Chinese electric vehicle and battery industry transitions

The Chinese electric vehicle (EV) and battery sectors are undergoing significant technological and structural shifts. Major firms such as CATL and BYD are navigating market volatility; while CATL reported a 58.5% year-on-year revenue increase for the third quarter of 2026, net profit growth lagged at 14.54%. Technological advancement is highlighted by a partnership between CATL and Changan to develop ‘Golden Bell’ solid-state batteries, which aim for energy densities of 400 Wh/kg and projected road tests in 2026.

At the same time, the industry faces challenges as the first wave of EVs registered around 2018 reaches the end of their eight-year battery and powertrain warranties in 2026. This mass expiration of coverage has created uncertainty in the second-hand market, as battery replacement costs may exceed vehicle values.

In response to these market pressures, companies including Huawei, CATL, and BAIC are investing in battery swapping ecosystems. This shift is increasingly driven by the ‘Battery-as-a-Service’ (BaaS) model, which seeks to lower initial purchase prices and reduce acquisition taxes by separating the battery from the vehicle.