[SMM Analysis] Slower Tech Progress in Consumer Lithium Batteries; Material Changes Normalize, Safety Policies Tighten

From the perspective of technical iteration, the upgrading pace of consumer electronic batteries is relatively gentle. The industry focuses on material substitution and scenario-based fine-tuning, with no disruptive new technology routes on the horizon. Material substitution has become normalized in the 3C space. Driven by cost reduction, mid-to-low-end tablets and PCs are switching from LCO to ternary materials. High-end smartphones retain LCO solutions for superior endurance and safety performance. The industry keeps advancing modification processes for high-voltage LCO, adopting doping and coating technologies to lift voltage platforms and energy density and consolidate technical barriers for high-end devices. The smart wearable sector has long relied on LCO and ternary material systems. AI smart glasses only optimize batteries for miniaturization and safety, focusing on ultra-thin cells, lightweight packaging and thermal management without switching core material systems.

Battery systems for different downstream segments are highly established: smart home products and power tools mainly use cylindrical ternary cells; service robots adopt LFP batteries; two-wheeler market is dominated by lead-acid and LFP batteries. Material routes for each track will not witness drastic changes in the short term. Although cutting-edge technologies such as silicon-carbon anodes and semi-solid-state batteries are under R&D and small-batch sampling, large-scale mass adoption in mass-market consumer terminals is hindered by high costs, low yield rates and unstable production performance, with trial applications limited to a small number of flagship models only.

On the policy front, relevant regulations for consumer lithium batteries focus on standardizing market order, mitigating battery safety risks and regulating grey-market sectors, with no large-scale stimulus policies that can strongly boost overall demand. Multiple cities in China continue rectifying the electric two-wheeler market. New national standards impose stricter safety requirements on lithium cells for consistency and testing, slowing the replacement of lead-acid batteries by lithium batteries. Power banks are subject to mandatory national standards for air and rail transport, pushing market standardization and phasing out unqualified products while keeping the existing market size stable. The e-cigarette sector faces the highest policy risks, as tightening regulations across China, Europe, America and Southeast Asia cap demand growth for supporting ternary and LCO materials. Mainstream tracks including smartphones, wearables and smart homes operate in a fully market-driven environment with no targeted restrictive or supportive policies, maintaining stable industrial landscape. Besides, power battery recycling policies are gradually extended to consumer lithium batteries, promoting standardized recycling of waste 3C batteries and exerting long-term impacts on raw material supply from recycled materials.

To sum up, technology and policy cannot drive major changes to total consumer lithium battery demand in the short run. In the coming period, market trends of consumer lithium batteries will be jointly determined by end-user demand, upstream raw material prices and the pace of material substitution. Structural opportunities outweigh overall volume opportunities. Competition among enterprises is shifting from pure cost rivalry to comprehensive capabilities including customized cell development for niche scenarios, safety control and stable supply chain management.