the US market through setting up factories, joint ventures, exporting from third countries, and technology licensing will all be closely monitored. Moreover, even if it is not a Chinese enterprise, as long as key materials or technologies come from Chinese-funded enterprises, they may be excluded from subsidy policies.
It can be said that the 'One Big Beautiful Bill' has almost cut off all current channels for entering the US market. This move aims to promote the localization of American manufacturing and further exclude Chinese enterprises from the US market.
Not only the US, but Europe has previously passed the Net-Zero Industry Act and the Critical Raw Materials Act proposals, and is further brewing the ambitious Industrial Accelerator Act. This act imposes strict requirements on the EU's procurement of net-zero technology products: for battery energy storage systems, one year after the act takes effect, all battery energy storage systems above 1MWh must use battery management systems (BMS) manufactured in the EU; three years after the act takes effect, battery energy storage systems must use battery cells, battery management systems, and at least one other key component manufactured in the EU.
The act proposes regulations on foreign direct investment: after the act takes effect, if the investor's home country controls more than 40% of the global capacity in this field, and makes strategic investments in the EU exceeding 100 million euros, the investor must meet four out of six standards, such as mandatory joint ventures with foreign shareholding not exceeding 49%, mandatory technology transfer, local employment of over 50%, and local procurement of over 30%.
Not only that, Europe and the US are also leveraging their positions to establish so-called economic and trade alliances, attempting to block the global layout of Chinese batteries. A global encirclement targeting China's new energy has already begun.
And the effects of this global encirclement and suppression have already begun to emerge.
In October 2025, the suspension of Gotion High-Tech's Michigan factory in the US, once hailed as the largest investment project in the history of Northern Michigan, is highly representative. The Michigan factory project of Gotion High-Tech started in 2022. In October of that year, Michigan Governor Gretchen Whitmer and the MEDC (Michigan Economic Development Corporation) high-profilely disclosed the investment plan of Gotion High-Tech's US subsidiary, Gotion Inc., near Big Rapids. The plan proposed an investment of 2.4 billion US dollars to build a 523-acre large-scale factory in four phases locally for the production of battery cathode and anode materials.
But three years later, on October 23, 2025, according to multiple media reports, the Michigan Economic Development Corporation (MEDC), which is responsible for promoting business development, employment, and community revitalization in Michigan, US, announced that because Gotion High-Tech failed to fulfill its contractual obligations in the agreement signed in 2022, the company's battery materials factory project in Michigan has been deemed abandoned by the state government, terminating all incentive measures.
Various parties have given completely different explanations for the termination of the project. The Michigan state government and local opponents attribute the responsibility to Gotion High-Tech's failure to deliver on its promises. In the notice of default issued on September 17, it was pointed out that 'qualified activities' on the project site by Gotion High-Tech had been suspended for more than 120 days, and at the same time, two lawsuits related to the project caused a 'material adverse effect.'
Mark Heusel, legal representative of Gotion High-Tech, insisted that the company never abandoned the project. He responded that the root cause of the project's stagnation lies in the 'political bias' and 'racist and nationalist stereotypes' of the local community, and it was the community, not the company, that abandoned the project.
Meanwhile, CATL's previously cooperative battery factory with Ford was also forced to hit the pause button (as claimed by Ford), and the 'Elvis' project cooperating with Tesla also reduced capacity and was delayed (as reported by LatePost). In early 2025, CATL was also placed on the 'blacklist' of military enterprises by the US Department of Defense...
Coincidentally, on the evening of November 30, 2025, Canadian Solar, a leader in photovoltaic modules and energy storage integration, issued an announcement declaring the divestiture of its photovoltaic and energy storage manufacturing business in the US to cope with the US 'One Big Beautiful Bill.'
According to foreign media, Tárkányi, then a member of parliament for the ruling Tisza Party in Hungary and Parliamentary State Secretary at the Ministry of Transport and Investment, stated in an interview with local media at the end of May this year that the new government would not support CATL's expansion plan to build a second and third factory next to its existing site in Debrecen.
It can be seen that whether in semiconductors, AI (Artificial Intelligence), biomedicine, or lithium batteries, wind and solar power, and energy storage industries, Chinese enterprises are encountering ruthless countermeasures from the world's largest economy and the second-largest country in automobiles, photovoltaics, and energy storage.
Considering that global industrial development and policies may continue to enter a game zone in the future, more overseas investment projects are highly likely to be forced into a 'delayed' or 'terminated' state, which will inevitably have a profound impact on the globalized development and landscape of the energy storage industry.
In summary, the rise and sustainable development of China's energy storage is by no means a smooth journey. It is crucial for enterprises to master and judge the scale of investment, the pace of development, and changes in capital and policies. Considering the risks of severe fluctuations in the global economy and market demand, enterprises must act according to their capabilities in globalization.
The author believes that as industrial competition reaches the deep-water zone, even giants may fall before dawn. Under the current industrial situation, maintaining financial health is very important. History has proven many times that facing the industry winter, financially healthy companies are more likely to cross the cycle and become winners, while financially fragile companies will face severe tests, and the risk of debt default or even bankruptcy cannot be ruled out.
Therefore, the first consideration for enterprises is how to survive, followed by expanding their global market influence and development capabilities.