China Great Wall: improving the national safety standards for power batteries may help in eliminating low-efficiency production capacity at the tail end.

China Great Wall released a research report stating that the current Chinese lithium battery companies have a clear advantage in global power battery industry in terms of scale production capacity and advanced technology. It is expected that these companies will maintain a trend of long-term stable growth. On one hand, this is because China has a large domestic market demand for new energy vehicles, and on the other hand, the relatively sound supply chain support is advantageous for companies to participate in global competition within a reasonable profit margin. The recent increase in industry safety standards at the national level will strengthen the concentration effect of leading companies and help high-quality enterprises improve their operational quality. The main points of view of China Great Wall are as follows: Event On March 28, the Ministry of Industry and Information Technology organized the formulation of the mandatory national standard "Safety Requirements for Power Batteries for Electric Vehicles" (gb38031-2025), which was approved and issued by the State Administration for Market Regulation and the State Administration of Standardization. It will be implemented starting from July 1, 2026. The new requirements have revised key technical indicators for multiple power batteries, placing a strong emphasis on safety in this revision of the national standard rules. The country has introduced new energy vehicle power battery-related safety policies to improve the production and operational quality of the industry. According to data published by China Passenger Car Association, the total retail market for narrow-passenger cars is estimated to be around 1.75 million in April 2025, a year-on-year increase of 14.4%, and a month-on-month decrease of 9.8%. The retail volume of new energy vehicles is expected to reach 900,000, with a penetration rate of 51.4%. However, the overall discount rate in the car market in mid-April is about 23.7%, reflecting the fierce competition in the pricing of new energy vehicles, and the pressure on cost reduction and efficiency improvement for car companies remains significant. As an essential means of transportation for the general public, the safety of automobiles has far-reaching impacts. Compared to traditional fuel vehicles, the safety of the power battery, a crucial component of new energy vehicles, is a core manifestation of the industry's production and operational quality. There is a significant concentration effect among leading companies in the power battery industry, and the inefficient capacity towards the end urgently needs to be cleared in an orderly manner. Due to the technical intensity and production complexity of the power battery industry, a market structure with a significant concentration of leading companies has persisted. However, given the rapid growth of the end-user new energy vehicle industry in recent years, the absolute demand for power battery installations is high, and the dynamic competitive pressure on power battery prices is greater, leading to a delay in the clearance of the tail-end capacity. The adjustment of the national standard this time directly targets the core performance indicators of power batteries from a safety perspective, imposing relatively high constraints on the entire industry. This is advantageous in eliminating the influence of price factors and orderly clearing the inefficient capacity at the tail-end of the power battery industry from a product performance perspective, reducing the risk coefficient of new energy vehicles in extreme accident situations. Risk warning: Rising trade protectionism, geopolitical risks, fluctuating raw material prices, and high investment in technology research and development.