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 realization of the “triple balance” in electric vehicles and the global surge in energy storage demand will drive continuous growth in lithium demand.

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

UBS Bullish: Significant Upward Revision

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

UBS’s latest analysis report states that electric vehicles are approaching the so-called “triple balance” in the industry.

According to the report, UBS’s electric vehicle team recently disassembled five next-generation battery cells to assess the development speed of the electric vehicle 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 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 predicts that this trend will not only drive transformation in the passenger car industry but also bring new development turning points in trucks, fixed energy storage, and other fields.

UBS further points out that China’s low-cost batteries will help Chinese automakers capture a larger share of the global electric vehicle market. It is estimated that by 2030, Chinese car companies’ global market share could rise to about 35%. This industry transformation in electric vehicles is triggering chain reactions across vehicle manufacturing, batteries, trucks, energy storage, and even humanoid robots.

Analysts expect global lithium demand to 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 shifted from a “Chinese market” to a “global explosion.” UBS forecasts that by 2035, energy storage will account for 42% of global lithium demand.

UBS announced a substantial 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.

Performance Fully Rebounds

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

The companies reporting positive earnings 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 losses into profits; Ganfeng Lithium is projected to earn between 1.1 billion and 1.65 billion RMB, while Tianqi Lithium’s net profit is estimated between 369 million and 553 million RMB. Yunnan Salt Lake Industry expects net profit to grow by 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 through overcapacity, and inventory cycles have officially shifted into a “proactive stockpiling” prosperity phase.

Li Pan, a lithium analyst at Shanghai Ganglian New Energy Business Department, states 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 the “Notice on Deepening the Market-Oriented Reform of New Energy Power Generation and Promoting High-Quality Development of New Energy,” which promotes full market access for new energy grid-connected power, widening peak-valley price differences, and improving the economics of energy storage projects. Coupled with subsidy policies in various provinces and cities, energy storage demand is experiencing rapid nonlinear growth.

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 points out that the global lithium resource supply shows a pattern 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 resonance, leading to a bottoming and upward trend in lithium prices. It is expected that shortages may persist through 2026–2027.

Aijian Securities recently published a research report stating that the implementation of a new independent capacity electricity price mechanism for grid-side energy storage could further boost energy storage installations and promote growth in the lithium industry. It recommends focusing on core lithium companies that integrate power batteries and energy storage.

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

(Source: Securities Firms China)