In the rapidly evolving market of power batteries, the tension has notably increased as the industry braces itself for a significant shake-upA recent observation from an insider at a mid-tier power battery manufacturer sheds light on the struggles faced by these companies amid the stark dominance of industry giants, which together command nearly 70% of the market shareAs the tide rises and the sands shift, these second-tier power battery firms find themselves caught in a relentless squeeze, navigating through a battleground defined by fierce competition and a relentless push towards survival.

The state of alarm within the sector has compelled many mid-tier batteries manufacturers to rethink their strategiesThe urgency is palpable: adapt and innovate or risk being left behindOptions for these companies vary, from pursuing differentiated niches, venturing into storage solutions, or even expanding overseas to seek new manufacturing basesThis predicament leads to a philosophical interpretation of survival that is almost existential— the notion of ‘rebirthing’ through innovation even in the face of potentially devastating losses.

The past two years have been a turbulent sea for these mid-tier power battery firmsAchieving a semblance of stability or even market growth often feels like a distant goal, especially when one examines the rankings from 2021 to 2024 of domestic power battery manufacturersThe consistent top three—Contemporary Amperex Technology Co., Limited (CATL), BYD, and Zhongchuang Innovation—remain unchallenged at the helmMeanwhile, other brands oscillate up and down the list, some disappearing altogetherThe landscape is indeed volatile, leaving little room for complacency.

The overall demand for power batteries in China has seen a meteoric rise, with installations leaping from 154.5 GWh in 2021 to a staggering 548.4 GWh by 2024. However, within this expanding pie, the most significant portion is devoured by the dominant players—CATL and BYD—whose combined market share has increased from 67.3% to 69.82%. This leaves scant room for the mid-tier and lower-tier companies, who now fight over the remaining crumbs, barely a third of the total market share.

The divergence in market positioning has reached a critical juncture, revealing a stark divide between leading companies and the ‘mezzanine’ players

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Recent data released by China’s Automotive Power Battery Industry Innovation Alliance highlights this chasm: as of January 2025, CATL and BYD are projected to command 47.08% and 22.90% of the market share, respectivelyIn contrast, the ninth-place and tenth-place contenders, namely Jidun New Energy and Zhengli New Energy, barely scrape together 1.50% and 1.06% respectivelyThis dramatic contrast underscores the difficulty faced by mid-tier enterprises to gain a foothold.

Liu Jin Cheng, chairman of Aihui Lithium Energy, articulated the harsh reality in a recent industry forum, emphasizing, “In the power battery sector, we lack even the opportunity for internal competition; nobody can match CATL or BYDThe dual dominance is stark, with only these two firms yielding significant profits, while others face unique challenges in their operating environments.” This sentiment encapsulates the struggles of second and third-tier battery manufacturers as they contend with a rapidly changing market landscape.

Financial reports reveal the stark realities confronting these companiesFor instance, Duofuduo, a battery maker based in Jiaozuo, Henan, recently forecasted losses for 2024 between 260 million to 320 million RMB, starkly contrasting their previous year's profit of 510 million RMBPenghui Energy has similarly announced a shift from profit to projected losses ranging from 165 million to 232 million RMBBoth companies blame intensified market competition as a primary factor behind their financial woes, exacerbated by automobile manufacturers now releasing their battery capacities into an already crowded market.

Historically, the power battery sector has witnessed a significant shift in composition; from 102 companies capable of providing power batteries in 2018, only half remain optimistic as of the end of 2023, heralding a wave of accelerated eliminations that’s likely to continue cascading into 2025 and beyondThe larger corporations leverage economies of scale and pricing power, while concurrently, automakers’ proprietary battery brands increasingly encroach upon the market share traditionally held by second-tier manufacturers.

In a bid to distinguish themselves, many mid-tier manufacturers are adopting innovative survival strategies

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Emphasis on crafting differentiated products or entering unexplored markets is setting the stage for what could be a pivotal shift in the industry’s operational dynamicsFor instance, Hive Energy stands out with its short-blade battery technology, which has gained significant traction in the market, marking annual delivery volumes exceeding 270,000 sets in 2024 alone.

Hive Energy's commitment to short-blade technology demonstrates not just survival, but a proactive strategy to capture market segments with emerging demandsCEO Yang Hongxin envisions an expansion into specialized batteries for off-road vehicles, recognizing the untapped potential in the electric off-road segment, projected to yield rapid growth and premium value.

Another legacy player, Tianjin Lishen Battery Co., once a top contender, faces dwindling visibility in recent rankings, despite pioneering advancements in low-altitude drone applications with their semi-solid state batteries, achieving notable energy density breakthroughsThe company aims for a bold leap into market opportunities focusing on semi-solid technology, proving that even established names must innovate relentlessly to survive.

Meanwhile, Duofuduo is exploring new avenues within battery recycling, presenting a sustainable future pathway aligned with global recycling trendsSuch strategies not only promise reduced manufacturing costs but also bolster long-term sustainability—an increasingly vital concern as environmental considerations reshape market dynamics.

On another front, Xinwangda, known for its rapid charging technology, has begun forging strong alliances, partnering with Li Auto to establish a joint battery production ventureTheir ambition does not stop at domestic borders; they have laid foundational plans to engage deeply in hybrid markets and global territories by establishing production bases worldwide.

Lastly, Ruipu Lanjun aims to plant seeds in international markets by investing in an Indonesian battery plant capable of producing 8 GWh of power and energy storage batteries, illustrating the ongoing transition of mid-tier manufacturers toward a global footprint despite facing resource constraints.

As the landscape continues to shift dramatically, while mid-tier firms boast certain advantages in cost control and adaptability, they find themselves continually disadvantaged in technological innovation and capacity expansion as they battle against the deep-pocketed industry leaders

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