Chinese Automakers Accelerate In-House Battery Development Ahead of 2026 to Counter Supply Chain Risks and Profitability Pressures

In 2026, multiple Chinese-listed automakers accelerated their independent R&D of core technologies such as batteries, driven by quality issues with power batteries and cost pressures from upstream suppliers. On July 20 of that year, China Aviation Lithium Battery (CALB) saw its Hong Kong-listed stock plunge nearly 13% intraday, down over 50% from its April peak, wiping out almost 60% of its market value. Around the same time, the GAC Aion S models equipped with CALB’s battery cells faced massive returns for repairs and a surge in consumer complaints—impacting approximately 213,000 commercial vehicles and severely damaging the brand’s reputation. Earlier that year, in February, Sunwoda had to pay substantial settlement fees after Geely sought compensation following a recall of 38,000 Zeekr electric vehicles due to defective battery cells supplied by Sunwoda. Meanwhile, CATL reported significant growth in both revenue and net profit in its interim financial results released on July 24, while some automakers plunged into severe losses. Frequent quality control issues with power batteries, excessive profit margins captured by upstream suppliers, and the impending implementation of a consumption tax on lithium-ion batteries further squeezed automakers’ profit margins. Capital markets have already begun repricing relevant companies based on existing risks, with potential recall costs, brand rehabilitation expenses, and legal liabilities significantly affecting the market valuations of both automakers and battery suppliers. Against this backdrop, traditional automakers—including BYD, Geely, Chery, and Great Wall—as well as numerous EV startups have substantially increased investments in in-house battery R&D. This strategic shift aims to secure product quality, enhance bargaining power over costs, and safeguard brand integrity. As consumer awareness of battery safety rises, part of the vehicle brand value is shifting toward battery brands, and the industry’s competitive focus is increasingly centered on technological self-reliance. New national standards and the upcoming consumption tax policy will further accelerate this trend, making independent development of core technologies a critical path for automakers’ survival.