EV Battery Industry Introduces 60-Day Payment Rule to Tackle Supply Chain Cash Flow Abuse

On June 29, 2024, the China Automotive Power Battery Industry Innovation Alliance and the Zhongguancun Energy Storage Industry Technology Alliance jointly issued the "Initiative on Standardizing Payment Terms for Suppliers of Power and Energy Storage Battery Enterprises." The initiative addresses long-standing industry issues such as excessively long payment terms, delayed acceptance procedures, abuse of commercial acceptance bills, and prolonged occupation of funds from small and medium-sized suppliers. It proposes establishing unified standards across key stages including order signing, goods acceptance, reconciliation, and payment deadlines. On the same day the initiative was released, 11 leading battery manufacturers—including CATL, FinDreams Battery, CALB, EVE Energy, and Sunwoda Power—publicly pledged to cap their maximum payment terms to small and medium-sized suppliers at no more than 60 days. Data shows that in 2025, the average accounts payable turnover days for 31 listed companies in the SWS lithium battery sector stood at 97.3 days, with some exceeding 204 days. Major power battery makers averaged 159 days for accounts payable turnover—significantly longer than their accounts receivable turnover periods. Specifically, both CATL and Gotion High-Tech reported accounts payable turnover days exceeding 180 days in 2025, while their accounts receivable turnover days were under 60 days and approximately 130 days, respectively. The root cause of excessively long payment terms lies in slow payments from automakers, which transmits financial pressure upstream along the supply chain. Caught between vehicle OEMs and upstream material suppliers, battery companies commonly extend payment terms or rely on commercial acceptance bills to ease cash flow constraints. Even when contracts stipulate fixed payment terms, some firms effectively prolong actual payment cycles by delaying acceptance inspections or postponing reconciliation. Commercial acceptance bills are also frequently used as deferred payment instruments, forcing suppliers who seek early discounting to bear additional financing costs. The new initiative explicitly mandates that payment terms begin counting from the date of delivery or successful acceptance, compresses the acceptance period to within seven business days, restricts the use of commercial bills, and encourages cash settlements—aiming to enforce a strict 60-day payment cycle. Battery companies of different scales exhibit markedly varied capacities to absorb these changes. By the end of 2025, CATL held nearly RMB 300 billion in cash and cash equivalents, with net operating cash flow of RMB 133.2 billion. FinDreams Battery, benefiting from BYD’s internal supply ecosystem, faces relatively low funding pressure. In contrast, second-tier players like Gotion High-Tech and EVE Energy carry higher debt-to-asset ratios and face greater short-term repayment burdens, making them more vulnerable to cash flow impacts from shortened payment terms. Industry analysts note that addressing payment term imbalances is not only critical for the survival of small and medium enterprises but also vital for fostering collaborative innovation and ensuring supply chain stability across the entire value chain. The historical model of relying on interest-free fund occupation to fuel expansion is no longer sustainable; companies must shift toward refined cash management and enhanced supply chain collaboration. Standardized payment practices will help upstream suppliers accelerate cash recovery, boost R&D investment, and encourage energy storage integrators to move away from profiting via extended payment terms toward enhancing solution design and service capabilities. Currently, the initiative remains voluntary and lacks binding enforcement. Some companies may circumvent its intent by adjusting warranty retention rates or employing alternative financial instruments to maintain existing capital occupation patterns. Nevertheless, the overall trend indicates that the industry is gradually transitioning from an era of extensive expansion to one centered on product quality, technological advancement, and collaborative competitiveness.