The capital injection has increased to 3.51 billion yuan, the warning of energy storage overcapacity has been sounded, what are the odds of success for Ganfeng Lithium's massive bet on large battery cells?

The low-end production capacity in the energy storage industry is in surplus, and Ganfeng Lithium Battery is ramping up large-cell production against the trend.

The energy storage cell industry is witnessing a bizarre production capacity game. The total planned production capacity of the whole industry has exceeded 2TWh, and the completed production capacity by the end of the year is expected to reach 1.2 to 1.5TWh, while the global total shipment of energy storage cells in 2026 is expected to be no more than 850GWh. The planned production capacity is more than twice the actual demand. Relevant authorities have taken action to conduct a thorough investigation of the production capacity of the energy storage industry, and the approval of new energy storage projects that are still in the planning stage and have not yet started construction may be suspended.

Foresee Energy notes that at this very juncture, Ganfeng Lithium Battery has completed the second capital increase within half a year, with its registered capital rising from about 3.18 billion yuan to 3.51 billion yuan. The two rounds of capital increase have introduced more than 2.3 billion yuan of external funds in total, which are mainly invested in the new 10GWh/annual energy storage battery production capacity at the Nanchang base and the self-developed 588Ah large cell production line. Its parent company Ganfeng Lithium holds a stake of around 64%.

The whole industry is complaining about overcapacity, but Ganfeng Lithium Battery is ramping up investment. This is not a reckless bet against the trend, but the only choice for a company that has been cornered.

01

What is in surplus is low-quality production capacity

The large cell market remains a seller's market

Foresee Energy believes that the "overcapacity" that everyone is talking about now should be analyzed separately.

Statistics show that the high-quality production capacity of leading enterprises is nearly fully utilized, while the capacity utilization rate of small and medium-sized and low-end production lines is less than 50%, and the weighted capacity utilization rate of the whole industry is about 65%. The conventional cell track with specifications of 314Ah and below is crowded with players, featuring severe homogenization.

It is understood that in the first quarter of 2026, the lowest bid price for the 2-hour LFP energy storage system centralized procurement once dropped to 0.398 yuan/Wh, and a large number of enterprises quoted prices close to the cost line.

However, the large cell market presents a completely different picture. According to data from TrendForce, the penetration rate of 500Ah+ cells in the first quarter was less than 5%, and the neutral industry forecast expects it to rise to 15% to 20% by the end of the year. The growth from less than 5% to 20% means that a large number of bidding shares have not yet been allocated in the coming months.

According to the currently disclosed information, Zhongchu Technology directly divided the ≥500Ah large cells into independent bidding packages in its 7GWh framework procurement, accounting for nearly 30% of the total. In the 20GWh cell procurement of CRRC Zhuzhou Institute, large cells account for 60%, which for the first time surpassed the traditional specifications in GWh-level centralized procurement.

This indicates that the bidders are actively setting aside share for large cells, and buyers have reserved independent positions for this product category.

From the demand side, the reason why large cells are "strongly promoted" by the bidding side is not complicated. 500Ah+ cells can reduce the cell consumption by more than 60%, and the BMS sampling points, wiring harnesses and structural parts are reduced synchronously, which cuts the system cost by 10% to 15%, bringing the levelized cost of electricity down to less than 0.3 yuan/Wh. The new national standard implemented on July 1, 2026 clarifies quantitative safety indicators for thermal runaway prevention and control and fault isolation of energy storage systems. Large cells reduce fault points while reducing connectors, which exactly matches the pace of safety standard upgrading.

Therefore, what is in surplus in the energy storage cell industry is low-end homogenized production capacity, and high-quality large-capacity cells are still in short supply. Ganfeng Lithium Battery invested 2.3 billion yuan in large cell production lines to hedge against the overall overcapacity risk of the industry by leveraging the scarcity of high-end production capacity. This is not a bet, but a rational calculation.

02

Conventional cells are barely profitable

Staying on the old track means waiting for elimination

At present, the production lines of Ganfeng Lithium Battery are indeed operating at full capacity. From January to April 2026, the capacity utilization rate of energy storage cells is close to 100%, and the orders are scheduled until the end of the year. In the first half of 2026, the revenue of battery series products reached 7.831 billion yuan, a year-on-year increase of 163.22%, accounting for about 33.9% of Ganfeng Lithium's total revenue. The data is so good that no flaw can be found.

However, the gross profit margin of Ganfeng Lithium Battery is only 12.43%, down 1.74 percentage points year on year.

Rising revenue without corresponding profit growth is a typical case of "revenue increase without profit growth". It is understood that the main shipment product of Ganfeng Lithium Battery is still conventional cells such as 314Ah. This product category features severe homogenization and fierce price competition, and it is normal for the gross profit margin to be suppressed at a dozen percentage points.

This means that if it does not change its strategy, even if the production capacity is fully operated, it can only earn meager profits. In contrast, large cells have completely different premium capabilities. Some leading enterprises predicted the trend opportunity of the large-capacity route as early as 2025, deployed dedicated production lines in advance, signed long-term price-locking agreements with downstream integrators and energy project parties, and secured stable orders as soon as the production capacity was put into operation.

If Ganfeng Lithium Battery does not switch to the large cell track and continues to fight price wars in the stock competition of 314Ah cells, its gross profit margin will only get thinner and thinner. The 12.43% gross profit margin of batteries is in sharp contrast with the 42.44% gross profit margin of the group's main lithium salt business. It is not that Ganfeng Lithium Battery wants to bet, but that the conventional cell track no longer has sufficient profit space to support its continuous investment.

03

Introducing capital from banking institutions

Risk sharing after precise calculation

In addition, Foresee Energy believes that the capital increase method of Ganfeng Lithium Battery is also very thought-provoking. Ganfeng Lithium's attributable net profit in the first half of 2026 was 4.257 billion yuan, turning losses into profits. With the parent company's current profitability, it is not impossible to take out more than 2 billion yuan alone to support the subsidiary's capacity expansion. However, Ganfeng chose to introduce banking institutions such as Industrial and Financial Asset Investment and Gongrong Jintou Phase VI, and complete the financing through capital increase and share expansion instead of the parent company's sole capital injection.

The hidden factor behind this is that the profit of the lithium salt business is highly dependent on prices. When lithium carbonate was priced at 600,000 yuan per ton in 2022, Ganfeng's annual net profit reached 20.5 billion yuan. After the lithium price fell in 2024, the annual loss was 2.074 billion yuan, and the total debt rose from 39.38 billion yuan to 53.24 billion yuan. This cyclicality means that the parent company's cash flow is not stable. If the subsidiary's large cell production line is fully funded by the parent company, once the lithium price falls again, the capital chain of the entire production line will face double pressure.

Using equity financing to replace debt financing and introducing external institutions to share risks is a defensive operation when the lithium price cycle is not yet clear. Banking institutions participated in the capital increase at a pricing of 3 yuan per 1 yuan of registered capital, which went through due diligence and risk assessment. This itself is an external verification of Ganfeng Lithium Battery's large cell route. The parent company still holds about 64% of the shares, so the control right is not diluted, but the capital pressure is shared.

Ganfeng Lithium's advantages in the resource side add an extra safety cushion to this investment. The parent company controls about 35% of the world's proven lithium ore resources, and its export market share of lithium hydroxide exceeds 50%. Its resource self-sufficiency capability is a real cost advantage in the large cell price competition.

However, the advantage on the resource side does not equal the competitiveness on the battery side. The competition logic of the battery industry lies in product iteration speed, customer certification cycle and large-scale delivery capability. To what extent the cost advantage of resource-based enterprises can play a role in this battlefield depends on whether stable yield and consistent delivery rhythm can be achieved after the production line ramps up.

04

The window period is narrower than expected

One step late means being eliminated

From the perspective of the whole industry, Ganfeng Lithium Battery is a follower in the large cell track. Before it, CATL realized large-scale mass production and delivery of 587Ah cells in June 2025, with cumulative shipments exceeding 5GWh. Hithium Energy Storage realized mass production of 587Ah cells in August the same year, and its 1175Ah long-duration energy storage cell orders have been scheduled until the first quarter of 2027. Eve Energy has taken the lead in realizing the power station-level application of 628Ah cells, and the next-generation 702Ah laminated cell is under development. Ganfeng Lithium Battery's 588Ah production line entered commissioning and trial production at the end of August, and plans to start capacity ramp-up in the third quarter and gradually release production before the end of the year.

From the timeline, it is at least one year later than CATL and Hithium Energy Storage. But the iteration window for large cells has not been completely closed. The ramp-up process from a penetration rate of less than 5% to 20% by the end of the year means that a large number of bidding shares are still being allocated. While setting aside share for large cells, the bidders are also looking for second and third suppliers other than CATL to ensure supply chain security. If Ganfeng Lithium Battery achieves stable delivery within the window period, it will have the opportunity to take over part of the overflow orders.

The real risk does not lie in technology, but in the overall supply and demand rhythm of the industry. Tian Qingjun, Senior Vice President of Envision, has publicly warned that once oversupply occurs, enterprises will inevitably launch price wars for survival. "The severe price competition in the photovoltaic industry in the past few years has sounded the alarm for us." Large cells are currently one of the few niche tracks that have not yet had overcapacity, but more and more players are pouring in -- many manufacturers including Chuneng, REPT, Sunwoda and CALB have exhibited 588Ah-related products, and announced plans for mass production or batch delivery within 2026.

Ganfeng Lithium Battery's 2.3 billion yuan capital increase is essentially buying a ticket to enter the large cell window period. With the ticket in hand, whether it can complete capacity ramp-up and order delivery before the window closes is the real key to success or failure. This industry will not wait for anyone. One step late means being out.

This article is from the WeChat official account "Foresee Energy", written by Wang Mengjiao, and published with authorization from 36Kr.