The head of the car association says that demand for lithium batteries in China will fall by early 2026.

The secretary general of China's passenger vehicle association stated on Sunday that the demand for Chinese lithium batteries is likely to fall in early 2026, due to a predicted drop?in domestic sales of electric vehicles and a slowdown in battery exports.

In a social media post, Cui Dongshu said that the demand for energy batteries would drop dramatically by 2026. Battery makers should reduce production and rest in order to deal with these fluctuations.

China is the world's?leader? in battery technology production and exports. It is also benefiting from a boom in demand?for batteries used in EVs or power networks.

Battery manufacturers such as Contemporary Amperex Technology Ltd. (CATL) & EVE Energy will be hurt by a big drop in demand.

Cui said that the green passenger vehicle sales will drop by at least 30% in early 2019, starting from the fourth quarter. This is due to tax incentives being phased out.

Cui stated that electric vehicles for commercial purposes will also "definitely" fall in the early 2026, after buyers rush to purchase vehicles by year's end for tax breaks and subsidies.

He said that exports are unlikely to compensate for the loss of domestic demand.

Exports of lithium batteries from China to the European Union (its largest overseas market) rose by 4% from the previous year in 2025, while those to the United States fell by 9.5%.

Cui stated that the drop in U.S. exports suggests that rising demand for energy storage due to artificial intelligence boom in the U.S. is not increasing demand for Chinese batteries.

UBS analyst Yishu Yán said in a statement this month that Chinese companies face risks due to U.S. restrictions regarding projects that receive investment tax credits and involve "foreign entities designated as of concern".

(source: Reuters)