XieXin Lithium Battery will be included in the consolidated financial statements of the listed company GCL Technology.
GCL Technology, a giant in photovoltaic polysilicon, is accelerating the integration of its group's lithium iron phosphate (LFP) assets into the listed company to drive the layout of million-ton-level cathode material capacity.
On October 19, GCL Technology announced its plan to acquire approximately 81.91% equity in Sichuan XieXin Lithium Battery Technology Co., Ltd. (XieXin Lithium Battery) for about CNY 2.5 billion, of which CNY 650 million will be paid in cash and CNY 1.85 billion through share issuance.
Upon completion of the transaction, XieXin Lithium Battery will be included in the consolidated financial statements of the listed company.
This is a related-party transaction. XieXin Lithium Battery is held by GCL Group, controlled by the Zhu Gongshan family, and was previously entrusted to GCL Technology for operation and management.
This acquisition signifies that GCL is further unifying its cathode material capacity, customer resources, and operational platforms within the group.
Notably, the target of this acquisition is not a new project that has yet to be put into production, but rather an LFP asset that has already achieved profitability and entered the supply chain of CATL (Contemporary Amperex Technology Co., Limited).
Integration of Two Major Bases Accelerates Million-Ton Capacity Layout
Founded in 2022, XieXin Lithium Battery's Phase I production facility has an annual capacity of 120,000 tons. The effective capacity disclosed previously on the company's official website was approximately 150,000 tons. Upon the completion of Phase II, it is expected to reach 400,000 tons, with long-term planning further increasing to 600,000 to 800,000 tons.
The Renshou base has supplied CATL in batches since 2025 and achieved annual profitability.
According to GCL, the base's capacity utilization rate has currently reached 100%, mainly supplying fourth-generation and above high-compaction LFP products.
Meanwhile, GCL Technology's own LFP business is also expanding rapidly.
Phase I of its Leshan base, with a capacity of 200,000 tons, was put into production in June this year and is expected to reach full production by the end of October. Phase II, with another 200,000 tons, is under construction and planned to be commissioned by the end of the first quarter of 2027.
Based on the current effective capacity caliber, upon completion of the acquisition, GCL Technology's consolidated annual LFP capacity will reach 350,000 tons. With the commissioning of Leshan Phase II, it is expected to further increase to 550,000 tons.
The LFP capacity expansion map at the group level is still expanding.
In September this year, the 400,000 tons per year LFP project of Xuzhou Xinrui Lithium Battery Material Co., Ltd., under the GCL system, obtained energy conservation review approval. Phase I of the project is planned for 200,000 tons. The specific equity attribution of this project and the listed company still needs to be distinguished.
Factoring in the planned capacities of Renshou, Leshan, and Xuzhou, the long-term planned scale of GCL Group's related cathode material projects has exceeded one million tons, making a strong push toward the top tier of the industry.
Behind the capacity expansion is the large-scale customer demand disclosed by GCL.
According to previous disclosures by GCL Technology to the media, XieXin Lithium Battery has signed a long-term supply agreement with CATL, with an expected cumulative supply of one million tons by the end of 2028;
During the same period, the demand from Envision AESC and Hithium is approximately 450,000 tons each, of which 350,000 tons each are under guaranteed supply arrangements;
The demand from Ganfeng Lithium is about 300,000 tons, of which 200,000 tons are guaranteed.
However, the aforementioned procurement volumes are not mentioned in this HKEX acquisition announcement, and the demand volumes from customers such as Envision AESC and Hithium cannot be directly equated to confirmed delivery orders. The actual supply scale still depends on contract fulfillment, capacity release, and customers' procurement pace.
Betting on High-Compaction Materials: Photovoltaic Giant Seeks New Growth Curve
Besides capacity and customers, the technology route is also a crucial factor in this integration.
XieXin Lithium Battery adopts the independently developed GCL-PHY iron oxide one-step process. By simplifying the material preparation process and reducing sintering and wet processing steps, it lowers investment, energy consumption, and production costs.
This technology has been licensed for use at GCL Technology's Leshan base. GCL Technology previously disclosed that, compared with traditional processes, this route can significantly reduce carbon emissions and form differentiated competition in high-compaction LFP products.
Currently, GCL's fourth-generation products have achieved batch supply, and the fifth-generation products have completed R&D and been sent to customers for sampling.
Notably, in this transaction, GCL Group also committed that the target company will develop sixth-generation LFP cathode materials with a compaction density exceeding 2.8 g/cm³ by the end of 2028.
Financially, GCL Group committed that XieXin Lithium Battery's cumulative adjusted net profit in 2027 and 2028 will be no less than CNY 620 million, and the performance commitment is calculated based on the target company's existing capacity and technical transformation.
Failure to meet the relevant commitments will trigger a transaction consideration compensation mechanism, with specific terms to be determined in the formal agreement.
These arrangements reflect GCL's bet on the profitability of high-end LFP products.
From an industry perspective, the rapid growth in energy storage demand in 2026 has driven an increase in LFP shipments. The capacity utilization rate of leading enterprises remains high. Due to the thresholds for customer certification and large-scale manufacturing, high-compaction materials still face a structural supply gap.
However, the new round of capacity expansion is equally aggressive. According to previous statistics by GGII (Gaogong Industry Research Institute), by the end of May this year, the domestic nominal LFP capacity in production had reached 8.16 million tons, while planned and expanded capacity reached 11.38 million tons.
In the future, as new capacity is released, industry competition will further intensify.
GCL Technology's increased investment in lithium batteries at this time is also driven by operational pressures from its original core business.
In the first half of 2026, GCL Technology achieved a revenue of CNY 5.777 billion and a net loss attributable to shareholders of CNY 2.081 billion. Affected by the price cycle of photovoltaic polysilicon, the company's profitability has been under continuous pressure in recent years.
In May this year, GCL Technology announced the launch of a comprehensive strategic transformation, expanding from granular polysilicon business to new energy materials such as silicon-based, lithium-based, and carbon-based materials.
The company's management also proposed striving to reduce the proportion of photovoltaic product revenue to less than 20% over the next three years.
LFP is becoming the first business in this strategy to achieve large-scale manufacturing and sales.
For GCL Technology, this acquisition is not only about injecting profitable assets into the listed platform but also further integrating capacity, technology, and customer resources to provide support for subsequent expansion.
From the cross-boundary move of traditional material giants to the accelerated asset integration by photovoltaic leaders, a new round of capacity competition in the LFP industry is heating up.
As the demand for high-compaction products grows, the key to determining whether an enterprise can enter the top tier will further focus on large-scale manufacturing costs, product iteration capabilities, and continuous delivery to leading customers.