This article is written based on public information and is for information exchange purposes only, and does not constitute any investment advice.
In June 2026, at the Summer Davos in Dalian. When asked about solid-state batteries, Robin Zeng, the wealthiest and most aggressive investor in the entire industry, gave a rare and straightforward answer: according to the Technology Readiness Level (TRL) scale from 1 to 9, solid-state batteries are currently only at Level 4—having just completed the proof of concept for small-scale laboratory samples.
What does Level 4 mean? From Level 4 to Level 9, which represents mass production, historical experience in the manufacturing industry typically shows a gap of 5 to 8 years.
On the other side of the same year: in Bishan, Chongqing, BYD launched the construction of 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 across the country were intensively signed and commenced, with a total investment of over 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, it is said that "it is still early"; on the other hand, construction is underway, investments are increasing, and prices are rising. These two things are not contradictory; they are simply standing at different ticks on the clock of industrialization.
To understand this clock, you only need 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 scale used by NASA and military industries of various countries to measure technology industrialization: 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, what stands in the way is not the engineering volume, but yield rate, cost, and the supply chain. These three terms have specific numbers attached to 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. Allocated to a 100kWh vehicle, the battery alone is over CNY 150,000 more expensive, which is equivalent to the price of a BYD Seagull.
In terms of yield rate, the comprehensive yield rate of all-solid-state pilot lines is only 60–70%, while 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 carried out in a dry environment with a dew point of minus 60 degrees Celsius. 90% of existing liquid production lines cannot be reused. 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 also primarily priced based on it.
Then 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 businesses. The higher the solid-state content, the uglier the current financial statements.
Therefore, in this sector, P/E ratios are all scrap paper. The only correct question to ask is: whose accounts is the money currently in.
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 of this sector in the first half of 2026 almost entirely comes from a super boom in liquid lithium batteries.
Only 5 companies have positive year-to-date gains. After checking the main businesses one by one, the drivers are as follows:
● Yunnan Germanium: Indium phosphide and gallium arsenide, AI optical communication. Compound semiconductors contributed 32.84% of gross profit, while the gross margin of germanium actually declined during the same period;
● Yunnan 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. Revenue only grew by 0.23%, and the net profit growth relied entirely on the gross margin;
●● Jiaocheng Ultrasonic: Energy storage and semiconductors. The private placement of CNY 1.344 billion is mainly invested in semiconductor packaging;
● Zhongyi Technology: Lithium battery copper foil. Global shipments increased by 60.1%, and net profit nearly increased tenfold.
In other words, among the five companies, the gains of four have nothing to do with solid-state batteries. The driver for the fifth is the boom in liquid lithium batteries—which is exactly what solid-state batteries aim to put an end to.
The ranking of gross margins nails this rule 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 negative electrodes, respectively. All four are substitution targets for solid-state batteries. 99.44% of Xiangfenghua's revenue comes from graphite negative electrodes, 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 industrialization is "technology matures, costs drop, and volume substitution occurs," but there is another reality in the true history of industry: the better the cash flow of incumbents, the lower their willingness to switch.
Think about 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, ask management to 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 it is -5.9% year-on-year. The capital expenditure of the leader on liquid batteries has entered the harvest period, not a massive investment in new routes.
The mirror image of industrial history is readily available. In the 2000s, polysilicon rose to 400 US dollars per kilogram, and thin-film batteries were highly anticipated; after 2008, polysilicon fell by 90% in two years, and all cost advantages of thin-film evaporated instantly. 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 it is pricing it very accurately.
03. 75% of the BOM Cost is Lithium Sulfide
The next cost sheet is the most solid part of the entire article, because it does not rely on the statements 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 accounts for 25%, anode (lithium metal/silicon) accounts for 15%, and manufacturing and others account 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 is hidden inside 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, lithium sulfide, as a single material, 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 unavoidable 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, but their magnitude is much smaller. In terms of process, dry electrodes simplify the seven-step process into five steps, eliminating the need for expensive NMP solvents. GAC's cathode film-forming speed reaches 50 meters per minute, three times that of the wet process, achieving a comprehensive cost reduction of about 15%; in terms of yield rate, BYD's 2GWh all-solid-state pilot line in Pingshan, Shenzhen, claims to have increased the yield rate to 95%, reducing 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 still cannot match the single path of lithium sulfide.
And the cost reduction of lithium sulfide hits a wall: 830 tons.
Working backward from 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 production of less than 10 tons. Physically, this is only enough to equip about 3GWh. However, the capacity imagination converted from orders on hand on the equipment side is already more than five times this number.
Thus, a three-ring deadlock emerges: material manufacturers dare not expand production. A hundred-ton-level production line requires an investment of over CNY 100 million; without batch orders, who dares to build it? Battery manufacturers dare not mass-produce. Raw materials are expensive and unstable, and costs are three to four times those 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 Xiba. 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, with fixed assets surging 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 left, a year-on-year decrease of -99.8%.
The capacity is built, but demand has not kept 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 voted against it 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 support.
GB/T 43568-2026 was implemented on July 1, using a 0.5% weight loss rate to draw a clear line between liquid, hybrid solid-liquid, and solid-state—industry estimates show that simply 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 Ministry of Industry and Information Technology (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: in the first quarter, 25 projects, CNY 35 billion in investment, and 110GWh of planned capacity.
But all these are changing the same thing: the cost side of the financial statements. Tax exemption improves the income statement, national standards clean up the track, and subsidies lower equipment bills. They cannot change that three-ring deadlock: material manufacturers need orders to dare to expand production, battery manufacturers need cheap and stable raw materials to dare to 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 production of lithium sulfide climb from 10 tons to 100 tons.
There is also a divergence here that is easily obscured by the policy fever, and it 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 the mainstream for a long time. 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 the cost of 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: it is dangerous to use "all-solid-state will inevitably arrive" as a reason to buy. A more prudent approach is to find the links that can collect 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 lying in the accounts, not relying on any revenue recognition policies. The divergence in cash flow is more intuitive: the operating cash flow to net profit ratio for the equipment group is generally greater than 1.5, with Lead Intelligent at 4.27, Nacono 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. Nacono's orders on hand are CNY 2.718 billion, of which intelligent rolling equipment accounts for 77%, which is conventional equipment shared by liquid and dry processes. Second, the improvement in cash flow is not entirely due to solid-state. Out of Lead Intelligent's CNY 8.2 billion revenue, intelligent lithium battery equipment is CNY 6.12 billion, accounting for 75%. The growth mainly comes from liquid expansion and going overseas. For the solid-state complete line, they only said "intensively won 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 verifying processes. GWh-level mass production large lines have not yet arrived. When that day truly comes, the elasticity of complete line leaders will once again exceed 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 in equipment costs. That would mean maintaining a team spanning machinery, electrical, control, and process engineering to make something that is only used a few times a year. The irreplaceability of equipment comes from organizational costs, not technical secrets, which is, on the contrary, the most solid.
In the previous round of lithium battery expansion, Wooteam 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 betting tomorrow's money with today's cash. Their interim reports need to be read differently: do not look at profit, look at three numbers—net profit after deducting non-recurring gains and losses, cash self-sufficiency rate, and interest coverage.
Jinlongyu, a cable factory, is going all-in on solid-state. In half a year, new interest-bearing debt increased by CNY 1.03 billion (CNY 814 million at the beginning of the year, CNY 1.844 billion in the middle of the year). The annualized net profit is about CNY 77 million, and the 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. The planned investments are CNY 1.2 billion in Huidong plus CNY 1.2 billion in Dapeng, which is 31 times the annualized net profit. The proportion of solid-state revenue is 0.09%. This is not investment; this is a leveraged option: if you bet right, it's ten times; if you bet 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 after deducting non-recurring items 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. Expansion relies entirely on external financing. It simultaneously produces cells and lithium sulfide (planned 20,000 tons, which can support about 71GWh when converted, far exceeding its own installation capacity, positioning it for external supply). If the 2027 node 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 sentenced the fate of independent material suppliers. The synthesis path of 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 compressed into contract manufacturing.
As for true solid-state revenue, there are only two pieces of paper in the entire A-share market where the amount can be found: Shanghai Xiba at CNY 13.37 million, accounting for 5.72%; Jinlongyu at CNY 2.0354 million, accounting for 0.09%. Jinlongyu, recognized by the market as the "purest," has a solid-state revenue proportion that is one-sixtieth of Shanghai Xiba's. Easpring Material Technology has batch-introduced its solid-state materials into QingTao, WeLion, ProLogium, 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. The revenue from solid-state materials cannot be found in the financial statements because it is too small to be listed in 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 is roughly as follows:
2026 H2, the prosperity of liquid continues, and the financial statements of solid-state continue to be ugly. Energy storage and power demand support full production of liquid, and battery manufacturers are even more reluctant to switch; the implementation of national standards clears up "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 installation, the true pricing node. The installation schedules 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 capacity of lithium sulfide, the upper limit for the entire industry is still 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 rate is expected to be 9%, about 271GWh. If Yang Hongxin's judgment is correct, this box will be skipped—hybrid solid-liquid will remain the mainstream for a long time.
More important than forecasting is knowing what you should watch. Four windows, ranked by hardness:
First is the monthly production of lithium sulfide. Prices will fluctuate due to short-term supply and demand, but production volume will not. The day monthly production climbs from 10 tons to 100 tons, the deadlock will loosen.
Second is when Shanghai Xiba'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, the orders will truly arrive.
Third is when Easpring and Xiamen Tungsten 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 unexpectedly succeeds, and the scarcity of lithium sulfide fails overall; a certain manufacturer announces GWh-level mass production with costs close to liquid, advancing the timeline 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, and the 280 tons/GWh coefficient is invalidated.
08. Conclusion
Back to that "Level 4" at Davos.
Its value does not lie 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%, the gross margin decline is uniformly in mid-stream manufacturing, and Shanghai Xiba 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 mid-stream manufacturing collects an unexercised option.
No one is wrong. You just need to distinguish clearly which payment you are making.