This article is based on public information and is intended for information exchange only, and does not constitute any investment advice.
In June 2026, at The World Economic Forum. When asked about solid-state batteries, Robin Zeng, the wealthiest and most aggressive investor in the entire industry, gave a rare and straightforward answer: on a scale of 1 to 9 for Technology Readiness Levels (TRL), solid-state batteries are currently only at Level 4—having just completed proof-of-concept with small laboratory samples.
What does Level 4 mean? From this stage to Level 9, which represents mass production, historical experience in the manufacturing industry typically indicates a gap of 5 to 8 years.
On the other side of the same year: in Bishan, Chongqing, BYD commenced construction on a 20GWh sulfide all-solid-state mass production line; starting September 1, solid-state batteries are exempt from consumption tax; in the first quarter, 25 solid-state battery projects nationwide were densely signed and commenced, with a total investment exceeding CNY 35 billion. Meanwhile, in the A-share market, a company producing indium phosphide, boasting a price-to-earnings ratio of 839 times, is categorized under the "solid-state battery" concept.
On one hand, saying "it's still early," and on the other, breaking ground, increasing investment, and raising prices. These two things are not contradictory; they are simply standing at different ticks on the clock of commercialization.
To understand this clock, one only needs three things: an interim report, a cost sheet, and 830 tons of lithium sulfide. 830 tons—that is the total effective global capacity of lithium sulfide in 2026. This number, determined by materials science, sets the boundaries for this market trend earlier than any research report.
01. What Does Level 4 Mean
The Technology Readiness Level (TRL) is the benchmark used by NASA and military sectors worldwide to measure technology commercialization: Level 4 is laboratory proof-of-concept, Level 6 is prototype demonstration in a relevant environment, and Level 9 is proven through actual application.
Between Level 4 and Level 9, the gap is not merely about engineering scale, but yield rate, cost, and the supply chain. These three elements have specific numbers attached to them for solid-state batteries in 2026.
In terms of cost, all-solid-state cells cost CNY 1.6 to 2.2 per Wh, while lithium iron phosphate (LFP) costs CNY 0.39 to 0.5 per Wh—a 3 to 5 times difference. Applied to a 100kWh vehicle, the battery alone is over CNY 150,000 more expensive, equivalent to the price of a BYD Seagull.
In terms of yield rate, the comprehensive yield of all-solid-state pilot lines is only 60–70%, whereas liquid batteries have exceeded 94%; Toyota's pilot production line achieves 92%, which is already one of the best results in the industry.
On the production line, sulfide electrolytes react with water to generate toxic hydrogen sulfide. The entire process must be conducted in a dry environment with a dew point of minus 60 degrees Celsius. 90% of existing liquid production lines cannot be reused, and the equipment investment per GWh is CNY 1.5 to 1.8 billion, which is 8 to 12 times that of liquid production lines.
However, there is an easily overlooked detail in the cost sheet: semi-solid-state batteries are already close to liquid ones. At CNY 0.8–1.1 per Wh, they are only 20% to 30% more expensive than high-end liquid batteries, because 90% of the process steps can reuse existing production lines. This is why almost all "solid-state battery vehicles" you can buy in 2026 are semi-solid-state; it is also why the GB/T 43568-2026 national standard uses the threshold of "0.5% weight loss rate" to make things clear: currently, no mass-produced vehicle meets the all-solid-state standard.
Level 4 refers to all-solid-state. And the solid-state battery sector in the A-share market is primarily priced based on it.
So the question arises: what should the financial statements of companies at Level 4 look like? The answer is simple: ugly. Revenue has not yet arrived, and money is flowing out: revenue comes from old businesses, while costs come from new ones. The higher the solid-state content, the uglier the current financial statements.
Therefore, in this sector, P/E ratios are all worthless. There is only one correct question to ask: whose accounts currently hold the cash.
02. What Level Are the Financial Statements At
Laying out the interim reports of 27 core samples and penetrating the main business composition of each company reveals a fact more embarrassing than "mismatch": the profit growth in this sector in the first half of 2026 almost entirely comes from a super boom in liquid lithium batteries.
Only 5 companies have seen positive year-to-date gains. After checking the main businesses one by one, the drivers are respectively:
● Yunnan Germanium: Indium phosphide and gallium arsenide, AI optical communications, and compound semiconductors contributed 32.84% of gross profit, while the gross margin of germanium actually declined during the same period;
● Chihong Zinc & Germanium: Silver production increased from 87 tons to 212 tons, and gold production nearly tripled, making it a typical precious metals company;
● Sanxiang Advanced Materials: Zirconium, with revenue growing by only 0.23%, and net profit growth entirely reliant on gross margin;
●● SBT Ultrasonic Technology: Energy storage and semiconductors, with a private placement of CNY 1.344 billion mainly invested in semiconductor packaging;
Zhongyi Technology: Lithium battery copper foil, with global shipments up 60.1% and net profit nearly tenfold.
In other words, among the five, four have gains completely unrelated to solid-state batteries. The driver for the fifth is the boom in liquid lithium batteries—which is precisely what solid-state batteries aim to replace.
The ranking of gross margins nails this pattern down even more firmly. The four with the most significant improvements: Ganfeng Lithium +20.4 percentage points, Tinci Materials +14.9, Do-Fluoride +9.6, and Xiangfenghua +6.3. Their main businesses are lithium salts, electrolyte, lithium hexafluorophosphate, and graphite anodes, respectively. All four are replacement targets for solid-state batteries. 99.44% of Xiangfenghua's revenue comes from graphite anodes, while the protagonists in the solid-state era are silicon-carbon and lithium metal.
Behind this lies a generally ignored negative feedback loop. The common sense of commercialization is "technology matures, costs drop, and volume replacement occurs," but there is another reality in true industrial history: the better the cash flow of incumbents, the lower their willingness to switch.
Consider the situation of battery manufacturers in the first half of 2026: energy storage demand is exploding, production lines are at full capacity, and every link in liquid batteries is making money. At this time, should management invest in an all-solid-state pilot line with costs 3 to 5 times higher, a yield rate of 60% to 70%, and 90% of the production line unable to be reused? The rational answer is written in the financial statements: CATL's construction in progress is CNY 33 billion, the largest in the industry, yet down 5.9% year-on-year. The capital expenditure of the leader on liquid batteries has entered the harvest period, not massive investment in a new route.
The mirror of industrial history is readily available. In the 2000s, polysilicon rose to 400 USD per kilogram, and thin-film batteries were highly anticipated; after 2008, polysilicon dropped by 90% in two years, and all cost advantages of thin-film instantly evaporated. The reverse is equally true: when every link in liquid lithium batteries is making money, the window for solid-state batteries will be delayed.
Buying the most profitable companies in the sector is actually buying the opposite of solid-state. This is not a mispricing by the market—the market is pricing "the last boom of liquid lithium batteries," and pricing it very accurately.
03. 75% of BOM Cost is Lithium Sulfide
The following cost sheet is the hardest-hitting part of the entire text, because it does not rely on the narrative of any single company.
Why is all-solid-state CNY 1.6–2.2 per Wh? Breaking down the BOM: cathode materials account for 30%, solid-state electrolyte for 25%, anode (lithium metal/silicon) for 15%, and manufacturing and others for 30%. The proportion of the manufacturing link is nearly twice that of liquid batteries; dry processes and isostatic pressing are all newly added processes, and the yield rate is still low.
But this is not the crux. The crux lies hidden within the electrolyte. Gotion High-Tech provided a figure at the 2026 Global Technology Conference: 70–80% of the cost of sulfide solid-state batteries comes from the electrolyte, and 70–80% of the electrolyte cost comes from lithium sulfide—multiplying the two, this single material, lithium sulfide, accounts for half to two-thirds of the total cost of all-solid-state batteries. The BOM breakdown by Changjiang Securities is even more extreme: in the current CNY 1.66 BOM cost for 1Wh of all-solid-state, lithium sulfide accounts for 75%.
This leads to an unpalatable but inescapable conclusion: the cost reduction of all-solid-state batteries is essentially the cost reduction of lithium sulfide. This is not just an important path; it is the only path.
The other three paths also genuinely exist, just at a much smaller magnitude. In terms of process, dry electrodes simplify the seven-step process into five, eliminating the need for expensive NMP solvents; GAC's cathode film-forming speed reaches 50 meters per minute, three times that of the wet method, achieving an overall cost reduction of about 15%; in terms of yield, BYD's 2GWh all-solid-state pilot line in Pingshan, Shenzhen, claims to have raised the yield to 95%, dropping the unit manufacturing cost by 20%; in terms of system, the solid-state electrolyte doubles as a separator, thermal management can be simplified, and it is compatible with lithium metal anodes. Adding the three together, they still cannot rival the single path of lithium sulfide.
And the cost reduction of lithium sulfide hits a wall: 830 tons.
Back-calculating based on mainstream formulations: 1GWh of batteries requires about 700 tons of electrolyte, and each ton of electrolyte requires about 400 kg of lithium sulfide; multiplying the two, the demand per GWh is about 280 tons. The global effective capacity of lithium sulfide in 2026 is 830 tons, with a monthly output of less than 10 tons. Physically, this is only enough for about 3GWh. Meanwhile, the capacity imagination derived from on-hand orders on the equipment side is already more than five times this number.
Thus, a three-ring deadlock emerges: material manufacturers dare not expand production, as a hundred-ton-level production line requires an investment of over CNY 100 million, and who would dare to build without batch orders; battery manufacturers dare not mass-produce, as raw materials are expensive and unstable, with costs three to four times that of liquid batteries; without mass production, there is no scale demand, and vehicle installation volumes remain at the demonstration level. The three links wait for each other; whoever moves first bears the risk.
The core of this deadlock is no longer the technology itself, but risk allocation.
There is a ready-made thermometer on this wall: Shanghai Emperor of Cleaning Hi-Tech (ECG). According to the interim report, its revenue from new energy advanced materials accounts for 5.72%, making it the company with the highest solid-state content in the entire A-share market—totaling CNY 13.37 million over half a year. In the fourth quarter of 2025, it transferred CNY 186 million of construction in progress to fixed assets, causing fixed assets to surge from CNY 60 million to CNY 261 million; the hundred-ton-level lithium sulfide production line was truly built. And then? In the first half of 2026, construction in progress was only CNY 400,000, down 99.8% year-on-year.
The capacity is built, but demand has not caught up, so they dare not build more. The market interprets its lithium sulfide shipments as "accounting for 30% of the national total," but the company itself cast a veto with its capital expenditure.
04. Tax Exemption, National Standards, and CNY 35 Billion
Policymakers certainly know where this wall is, and 2026 has indeed provided unprecedented intensity.
GB/T 43568-2026 was implemented on July 1, using a 0.5% weight loss rate to clearly demarcate liquid, hybrid solid-liquid, and solid-state—industry estimates suggest that merely clearing out "fake solid-state" can save the entire industry about 30% of ineffective R&D trial and error. Starting September 1, solid-state batteries are exempt from consumption tax for two and a half years. The MIIT included all-solid-state batteries and solid-state electrolytes in the key research directions of the "15th Five-Year Plan"; Shenzhen issued a special subsidy of CNY 30 million for equipment investment. The capital side is even hotter: 25 projects, CNY 35 billion in investment, and 110GWh of planned capacity in the first quarter.
But all these are changing the same thing: the cost side of the financial statements. Tax exemption improves the income statement, national standards clear the track, and subsidies lower equipment bills. They cannot change that three-ring deadlock: material manufacturers need orders to dare expand production, battery manufacturers need cheap and stable raw materials to dare mass-produce, and cheap and stable can only be achieved after scaled production.
Tax exemption can change the financial statements, but it cannot change the deadlock. There is only one key to unlocking the deadlock: when will the monthly output of lithium sulfide climb from 10 tons to 100 tons.
Here is another divergence easily obscured by policy enthusiasm, which is more fundamental than most people think. Yang Hongxin, Chairman of SVOLT, judges that even by 2035, all-solid-state batteries will hardly gain a cost advantage over liquid ones, and hybrid solid-liquid will remain mainstream in the long term. Academician Ouyang Minggao's view echoes this: hybrid solid-liquid is the true driver of incremental growth in the next 5 to 10 years. In contrast, BYD's goal is "solid-liquid price parity" by 2030, bringing all-solid-state cells down to CNY 0.5–0.7 per Wh.
On one side is "can never catch up," and on the other is "catch up by 2030." This divergence is unsolvable within 2026, but it draws an investment discipline: using "all-solid-state is inevitable" as a reason to buy is dangerous. A more prudent approach is to find the links that can make money regardless of which route wins.
05. The Money in Pilot Lines
There is only one such link: equipment.
The contract liabilities of 9 equipment companies in their 2026 interim reports totaled CNY 32.48 billion, equivalent to 104% of half-year revenue—advance payments from customers are already sitting in the accounts, not relying on any revenue recognition policies. The divergence in cash flow is more intuitive: operating cash flow divided by net profit for the equipment group is generally greater than 1.5, with Lead Intelligent at 4.27, Naknor at 3.75, and Yinghe Technology at 2.89; the cell and material group is generally below 0.7, with Tinci Materials at 0.14 and Gotion High-Tech at 0.31. EVE Energy is even more extreme: net profit of CNY 3.3 billion, and operating cash flow of negative CNY 388 million.
Profit is an opinion, cash is a fact. In this industry, only equipment manufacturers hold the facts.
But here, two discounts must be honestly applied. First, contract liabilities do not equal solid-state orders. Naknor's on-hand orders are CNY 2.718 billion, of which intelligent rolling equipment accounts for 77%, which is conventional equipment shared by liquid and dry methods. Second, the improvement in cash flow is not entirely due to solid-state. In Lead Intelligent's CNY 8.2 billion revenue, intelligent lithium battery equipment is CNY 6.12 billion, accounting for 75%, with growth mainly from liquid expansion and going global; for the solid-state complete line, it only mentions "intensively winning orders in Q2" without providing the amount.
The truly valuable information is hidden in the structure of orders: the growth rate of contract liabilities for specialized machine manufacturers is three to eight times that of complete line leaders. This indicates that what is being built everywhere right now are pilot lines—small single lines, non-standard equipment, aimed at process verification. GWh-level mass production mega-lines have not yet arrived. When that day truly comes, the elasticity of complete line leaders will once again surpass that of specialized machine manufacturers. But that will be another round of market trends, another pricing.
The equipment link also has a property that no other link has: it cannot be internalized. Battery manufacturers will not build their own equipment company just to save CNY 300 million on equipment. That would mean maintaining a team spanning mechanical, electrical, control, and process engineering to build something used only a few times a year. The irreplaceability of equipment comes from organizational costs, not technical secrets, which makes it the most solid.
In the previous round of lithium battery expansion, Wotma went into bankruptcy liquidation in 2019, and the equipment suppliers that supplied it that year are still at the table today. Betting on technology routes might be wrong, but selling equipment will not.
06. Who is Paying for 2027
On the other side of the clock stands a group of companies using today's money to bet on tomorrow. Their interim reports need to be read differently: not looking at profit, but at three numbers—net profit deducted from non-recurring gains and losses, cash self-sufficiency rate, and interest coverage.
Jinlongyu, a cable factory going all-in on solid-state. New interest-bearing debt in half a year is CNY 1.03 billion (CNY 814 million at the beginning of the year, CNY1.844 billion in the middle of the year), annualized net profit is about CNY 77 million, and annual interest calculated at a 4% financing cost is about CNY 74 million. That is to say, interest expenses are almost equal to total net profit. Planned investments are CNY 1.2 billion in Huidong plus CNY 1.2 billion in Dapeng, which is 31 times the annualized net profit. Solid-state revenue accounts for 0.09%. This is not investment; this is a leveraged option: if the bet is right, it's ten times; if wrong, it's debt restructuring. Neither outcome depends on technology, but on timing.
Gotion High-Tech: net profit attributable to parent +278.05%, but net profit deducted from non-recurring gains and losses is only CNY 107 million, with 92% of profits coming from non-recurring gains and losses. Capital expenditure is CNY 8.478 billion, operating cash flow is only CNY 428 million, cash self-sufficiency rate is 0.05, and interest-bearing debt is CNY 57.16 billion, with expansion entirely reliant on external financing. It simultaneously produces cells and lithium sulfide (planning 20,000 tons, which can support about 71GWh when converted, far exceeding its own installations, positioning it for external supply). If the 2027 milestone is realized, it will be the biggest winner; if delayed by two years, the interest on CNY 57.16 billion of interest-bearing debt will be a heavy burden.
Gotion's 20,000-ton lithium sulfide plan also incidentally sentences the fate of independent material suppliers. The synthesis path for lithium sulfide is public; the difficulty lies in purity and cost, not the formulation—once demand picks up, the optimal solution for battery manufacturers will definitely be to do it themselves. The effective window for independent lithium sulfide material suppliers is only these three years from 2026 to 2028. Once the battery manufacturers' own production lines are up and running, external suppliers will either be absorbed or squeezed into contract manufacturing.
As for real solid-state revenue, there are only two pieces of paper with traceable amounts in the entire A-share market: Shanghai Emperor of Cleaning Hi-Tech (ECH) at CNY 13.37 million, accounting for 5.72%; and Jinlongyu at CNY 2.0354 million, accounting for 0.09%. Jinlongyu, widely recognized by the market as the "purest," has a solid-state revenue proportion one-sixtieth that of ECH. Easpring Material Technology has batch-introduced its solid-state materials into Qingtao (Kunshan) Energy, Welion New Energy, ProLogium Technology, Ganfeng Lithium Battery, and China Automotive New Energy—the most specific customer list in the entire sector, but its 136% revenue growth comes from long-term overseas agreements with LGES and SK On. Solid-state material revenue cannot be found in the financial statements because it is too small to warrant a separate line.
07. The Script for the Next Three Years
Stringing all the evidence into a timeline, the script for the next three years roughly looks like this:
2026 H2, the liquid boom continues, and solid-state financial statements remain ugly. Energy storage and power demand support full production of liquid batteries, making battery manufacturers even more reluctant to switch; the implementation of national standards clears out "fake solid-state," and tax exemption improves the income statement but cannot unlock the deadlock. The revenue proportion of solid-state-related companies remains below 5%.
2027, all-solid-state demonstration vehicle installations, the true pricing node. The installation timelines of CATL and BYD both point to this year, and QingTao plans to start delivering all-solid-state products. However, calculated based on the 830-ton lithium sulfide capacity, the upper limit for the entire industry remains in the single-digit GWh. The significance of demonstration is verification, not volume scaling.
2028, whether 830 tons can become 8,000 tons is the physical switch for this cycle. If battery manufacturers' self-built production lines succeed (Gotion's 2030 target is 50,000 tons), the window for independent material suppliers closes; if not, the cost of all-solid-state will never come down. Semi-solid-state is expected to drop to CNY 0.49 per Wh, narrowing the gap with high-end liquid to within CNY 0.1.
2030, the first test of cost parity. Industry consensus: all-solid-state drops from CNY 1.6–2.2 per Wh to about CNY 1, BYD's goal is "solid-liquid price parity," and global penetration is expected to be 9%, about 271GWh. If Yang Hongxin's judgment is correct, this box will be skipped—hybrid solid-liquid will remain mainstream in the long term.
More important than forecasting is knowing what to watch. Four windows, ranked by hardness:
First is the monthly output of lithium sulfide. Prices will fluctuate due to short-term supply and demand, but output will not. The day monthly output climbs from 10 tons to 100 tons is the day the deadlock loosens.
Second is when ECH's construction in progress will grow again. It is the most demand-sensitive thermometer in the entire industry; the day it dares to build a second line is the day orders truly arrive.
Third is when Easpring and Xtc New Energy Materials will list solid-state revenue separately in their financial reports. Being worth listing separately means the proportion has passed 1%, which is the dividing line between a story and a business.
Fourth is the announcement of the commissioning of battery manufacturers' self-produced lithium sulfide lines. The death knell for independent material suppliers and the starting point for the cost reduction of all-solid-state will be the same day.
Finally, four paths that could overturn this article: the halide route is unexpectedly proven, rendering the scarcity of lithium sulfide entirely invalid; a certain manufacturer announces GWh-level mass production with costs close to liquid, moving the timeline forward by two years; the liquid boom bursts, and the deterioration of incumbents' cash flow becomes the catalyst for new technology; generational changes in electrolyte formulations lead to a significant drop in unit consumption, invalidating the 280 tons/GWh coefficient.
08. Conclusion
Back to that "Level 4" at Davos.
Its value lies not in pessimism, but in providing a calibratable coordinate for the whole matter. Level 4 means revenue will not come, costs must be paid, and capacity is built but dared not be opened. All three of these things were verified in the 2026 interim reports: the highest solid-state revenue proportion in the entire sector is 5.72%, all those with declining gross margins are midstream manufacturers, and ECH reduced its construction in progress by 99.8%.
It also means that before 830 tons becomes 8,000 tons, all gains in this sector are advance payments—upstream resources collect money from the liquid boom, equipment collects money from the expansion cycle, and midstream manufacturing collects an unexercised option.
No one is wrong. You just need to figure out which bill you are paying.