In previous years, the prices of negative electrode materials were relatively stable and unremarkable. But this year, as the new-energy vehicle sector has taken off with remarkable momentum, negative electrode materials have followed closely behind, experiencing a sharp and steady price increase—adjustments in April, July, September, and November ranged from 500 to 1,000 yuan per ton. Downstream battery manufacturers have been struggling: on one hand, lithium salt prices—including lithium carbonate—have hit new record highs; on the other hand, electrolyte prices are rising rapidly. As a result, many battery cell companies have jointly announced price adjustments. Even though material prices have risen across the board, the shortage of automotive-grade chips has failed to slow down the advance of the new-energy vehicle industry; several automakers have achieved record-high production and sales volumes. With global demand for new-energy vehicles continuing to soar, driven by robust demand both in overseas power battery markets and the domestic market, leading global power battery companies such as CATL, LG Chem, Panasonic, SK Innovation, CALB, BYD, and Guoxuan High-Tech are actively preparing to expand production, accelerating the pace of negative electrode material capacity expansion. Despite their modest and unassuming nature—negative electrode materials typically account for only 7% to 15% of battery costs and represent about half the volume of positive electrode materials—they remain quietly committed to technological innovation. They continue to refine and stabilize existing technologies like artificial graphite, explore advanced options such as 4680 silicon-based negative electrodes, and keep an eye on the potential of sodium-ion batteries yet to be fully developed.

Negative-electrode companies are increasingly “teaming up” to accelerate their integrated development efforts.

In January, Betray announced the construction of a “50,000-ton high-end synthetic graphite anode material project” through Sichuan Jinbei Investment. In March, Putailai, via its wholly-owned subsidiary Sichuan Zichen Investment, launched a 200,000-ton integrated project for anode materials and graphitization. Shanshan Shares also announced the construction of a second-phase integrated base in Baotou, Inner Mongolia, with an annual capacity of 60,000 tons of anode materials and supporting graphitization capacity of 52,000 tons, with a total investment reaching 1.535 billion yuan. Anju District of Suining City successfully partnered with Luoyang Yuexing New Energy Technology Co., Ltd. to launch a 50,000-ton-per-year lithium-ion battery silicon-carbon anode material project. The integrated anode material project between Jianwei County and Guangdong Kajin New Energy Technology Co., Ltd. was officially signed. Several small and medium-sized enterprises, including Huashun New Energy, Kontian New Energy, Sichuan Jintaineng, Fuan Carbon Materials, and Hubei Baoqian, have also announced large-scale plans to build anode material projects, with typical capacities around 50,000 tons each.

Market share of each negative electrode material

From the perspective of China’s consumption structure for negative electrode materials, synthetic graphite accounts for the largest share, with China’s shipments of synthetic graphite reaching 79.2%. It is projected that demand for negative electrode materials will increase from 477,000 tons in 2021 to 895,000 tons between 2021 and 2023.

After years of development, the negative electrode material market has now taken shape into a “four major, three minor” structure. Betray, Suncore, Putailai (Zichen), and Kehua Energy are the leading first-tier companies. Among them, Betray is the undisputed leader in natural graphite, while its share of synthetic graphite is steadily increasing.

From the perspective of negative electrode material supply, the world’s major suppliers of negative electrode materials are primarily located in China and Japan; the combined production capacity of these two countries accounts for more than 95% of the global total.

Since 2020, the market has been concerned that the large-scale expansion of negative electrode production could lead to oversupply. However, thanks to the strong growth in downstream demand, the newly added capacity has largely been absorbed, and we expect the supply-demand balance for negative electrodes to remain stable.

Currently, negative electrode materials remain in a state of supply shortage, and it will still take time for production capacity to be fully released. The demand for negative electrode materials for lithium batteries has surged, driven by the rapid growth in sales of new-energy electric vehicles and the increasing need for energy storage. Moreover, the fervor surrounding new automotive players and cross-industry entrants from the internet sector has further spurred expansion or new construction of production capacities among lithium battery raw and auxiliary material companies. The accelerated electrification of internal-combustion engine vehicles and the shift toward low-carbon mobility are set to become the new normal—providing lithium battery raw and auxiliary material companies with vast market opportunities and an extensive array of application scenarios. Major enterprises are all expanding their negative electrode production capacities. The following table lists companies that are expanding their negative electrode production capacities.

New Negative Electrode Capacity Statistics

Graphite pricing continues to escalate, while power restrictions and dual-control measures on energy consumption keep intensifying.

Following the implementation of Inner Mongolia’s “dual control” policy on energy consumption and power restrictions, approximately half of the graphitization capacity has been shut down. As a result, graphitization prices have risen from 13,000 yuan per ton in September last year to 22,000 yuan per ton. Meanwhile, on the cost side, negative electrode material prices have gradually been passed down to downstream sectors since the start of the year, with price increases ranging from 5% to 10%. Prices for graphitization insulation furnaces and resistance materials remain high and stable, currently hovering between 3,000 and 3,600 yuan per ton. As for graphitization crucibles, the prevailing quoted price is now 1,500 yuan per set.

On May 17, Ulanqab City issued the “Letter on Issuing the Budgeted Electricity Consumption for High-Energy-Consuming Enterprises for May-June 2021.” On August 31, Inner Mongolia released a document titled “Report on the Decomposition of Ordered Electricity Consumption Indicators for the Inner Mongolia Power Grid in August 2021.” Qinghai: Issued a power restriction alert, and the scope of power restrictions continues to expand. Ningxia: High-energy-consuming enterprises have been ordered to halt or limit production for one month. Yunnan: Two rounds of power restrictions have already been implemented, and further tightening measures are expected to follow. Guangxi: Businesses and industrial enterprises are required to implement orderly electricity consumption and proactively stagger peak demand periods. Sichuan: Non-essential production, lighting, and office loads have been suspended. Henan: Some processing enterprises have faced power restrictions for more than three weeks. Chongqing: Some factories were subjected to power restrictions and production halts starting in early August. Inner Mongolia: Strictly controls the duration of power restrictions imposed on enterprises, with electricity prices increasing by no more than 10%.

Chip shortages trigger a butterfly effect, with production cuts cascading upstream.

Bosch’s ESP chips and other components were essentially out of supply by August; ST’s Muar factory temporarily suspended production; the Selangor state government mandated that only 20% of employees could be assigned to production lines; and Malaysia’s severe epidemic situation has forced numerous companies to halt operations.

Ford Motor will reduce production of trucks such as the F-150; Maruti Suzuki’s automobile production in September will decline by 60%; Daimler Mercedes-Benz brand saw a significant drop in sales during the third quarter; Nissan suspended production from August 23 to August 30; Volvo Cars will halt production from August 30 through September 3; Tesla, Renesas, and Bosch are unable to supply sufficient chips and other components, causing factories to operate below capacity; NIO’s operations were affected, impacting its August delivery figures.

Next-generation energy-storage sodium-ion batteries—negative electrode materials remain to be developed.

The development of lithium-ion batteries has laid a solid foundation for the advancement of sodium-ion batteries (providing valuable references for R&D, materials, and even some materials and equipment that can be directly utilized). China is at the international forefront in terms of basic research, technological level, and the pace of industrialization of sodium-ion batteries, giving it a first-mover advantage. Sodium-ion batteries are not constrained by resource limitations and offer high cost-effectiveness.

Sodium-ion batteries and lithium-ion batteries share the same basic operating principles; the key difference lies in their charge carriers, which necessitates corresponding adjustments to the cathode and anode materials as well as the electrolyte to suit sodium-ion batteries. Currently, carbon-based materials are predominantly used, and researchers are exploring the feasibility of conversion-type and alloy-type anodes, as well as organic anodes. Almost all commercially available sodium-ion battery products employ hard carbon as the anode material. Research efforts are focused on improving the first-cycle Coulombic efficiency (increasing it) and lowering the operating voltage (reducing it). Due to their relatively high capacity, these materials have attracted considerable attention; however, addressing the rapid capacity fade caused by pulverization and volume expansion during sodium insertion/extraction remains a critical challenge. Moreover, at higher molecular weights, specific capacities tend to be lower, making it difficult to meet commercial demands (inorganic skeletal structures offer longer cycle life). The most notable feature of sodium-ion batteries is their low cost and structural versatility. Nevertheless, they suffer from several drawbacks, including low first-cycle Coulombic efficiency, polarization issues during cycling, poor electronic conductivity, and the dissolution of organic molecules in the electrolyte. As a result, related research is still in its early stages.

LG Battery Recall: Negative-Current-Collector Tab Torn

LG has conducted multiple recalls, primarily due to manufacturing defects inherent in this series of LG products themselves, rather than issues with the materials themselves or the pouch-cell technology approach. Specifically, two types of defects were found during the manufacturing process of LG’s battery cells: tearing of the negative electrode tabs and wrinkling of the separator.

In October 2020, Hyundai Motor announced a global recall of 77,000 KONA electric vehicles equipped with LG batteries. In November 2020, LG Energy Solutions issued its first recall of Chevrolet electric vehicles. In December 2020, LG Energy Solutions announced a recall in the U.S. of certain Resu 10H residential energy storage systems manufactured by the company. In February 2021, Hyundai Motor announced a second recall of approximately 82,000 electric vehicles starting March 29, to replace their battery systems. In March 2021, LG Chem’s energy storage systems (ESS) were again recalled due to the risk of battery fires. In July 2021, General Motors recalled all Bolt EV models and plans to seek compensation from battery supplier LG. In August 2021, LG New Energy recalled 10,000 units of its residential energy storage battery products.

4680 Battery: The King of Fast Charging—Silicon-Based Anode

Range (energy density), fast charging, and safety are all key trends for the future. Silicon-based anodes can boost theoretical gravimetric capacity, making them well-suited to the trend toward higher energy densities. However, silicon-based anodes face challenges such as volume expansion and low electrical conductivity, presenting significant technological barriers. In recent years, the adoption of silicon-based anodes has accelerated: Xiaomi smartphones and Tesla electric vehicles have already incorporated silicon-based anode batteries, while companies like NIO, GAC, and Zhiyi have announced plans to mass-produce silicon-based anodes. Moreover, automakers such as Daimler, BMW, ATL, Samsung, and LG have all formed partnerships with leading silicon-based anode manufacturers, accelerating the industrialization process.

Currently, the silicon-carbon anodes used in Tesla vehicles are actually silicon suboxide anodes. Since silicon suboxide anodes offer only limited improvements in driving range, the global industry is now returning to pure silicon-carbon anodes. In the future, when silicon-carbon anodes contain 30% silicon, their specific capacity could reach 1000 mAh/g. At present, the addition level of silicon-based anodes is 5% for the 2170 cells and 10% for the 4680 cells.

Intensified “involution” in the power battery sector prompts early-stage strategic planning for solid-state battery anodes.

Currently, negative electrode materials for carbon-based batteries mainly fall into three major categories: metallic lithium negative electrode materials, carbon-based negative electrode materials, and oxide-based negative electrode materials. Among these, metallic lithium negative electrode materials have become one of the primary negative electrode materials for all-solid-state lithium batteries due to their advantages of high capacity and low electrode potential. Using metallic lithium as the negative electrode holds promise for increasing energy density by 40% to 50%.

Japan and South Korea are at the forefront of technology in the development of solid-state batteries, with key players including Toyota, Hitachi, Honda, Kokusai Electric, Sony, Tokyo Institute of Technology, the National Institute of Advanced Industrial Science and Technology (AIST), Samsung, and LG Chem. Several companies in Europe and the U.S. are also actively developing core technologies for solid-state batteries, such as those in the U.S. (SEEO Inc., QuantumScape, Solid Energy, Fisker, Sakti3, 24M, Ionic Materials, etc.), the U.K. (Dyson, among others), Germany (Bosch, BMW, BASF, Porsche, Volkswagen, etc.), France (BatScap, Bolloré, among others), and Canada.

Only a handful of companies in China are focusing on the development of solid-state batteries, including Beijing Weilan, Zhejiang Ganfeng, Qingtao New Energy, Taiwan’s Huineng, CATL, BYD, Wanxiang, Svolt Energy, SAIC, and FAW.

Interpretation of the Central Economic Work Conference: Policies Do Not Directly Affect the Graphitization Stage.

Currently, the lithium-ion battery policies that have been introduced are favorable to negative-electrode materials. Although graphitization is an energy-intensive industry, many companies have already implemented energy-saving measures in their production processes. Looking ahead, in order to promote the development of downstream lithium-battery and new-energy industries, regional governments will likely adopt relatively favorable policies. The recent policy proposed at the Central Economic Work Conference—“scientifically assessing energy consumption”—does not directly impact the graphitization stage. In the future, if renewable energy sources are adopted, it will become easier to obtain energy assessment approvals.

The change in the calculation methodology this time (1) excludes newly added energy consumption from raw materials from the total energy consumption quota, allowing provinces to reserve more energy consumption space for project approvals and thereby facilitating the release of upstream energy production capacity that has been constrained by the overall energy consumption limit; (2) energy intensity remains an important assessment criterion, underscoring that improving enterprises’ production technology levels and enhancing the utilization rate of raw materials will continue to be key priorities.