- Statistics show that since May 2026, major domestic lithium battery material suppliers have been intensively disclosing capital expenditure plans. Companies like Enjie Co., Defang Nano, and Putailai have announced investments totaling over 20 billion yuan, indicating a significant marginal improvement in upstream capital expenditure cycles.
- Recently, the benchmark price of lithium carbonate in the commodity market has rebounded to around 180,000 yuan per ton, a substantial increase from the previous cycle's low point. This has opened a temporary profit window for upstream mining and refining companies, triggering this round of targeted capacity expansion.
- The logic of supply-side rebound is undergoing structural changes. This round of expansion is not a blind gamble on short-term supply-demand gaps but a defensive strategy by companies to spread core operating costs through technological iteration and economies of scale, against the backdrop of continuous growth in downstream power and energy storage battery demand.
Expenditure on Lithium Battery Material Supply Rises Again
As of May 2026, the upstream capital expenditure of the global new energy vehicle and energy storage industry chain is showing a coordinated upward trend. According to incomplete statistics disclosed by Jiemian News, only this month, core domestic lithium battery material companies have collectively launched a new round of capacity expansion plans. The projects cover a wide range, from basic lithium salt mining and processing to high-value-added cathode materials and high-end lithium battery separators. This round of investment, exceeding 20 billion yuan, marks a regrouping of capital strength by upstream material companies after several quarters of destocking and capital dormancy, aiming to seize a leading market share in the new round of industry chain positioning battles.
Price Cycle Bottoming Out and Rebounding Activates Profit Window
The direct catalyst for upstream companies reopening the capital gates is the substantial bottoming out of basic commodity prices. Looking back, during the expansion wave around 2022, driven by factors such as the surge in global new energy vehicle demand, the price of lithium carbonate, a benchmark for the lithium battery industry chain, once reached a historical high of nearly 600,000 yuan per ton. High profits attracted a large influx of cross-industry capital, leading to severe overcapacity in the industry. Under the continuous imbalance of supply and demand structure, lithium carbonate prices fluctuated violently, once plummeting to an extremely low level of around 60,000 yuan per ton. Since the second half of 2025, indirectly driven by the explosion in downstream energy storage and power battery demand, lithium carbonate prices have risen and returned to around 180,000 yuan per ton, providing leading companies with cost advantages and a healthy cash flow premium and profit window.
Marginal Cost Dilution and Resonance with Downstream Demand
Although the production value center has risen, the current logic of supply-side expansion fundamentally differs from the blind following in 2022. Mo Ke, founder of True Lithium Research, analyzes that the intensive announcements of capacity expansion by companies are ostensibly a response to the continuous rise in downstream power and energy storage battery demand, but in reality, it is a proactive strategy under the intertwining of multiple financial and operational factors. Firstly, there is the increasingly heavy pressure to reduce costs. Although the rise in lithium carbonate prices has improved upstream profits, it has also simultaneously pushed up the raw material procurement costs for midstream and downstream battery manufacturers. In the context of strong downstream price suppression intentions, material companies must build larger production lines to spread fixed asset depreciation and core operating costs through economies of scale.
Capital Structure Game Under the Shadow of Overcapacity
In addition, the capital refinancing needs of the secondary market and the cash reserve management of enterprises are also invisibly driving the pace of capacity index expansion. During the window period when the third round of industry upcycle signs appear, timely announcement of major project investments helps companies maintain active financing valuations in the capital market, thereby supplementing ammunition through targeted additional issuance or long-term bank loans. However, market analysts generally warn that since the surplus capacity left by the previous round of frenzied expansion has not been fully digested, if the new round of investment plans exceeding 20 billion yuan is concentrated in low-end business lines with serious homogenization, the industry chain will still face the risk of asset impairment provision and valuation re-evaluation if future downstream demand growth slows.
