Lithium battery breakthrough! UBS bullish: Clearly optimistic about "China Lithium"

Positive signals emerge in the lithium industry chain.

In its latest report, UBS clearly expresses optimism about “Chinese lithium,” significantly raising price forecasts for spodumene and lithium carbonate, and indicating that the market has entered the third supercycle of lithium prices. The report believes that the gradual implementation of the “triple balance” in electric vehicles and the global surge in energy storage demand will drive continuous growth in lithium demand.

From the performance perspective, as supply and demand in the industry gradually improve, profitability across lithium industry chain companies is fully rebounding. According to Wind data, among 71 A-share lithium battery listed companies that have disclosed earnings forecasts or interim reports, 51 have achieved year-over-year profit growth (including reduced losses), and 19 have turned losses into profits.

UBS Bullish: Significant Upward Revision

On February 22, Daily Economic News reported that in early February and during the Spring Festival holiday, UBS released consecutive reports, clearly expressing optimism about “Chinese lithium.”

In its latest analysis report, UBS pointed out that the electric vehicle industry is approaching the so-called “triple balance.”

According to the report, UBS’s electric vehicle team recently disassembled five next-generation battery cells to assess the development speed of the EV industry.

The analysis shows that the industry is at a critical turning point: the gap in cost, range, and charging time between electric vehicles and traditional cars is continuously narrowing, and the highly anticipated “triple balance” is within reach.

Data indicates that the current total cost of a single battery has fallen to $55 per kWh, nearly 50% lower than UBS’s 2020 analysis of battery costs; and battery manufacturing costs are still decreasing at about 10% annually.

UBS expects this trend will not only drive a transformation in the passenger car industry but also bring new development turning points in trucks, fixed energy storage, and other fields.

UBS further pointed out that China’s low-cost batteries will help Chinese automakers capture a larger share of the global EV market, with an estimated increase to about 35% of the global market share by 2030. This EV industry transformation is triggering chain reactions across vehicle manufacturing, batteries, trucks, energy storage, and even humanoid robots.

Analysts forecast that global lithium demand will grow by 14% in 2026 and 16% in 2027, mainly driven by the rebound in EV sales and accelerated investment in battery energy storage systems (BESS). The main driver of lithium industry demand this time is energy storage, which has upgraded from a “Chinese market” to a “global explosion.” UBS predicts that by 2035, energy storage will account for 42% of global lithium demand.

UBS announced a significant upward revision of lithium price forecasts, with spodumene prices raised by 74% to $3,131 per ton, and lithium carbonate increased to $26,000 per ton (equivalent to about 185,000 RMB per ton; current futures prices are around 150,000 RMB per ton). It is expected that global lithium demand will double to 3.4 million tons by 2030. UBS believes the market has entered the third supercycle of lithium prices.

Full Industry Performance Recovery

Looking at the performance forecasts or interim reports of multiple lithium battery companies for 2025, the entire lithium industry chain is experiencing a performance realization phase. According to Wind data, among 71 A-share lithium battery listed companies, 51 have achieved year-over-year profit growth (including reduced losses), and 19 have turned losses into profits, driven by improved supply and demand, product prices, and corporate profitability stabilization.

The companies reporting positive results cover upstream, midstream, and downstream segments of the industry chain. Notably, “lithium giants” Tianqi Lithium and Ganfeng Lithium are both expected to return to growth in 2025, turning profitable after losses; Ganfeng Lithium is projected to earn between 1.1 billion and 1.65 billion RMB, while Tianqi Lithium expects net profits of 369 million to 553 million RMB. Yunnan Salt Lake Industry expects net profit growth of 77.78% to 90.65%; Yahua Group forecasts a net profit increase of 133.36% to 164.47% in 2025.

Guojin Securities believes that lithium supply has established a cycle of overcoming oversupply, and inventory cycles have officially shifted into a “proactive stockpiling” prosperity phase.

Li Pan, a lithium analyst at Shanghai Ganglian New Energy Business Department, stated that adjustments to VAT rebate policies for battery products will accelerate market demand in 2027. Additionally, the “14th Five-Year Plan” recommends energy storage as a key focus; the National Development and Reform Commission and the National Energy Administration issued a notice to deepen the market-oriented reform of new energy power pricing, promoting high-quality development of new energy, which will expand the peak-valley price difference, improve the economics of energy storage projects, and combined with subsidy policies across provinces and cities, lead to rapid nonlinear growth in energy storage demand.

Li Pan estimates that, supported by downstream market demand, lithium carbonate prices this year are expected to range between 100,000 and 200,000 RMB per ton.

Dongfang Securities analysis pointed out that the global lithium resource supply shows a structure of “frequent short-term disturbances and limited long-term growth.” Last year’s second half saw domestic supply disruptions in Jiangxi, combined with strong downstream demand and stockpiling, leading to a bottoming and upward trend in lithium prices, which is expected to continue in a tight supply situation through 2026–2027.

Aijian Securities recently published a research report stating that with the implementation of the independent new energy storage capacity electricity price mechanism on the grid side, energy storage installation demand may further increase, promoting growth in the lithium battery industry. It recommends focusing on core lithium companies that coordinate power batteries and energy storage.

Guojin Securities research indicates that the global energy storage industry is entering a new growth cycle, with an expected 438 GWh of new global storage installations in 2026, a 62% year-over-year increase. The growth driver has shifted from solely renewable energy absorption to a “triple drive” of AI computing infrastructure, energy transition needs, and grid congestion.

(Source: Securities Journal)