China’s Battery Supply Chain Consolidates: CATL Scales Globally as Beijing Tightens Lithium Battery and Graphite Anode Export Controls

The market is no longer in a blind buildout phase

The battery value chain in China is undergoing a decisive structural shift. Leading cell makers and system integrators are still expanding globally, but much of the rest of the industry is in retrenchment: investment is being cancelled, fundraising is being redirected, and timelines are slipping. This is not a cyclical pause; it’s evidence that capacity expansion in conventional lithium-ion segments has outrun realistic demand growth, and capital is now being rationed toward only two things: (1) platforms with visible orders and export leverage, and (2) differentiated technology where Chinese firms believe they hold a durable lead, such as advanced energy storage systems (ESS), sodium-ion, and solid-state batteries.

This consolidation is unfolding just as Beijing moves to tighten control over strategic intellectual property. On October 9, 2025, China’s Ministry of Commerce and the General Administration of Customs issued Announcement No. 58 of 2025, imposing export controls on lithium battery technologies, artificial graphite anode materials, and associated large-scale production line equipment, with implementation starting November 8, 2025. The policy is explicitly designed to keep frontier battery know-how, production toolchains, and cost leadership onshore.

Together, these two developments — coordinated industrial retrenchment and new export controls — mark the beginning of an industry phase defined less by “build more gigawatt-hours” and more by “protect margin, protect IP, and scale only where you can win globally.”

Tier-one expansion is still accelerating — but it’s selective

Contemporary Amperex Technology Co. Ltd. (CATL) reported Q3 revenue of 104.2 billion yuan, up 12.9% year on year, with net profit attributable to shareholders at 18.55 billion yuan, up 41.2% year on year, underlining that the core leaders are still printing cash even in a cooler pricing environment. The company made it explicit that “surging customer order demand” is driving it to “fully advance global capacity construction.”

CATL’s domestic footprint continues to scale in multiple bases — Jining (Shandong), Ruiqing (Guangdong), Yichun (Jiangxi), Xiamen (Fujian), Qinghai, and its home base in Ningde (Fujian). The Jining site alone is expected to add more than 100 GWh of dedicated ESS capacity by 2026. That’s a telling data point: the incremental GWh is not just going into EV packs. It is explicitly targeting stationary storage, where order visibility is high and utilization rates across China’s leading ESS cell lines are reportedly near full, with some orders already booked into early next year.

Overseas, CATL is deepening its manufacturing network.

Hungary: Phase 1 production line equipment has entered commissioning and is expected to be completed and installed by the end of 2025.

Spain: The company has completed preliminary approvals and formed a joint venture, paving the way for factory construction.

Indonesia: CATL’s integrated battery industry chain project there is targeting 15 GWh of capacity for both EV power and ESS applications, with first operations scheduled in the first half of 2026.

The strategy is clear: CATL is not chasing low-end tonnage. It is locking in global grid storage demand, anchoring European and ASEAN capacity for geopolitical resilience, and upgrading existing Chinese facilities rather than merely adding “more of the same.” This is capacity upgrade, not capacity inflation.

Middle-tier and legacy projects are being abandoned

While CATL and a handful of other tier-one players keep expanding, a long list of mid-tier and upstream/downstream projects across China has been delayed, suspended, or permanently cancelled. The pattern is consistent: commodity segments with collapsing margins and opaque offtake are being sacrificed so capital can be redeployed to either higher-value tech or to protect liquidity.

Notable examples:

SEMCORP (002812): Terminated its “Jiangsu Ruijie Power Automotive Lithium Battery Aluminum Plastic Film Industrialisation Project.” The company will permanently reallocate ~284 million yuan of the remaining raised funds, plus interest, into working capital. SEMCORP cited intensified competition and broad price declines across the chain, warning that expected returns no longer justify continued spend. This project originally targeted 1.6 billion yuan of investment raised via a May 2023 private placement. By June 2025, 566 million yuan had already been deployed, but management concluded continuation would likely miss ROI targets.

Shandong Fengyuan Chemical (002805): Agreed with local authorities to terminate a planned 50,000 mt “integrated high-energy cathode material” project in Gejiu, Yunnan. After policy shifts and permitting delays stalled progress, the company opted to exit rather than continue absorbing execution risk.

Jiangsu Guotai (002091): Its subsidiary planned a 400,000 mt/year lithium-ion battery electrolyte project in Fuding City, Fujian. That build is now being scrapped before construction even started. The land allocation has been delayed, and management is explicit: electrolyte capacity expansion has outrun demand, prices have fallen steadily, and returns would likely undershoot targets.

Dowstone Technology (300409): Paused implementation of a “100,000 mt/year ternary cathode precursor project” (Phase I: 70,000 mt precursor, 30,000 mt nickel sulphate). Dowstone is reallocating resources toward solid-state battery materials and has already moved unutilized raised funds into a 120 mt/year single-wall carbon nanotube (SWCNT) project, signaling a pivot into higher-value conductive additive technologies.

Kexin Technologies (300565): Reallocated 366 million yuan of unused funds away from an ESS lithium battery system industrialisation project and into a “Data Center Green and Low-Carbon Technology Upgrade Project.” Management cited intensified competition in ESS batteries and higher uncertainty in the original project’s returns; Kexin will instead focus on high-value integrated ESS systems and outsource commodity cells and modules.

Anfu Technology (603031): Terminated a joint venture that was supposed to build a 300 MWh sulphide-based all-solid-state battery pilot line. One partner’s financial instability (shares frozen) introduced execution risk, so Anfu exited rather than carry partner risk into scale-up.

Wanrun New Energy (688275): Let a ~5 billion yuan multi-chemistry battery materials base in Wuhan (covering Li-ion, sodium-ion, solid-state, hydrogen ESS) expire after the two-year investment window lapsed with no real progress. The company said termination reduces investment risk and allows more focused deployment of capital.

PRET (002324): Cancelled a 10.2 billion yuan sodium-ion / lithium-ion battery system manufacturing complex in Liuyang, Hunan. The plan had envisioned 30 GWh of annual capacity across prismatic and cylindrical formats, phased over three stages. PRET now says its new energy strategy is being “continuously optimized,” with a sharper focus on sodium-ion and semi-solid/solid-state partnerships, plus delivered orders in those niches, rather than greenfield mega-sites.

Across these cases, management teams repeat the same logic: oversupply in legacy chemistries, falling ASPs, compressed margins, and growing policy or permitting friction. The message is that “growth for growth’s sake” is no longer rewarded. Instead, the survivors will be the firms that can either (1) prove immediate cash-backed demand, especially in ESS, or (2) defend a differentiated technology stack (solid-state, sodium-ion, CNTs, integrated thermal and power management for data centers).

Beijing is now ringfencing lithium battery and graphite anode IP

China’s new export controls go beyond cells. They explicitly cover:

Solid-state battery technology and products.

High-performance artificial graphite anode materials.

Large-scale lithium battery production line equipment.

The intention is fourfold:

Lock in China’s technological lead in next-generation lithium battery architectures — especially all-solid-state and semi-solid routes — while ensuring that domestic demand for high-performance batteries is prioritized.

Restrict the outbound flow of turnkey production line equipment, keeping process know-how and manufacturing tooling onshore and slowing capability transfer to foreign challengers.

Defend margins in downstream sectors such as NEV batteries, ESS cabinets, and even “low-altitude” applications (for example, drone and aerial mobility platforms) by preventing rapid commoditization offshore.

Add friction to Chinese companies’ own overseas factory buildout schedules. Before any new European or ASEAN facility goes live, firms now must ensure compliance with export licensing, which could stagger timelines.

In practice, this means Western and emerging-market buyers who want true next-gen chemistries, advanced graphite anodes, or best-in-class automated cell lines will be negotiating under Chinese regulatory oversight and on Chinese timelines. The export control is not a blanket ban, but it turns every high-end line into a strategic asset. That’s a structural shift in bargaining power.

Implications for cost curves, capital allocation, and global supply chains

The net effect of these changes is a bifurcated supply chain. On one side, dominant incumbents with scale, customer lock-in, and technology moats (like CATL) keep expanding both domestically and overseas, particularly into ESS. On the other side, latecomers and undifferentiated capacity are being culled. That prevents further price collapse in oversupplied intermediates such as electrolyte and generic ternary precursor, and it allows capital to be redeployed into solid-state, sodium-ion, CNT additives, and integrated ESS systems — the areas Beijing considers strategically defensible.

Key shifts worth watching:

Capacity upgrades, not raw capacity additions: New GWh numbers are increasingly replacing or superseding older lines rather than stacking on top of them. This quietly drains surplus capacity from legacy chemistries.

ESS and stationary storage as anchor demand: Leading firms report ESS cell factories running close to full utilization, with orders stretching into early next year. That supports multi-hundred-GWh expansion plans tied directly to grid and data center storage, not just EV output.

Capex discipline: Boards are openly cancelling multi-hundred-million- to multi-billion-yuan projects if projected ROIs fall below hurdle rates.

Technology concentration: Funds are flowing into solid-state pilot lines, sodium-ion industrial pilots, CNT conductive additive capacity, and high-integration ESS systems, not just more LFP or NCM assembly lines.

IP ringfencing: Export licensing now sits between Chinese engineering teams and any overseas localization push for advanced anodes or solid-state architectures.

This will have knock-on effects in North America and Europe. The United States and Canada are racing to localize lithium supply (through domestic brine, hard rock, and eventually black mass recycling), but both countries still produce only a fraction of what they consume and have limited refining capacity today. The US imported about 15,465 metric tons of lithium carbonate in 2024 and 12,031 mt from January–July 2025 alone, mostly from Argentina and Chile, highlighting continued dependence on foreign material and Chinese conversion capacity.

If China now slows the outbound transfer of high-performance graphite anode technology, solid-state pilot know-how, and full production line equipment, Western automakers and ESS integrators will be forced either to (a) work within Chinese joint-venture structures under Chinese licensing, (b) accept slower time-to-market for local “independent” lines, or (c) re-scope product specs around chemistries and process windows that sit outside the new export control perimeter. All three paths reinforce China’s pricing power over advanced battery IP in the near term.

Outlook

Market sentiment: neutral-to-bullish for tier-one integrators; bearish for speculative mid-tier capex.

In the next one to six months (November 2025–April 2026), the most likely scenario is:

Further cancellations and suspensions of undifferentiated capacity projects in China’s midstream (electrolytes, cathode precursor lines, generic ESS assembly) as boards prioritize balance sheet protection and ROI.

Continued global ESS-led expansion by CATL and other top-tier cell makers, supported by visible demand and high utilization of energy storage lines.

Intensifying policy scrutiny on outbound tech transfer as export controls on lithium battery technology, artificial graphite anode materials, and high-end production line equipment formally take effect on November 8, 2025.

More explicit pivots toward sodium-ion, semi-solid, and solid-state pilot capacity. Companies like Dowstone and PRET are already reallocating funds toward solid-state, sodium-ion, and CNT-enabled next-gen products rather than pouring capital into commodity nickel-rich ternary lines.

For investors, that implies:

Bullish bias on large, technologically differentiated Chinese battery and ESS leaders that can navigate licensing, lock in grid-scale storage orders, and finance overseas bases.

Bearish bias on late-stage, undifferentiated greenfield projects in cathode precursor, electrolyte, or generic module-pack assembly — many of which are already being wound down.

Moderately bullish on enablers of next-gen chemistries (solid-state, sodium-ion, CNT conductive additives) and high-integration ESS system providers, because capital is actively rotating in their direction.