Since the beginning of this year, a new round of reshuffling in the lithium battery industry chain has continued to deepen.
In August this year, the bankruptcy reorganization cases of lithium battery company Soundon New Energy Technology Co., Ltd. (hereinafter referred to as Soundon New Energy) and Sichuan Mulun New Material Technology Co., Ltd. (hereinafter referred to as Mulun New Material) saw new progress.
On August 14, the Xiangtan Intermediate People's Court ruled to terminate Soundon New Energy's reorganization procedure and declared it bankrupt. With that, Soundon New Energy's reorganization, which had lasted two years and two months, was declared a failure.
Soundon New Energy was established on December 2, 2011, with its headquarters in Xiangtan, Hunan Province. It was set up with investment from the Sound Group and is a core lithium battery enterprise in which ST Qihuan (000826) holds a stake. It focuses on the pouch lithium battery technology route, with business covering the entire industrial ecosystem including power batteries, ESS batteries, cathode materials, and battery recycling. In 2018, the company's revenue was 1.75 billion yuan, and its ternary pouch power battery installations reached 541.4 MWh, ranking fifth nationwide, with planned capacity of 6 GWh. However, its operations then deteriorated sharply: as of December 31, 2023, total assets were 6.574 billion yuan, net assets were 2.782 billion yuan, and liabilities were 3.793 billion yuan. In 2023, revenue was 262 million yuan and net profit was -524 million yuan. In 2023, it was also subject to administrative regulatory measures by the Hubei Securities Regulatory Bureau for occupying ST Qihuan's funds and failing to repay them on time, and was recorded in the securities and futures market credit archives.
Under the dual pressure of a broken capital chain and damaged credibility, Soundon New Energy was unable to repay its due debts and applied to the court for bankruptcy reorganization twice, in December 2023 and May 2024. On June 5, 2024, the Xiangtan Intermediate People's Court ruled to accept the bankruptcy reorganization applications filed by BTR (920185) and Yuyao Haitai Trading against Soundon New Energy, and on July 30 of the same year designated Hunan Hongyi Law Firm and Beijing DeHeng (Changsha) Law Firm to jointly serve as administrators. At the second creditors' meeting in October 2025, the draft reorganization plan was approved only by the employee claims group, while the priority claims group, ordinary claims group, and investor group all rejected it. On May 20, 2026, Soundon New Energy issued a notice scheduling the third creditors' meeting in the bankruptcy reorganization case for June 4 to review and verify the claim filing and review report and to vote on the draft reorganization plan for a second time. The court and administrators ultimately confirmed that Soundon New Energy's total valid claims amounted to approximately 4.01 billion yuan.
According to Sichuan Shuliheng Bankruptcy Liquidation Firm, the first creditors' meeting in the Mulun New Material bankruptcy reorganization case was held on August 4. Mulun New Material was established in November 2017 with registered capital of 76 million yuan, and its legal representative is Lei Jianming. At its inception, it was mainly engaged in the production and sale of graphite electrodes, and later gradually expanded into graphitisation production for new energy anode materials. The first phase of the first lithium battery anode material project in Panzhihua, Sichuan, which it invested in and built, went into production in May 2021. The project has a planned annual capacity of 30,000 mt, with the first phase producing 8,000 mt per year, achieving a "zero" breakthrough in graphitisation processing of lithium battery anode materials in the Panxi region.
On July 3, 2025, creditor Yang Chunjie filed a pre-reorganization application with the Panzhihua Intermediate People's Court on the grounds that Mulun New Material was unable to repay its due debts but still had value and possibility of rescue. On October 24, 2025, the court decided to formally initiate the pre-reorganization procedure, and through random designation by the court, the Panzhihua branch of Sichuan Shuliheng Bankruptcy Liquidation Firm Co., Ltd. was appointed as the interim administrator. The balance sheet shows that as of February 28, 2025, the company's total assets were 57.1656 million yuan, total liabilities were 105 million yuan, and owners' equity was -48.1781 million yuan. On March 26, 2026, the Panzhihua Intermediate People's Court ruled that the Renhe District People's Court should hear the bankruptcy reorganization case. On June 9, the Renhe District People's Court formally filed the case, and on June 16, the Renhe District People's Court designated the aforementioned Panzhihua branch as the administrator. The smooth convening of the first creditors' meeting marked that Mulun New Material's bankruptcy reorganization work has entered a substantive advancement stage.
The bankruptcies of Soundon New Energy and Mulun New Material are not isolated cases. Since the beginning of this year, many companies in the battery industry chain have fallen into bankruptcy crises, affecting everything from battery manufacturers to materials and recycling companies:
In January, the Changxing County Court in Zhejiang ruled to accept the bankruptcy liquidation case of JEVE New Energy Technology (Huzhou) Co., Ltd. and appointed an administrator. The company was established in September 2021 and is a member enterprise of Fosun Holding Group, wholly owned by Tianjin JEVE Power Industry Co., Ltd. It is mainly engaged in the R&D and manufacturing of new energy batteries and automotive parts. The company began construction in stages starting in 2021, but by the time of bankruptcy, it had not yet been fully completed and had not officially gone into production.
In March, Tianjin Baishun Songtao Power Battery Technology Development Co., Ltd. saw a new bankruptcy review case filed. This enterprise, established in 2012, had planned to build a power battery industrial base in Tianjin Airport with a total investment of 10 billion yuan and sales of 10 billion yuan. However, around 2017, a debt crisis erupted in concentrated fashion, and its core production equipment was auctioned off by the court twice. Multiple publicly listed firms including Easpring Technology, Nebula Electronics, PTL, and Shenzhen Senior Technology Material were drawn into payment disputes.
In April, Jiangxi Special Electric Motor (002176) announced its participation in the bankruptcy reorganization investment of Zhaoqing Aoyou Power Battery Co., Ltd. (referred to as Aoyou Power). After the reorganization is completed, Aoyou Power will become a controlling subsidiary of Jiangxi Special Electric Motor and be included in its consolidated statements, and will be used for the production of non-power batteries and ESS batteries. Aoyou Power was originally a new energy power battery manufacturer, mainly engaged in the R&D and production of lithium-ion power batteries, ESS battery systems, and related modules. Due to changes in the market environment and a broken capital chain, it had been shut down for a long time with large liabilities, and in 2025 the Zhaoqing Intermediate People's Court ruled to accept its bankruptcy reorganization and appointed an administrator.
In June, Jiangxi Province Keneng Weida ESS Battery System Co., Ltd. was ruled by the court to accept bankruptcy liquidation. The company was established in December 2016 and is a wholly owned subsidiary of Jiangxi Keneng ESS Battery System Co., Ltd. (jointly funded by Beijing Guoneng Battery and Kelu Electronics), mainly engaged in the development of lithium-ion batteries, new energy battery systems, and ESS. After its establishment, the company leased factory buildings in the Chengdong Industrial Park of Fenyi County, Xinyu City, Jiangxi Province for lithium battery production, and began production in early 2019. In November of the same year, it was forced to halt production due to reduced market orders and other reasons. Although attempts were later made to restart, production could not be resumed due to intensifying industry competition. As of March 31, 2026, the company's asset-liability ratio was as high as 121.5%.
Even Narada Power, a veteran energy storage company with 30 years of history, was not spared. In July, creditors applied for pre-reorganization and reorganization of ST Narada (300068) on the grounds that it was unable to repay its due debts. Narada Power started with lead-acid batteries, initially producing industrial energy storage lead-acid batteries and providing backup power supplies for communications companies. In 2001, it registered and established Shanghai Narada Ruibao Energy Technology Co., Ltd. in Shanghai, entering the lithium battery industry. In 2010, it was listed on the ChiNext board, and in November of the same year, it exclusively supplied ESS batteries for China's first large-scale practical energy storage project, the Zhejiang Dongfushan New Energy Project, entering the renewable energy storage industry and becoming a pioneer in China's new-type energy storage sector. In 2020, it launched the strategic transformation of "abandoning lead and shifting to lithium," and in 2023 it ranked fourth globally in ESS system integrator shipments in the Chinese market, and invested in building two major energy storage bases in Yangzhou and Jiuquan. However, the transition to lithium batteries requires enormous capital investment and a long period of painful adjustment. The lead-acid battery business declined, while the lithium battery business had not yet fully matured. The company is currently facing a predicament of massive financial losses and a large amount of due debts that cannot be repaid. ST Narada's announcement on July 6 showed that a total of 163 accounts of the company and its subsidiaries had been frozen, with the total amount of funds subject to freezing applications at approximately 3.067 billion yuan.
In addition, the lithium battery territory of central state-owned enterprise giant Sinochem International (600500) is also accelerating its collapse. In 2025, its power battery subsidiary Huaian Junsheng New Energy Technology Co., Ltd. entered bankruptcy proceedings and was transferred to Xingtai (Hebei) Lithium Battery Technology Co., Ltd. In 2026, the ternary cathode material company Ningxia Sinochem Lithium Battery Materials Co., Ltd. completed bankruptcy reorganization and was transferred to Shaoxing Hailan New Materials Co., Ltd. The battery recycling company Hebei Sinochem Lithium Battery Technology Co., Ltd. was ruled by the court to enter bankruptcy proceedings, and the first creditors' meeting was held on July 10. The administrator is currently publicly recruiting interested investors.
This reshuffling of the lithium battery industry is not confined to China.
In July, VARTA, a German battery manufacturer with a century of history, filed for pre-bankruptcy proceedings under self-administration, and its factory in Nördlingen, Germany will be shut down in autumn 2026. The most critical blow to VARTA came from Apple. In May this year, a VARTA spokesperson confirmed that Apple would not renew its battery supply contract.
In the same month, Limatech, a French aviation battery startup, was ruled by the court to be liquidated. The company mainly developed LFP batteries, and due to the Middle East war, its core financing cooperation was suspended, breaking its capital chain and making it unable to continue operations.
In May, another LFP battery manufacturer, Morrow Batteries, formally initiated bankruptcy proceedings. This Norwegian battery company owns Europe's first LFP gigafactory, with shareholders including Siemens Financial Services, ABB, and other well-known institutions. The Norwegian Prime Minister personally cut the ribbon for its 1 GWh factory. Morrow had originally planned to build a gigafactory cluster with annual capacity of up to 43 GWh. However, the global battery market oversupply led to enormous price pressure, rising capital costs, and a more cautious investment market, and the company was unable to obtain new financing before running out of funds.
In April, battery recycling company Ascend Elements initiated bankruptcy protection proceedings due to exhausted funds and an unfinished project. It is reported that the company had raised 12 rounds of financing since its establishment, attracting investment from Honda, SK Group, Qatar Investment Authority, Temasek, and others, with cumulative financing exceeding $1.1 billion.
In March, French lithium refining startup Viridian Lithium was placed into judicial liquidation. The company had been included in the first batch of strategic project lists by the European Commission, and had originally planned to build Europe's first lithium refinery in Lauterbourg in the Alsace region of France to produce battery-grade lithium hydroxide. According to recent foreign media reports, of the 60 critical minerals strategic projects released by the EU, 23 jointly sent an "urgent call to action" to European Commission President von der Leyen in August, saying they could barely hold on.
Taken together, the surface reasons for these lithium battery industry chain companies falling into reorganization or bankruptcy crises are mostly "inability to repay due debts and broken capital chains," but a broken capital chain is never the cause; it is the result. The deeper reason is the shift from rapid expansion to surplus-driven exit from the market, with several forces striking back simultaneously: aggressive early expansion, price wars, tightening financing, and failed transformations.
First, global supply-demand imbalance, overcapacity and spreading price wars, and loss of clients and orders.
The global battery market is structurally oversupplied, and price wars follow like a shadow. When lithium batteries were booming, capital poured in, and upstream and downstream players concentrated on expanding capacity. When the tide receded, as industry supply and demand shifted, price wars spread rapidly.
Small and medium-sized enterprises already struggle to secure stable orders. Some companies have high client concentration, and once an order is lost, revenue falls off a cliff. At the same time, raw materials such as lithium and cobalt have seen sharp rises and falls, and amid price wars, many enterprises "lose money on every unit they produce."
Second, the aftereffects of early expansion: once financing tightens, cash flow is the first to collapse.
The battery industry chain is a typical asset-heavy sector: large investment, slow returns, and long cycles. Lithium battery industry chain companies frequently plan bases worth tens of billions of yuan, tying up large amounts of capital in capacity and projects. As the financing environment tightens and capital costs rise, once follow-up financing cannot keep pace, cash flow immediately blows up. Without sustained financing capability, it is also difficult to cross the commercialization threshold. Scale was once a moat, but now it may become a dam of debt.
Third, the pains of strategic transformation: old businesses are bleeding, new businesses have not yet taken off, and companies fall into debt crises.
Some companies crossed over into lithium batteries, creating large amounts of goodwill and enormous investment during the transformation period. When old businesses decline and new businesses have not yet ramped up, cash flow gaps are most likely to appear. At the same time, technology routes are iterating at an accelerating pace: the shift between ternary and LFP, and the continuous iteration of new technologies such as solid-state batteries, sodium-ion batteries, high-nickel, and silicon-based anodes. Companies that bet on the wrong route or lack sufficient R&D strength are left behind by technological iteration.
Conclusion:This is not the individual failure of a few companies, but a brutal screening as the lithium battery industry moves from a phase of rapid expansion into a stage of high-quality development. In the first half, companies took off on tailwinds, secured positions through scale, and accelerated with capital. In the second half, it is no longer just about who runs fastest, but about who survives longest. To successfully navigate the cycle, core technology, resources and capital, client quality, and capacity utilization rate must all be strengthened.
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