Is the Sodium-Ion Battery Just the "Hot Cake" in the Incremental Market?

Sodium-ion batteries have once again become the darling of the capital market.

Over the past month, several sodium-ion battery startups have secured new rounds of financing.

In December 2024, sodium-ion battery technology developer Yingo Technology announced the completion of a nearly 100 million yuan Pre-A round of financing, led by IDG Capital, with co-investment from Xianghe Capital and local state-owned capital, and additional funding from existing shareholder Lightspeed China Partners. This financing provides solid financial support for Yingo Technology's continued innovation and capacity expansion in the new cycle.

In the same month, Zhongna Energy announced the completion of a nearly 100 million yuan A1 round of financing, jointly invested by Zhonghe Investment and Huanghai Financial Holdings, with the A2 round nearing completion.

In January 2025, Qingna Technology announced it had recently secured over 100 million yuan in a Pre-A round of financing, led by Yunhe Fangyuan, with Kaiyi Capital participating as one of the main financial advisors. The funds will primarily be used to build a 2GWh large cylindrical sodium-ion battery mass production line in Guangde, Anhui, as well as for R&D and operational investments.

According to estimates from the "White Paper on the Development of the Sodium-Ion Battery Industry in China (2022)" jointly released by EVTank, the Yiwei Economic Research Institute, and the China Battery Industry Research Institute, considering the demand for batteries across various potential application scenarios, the theoretical market space for sodium-ion batteries could reach 369.5GWh by 2026, with a theoretical market size of approximately 150 billion yuan.

Faced with this future trillion-yuan market, industry experts are optimistic.

Zhang Yi, CEO and Chief Analyst of iiMedia Research, told Gasgoo Auto that in the future, sodium-ion batteries could overcome challenges related to application scenarios and scalability, with opportunities to address their shortcomings through technological innovation in a relatively short time.

Once Faced Setbacks

Before gaining capital attention, sodium-ion batteries experienced a journey from setbacks to flourishing development.

Sodium-ion batteries are a type of rechargeable battery that operates by the movement of sodium ions between the cathode and anode, similar to the working principle of lithium-ion batteries. They are primarily used in low-speed EVs, electric forklifts, 5G base station ESS, household ESS, and large-scale ESS.

China has three major advantages in developing sodium-ion batteries: first, abundant sodium reserves that are not constrained by resources or geography, offering significant resource advantages over lithium-ion batteries. Second, high safety. During testing, they do not catch fire or explode, and during transportation, they reduce safety risks. Third, excellent high and low-temperature performance. Data shows that sodium-ion batteries maintain over 90% discharge retention at temperatures as low as -20°C.

The concepts of sodium-ion and lithium-ion batteries were both proposed in the 1970s, but their trajectories have been vastly different.

In 1976, Whittingham first reported the reversible electrochemical intercalation reaction of layered TiS2 with lithium in Li//TiS2 batteries. He discovered that both sodium and lithium could intercalate into TiS2 and other transition metal disulphides.

However, due to the low open-circuit voltage of the TiS2 cathode (approximately 2.2V) and the instability caused by the lithium metal anode, Li//TiS2 batteries could not be developed into commercially viable functional batteries.

Additionally, the larger radius of sodium ions compared to lithium ions resulted in sodium-ion batteries having only one-tenth the capacity of lithium-ion batteries when using the same materials.

As a result, scientists turned their focus to lithium-ion battery R&D, temporarily shelving sodium-ion battery research.

Thanks to scientists' efforts, lithium-ion battery technology has made significant advancements over the past 50 years. In 1990, Sony became the first to commercialise lithium-ion batteries, while sodium-ion batteries remained neglected.

This led to a sharp decline in sodium-ion battery research from 1990 to 2000. During the same period, the market share of lithium-ion batteries continued to rise.

In 2010, sodium-ion batteries finally saw a turning point. Against the backdrop of a global renewable energy revolution, the scarcity and uneven distribution of lithium resources made it clear that relying solely on lithium-ion batteries would not suffice for the transition to electrified energy.

Since the cathode and anode materials for sodium-ion batteries are abundant on Earth, sodium-ion batteries returned to the forefront of the industry.

Starting in 2010, the sodium-ion battery R&D boom began in the industry. From 2010 to 2020, sodium-ion battery-related research experienced explosive growth, with a significant increase in academic papers and patents.

A large number of companies also began investing in sodium-ion battery research, ushering in a new era of flourishing development. With the entry of domestic companies like CATL, HiNa Battery, Na Innovation Energy, Ronbay Technology, and Sunwoda, as well as international companies like Natron Energy and Faradion, the large-scale commercialisation of sodium-ion batteries has accelerated.

Why the Renewed Popularity?

The sodium-ion battery sector's popularity is not new; it gained traction years ago.

In 2021, CATL released its first-generation sodium-ion battery, along with a hybrid lithium-sodium battery pack. According to CATL's plans, the industrialisation of sodium-ion batteries has already begun, with a basic industry chain expected to form by 2023.

In April 2022, sodium-ion battery startup HiNa Battery underwent business changes, adding leading institutions like Huawei's Hubble Investment, Haisong Capital, and Poly Capital as shareholders. The company's registered capital also increased to approximately 30.95 million yuan.

In June 2023, East Group announced plans to jointly invest with an employee stock ownership platform to establish a sodium-ion battery project company. That same month, Zhongbei New Energy announced the mass production of its first automotive-grade large cylindrical sodium-ion battery and signed strategic cooperation agreements with HiNa Battery and other upstream and downstream companies in the sodium-ion battery sector.

Why is the capital market once again favouring sodium-ion batteries?

Throughout 2024, domestic lithium prices began to stabilise. At the beginning of 2024, lithium carbonate prices started to decline slowly from 97,000 yuan/mt. By mid-to-late March, prices briefly rebounded to 113,000 yuan/mt but soon gradually pulled back to around 72,500 yuan/mt. On December 24, battery-grade lithium carbonate was quoted at 75,000 yuan/mt, up 250 yuan/mt MoM.

On the other hand, demand for raw materials like lithium carbonate in the automotive market continues to grow. According to data from the China Passenger Car Association, from January 1 to 12, 2025, retail sales in the domestic passenger car market declined both MoM and YoY, but NEV retail sales still achieved YoY growth of 8%, with a penetration rate reaching 38.6%. The NEV market's growth momentum remains strong.

Additionally, the abundant raw material reserves for sodium-ion batteries will further enhance the closed-loop industry chain.

Zhang Yi pointed out that another major reason sodium-ion batteries are favoured by capital is the abundant and diverse forms of sodium on Earth, making sodium ions highly extractable. This represents a significant advantage in raw materials for the future.

According to data from Guojin Securities Research Institute, as of 2020, nearly 60% of the world's proven lithium resources were concentrated in South America and Oceania. Although China ranks sixth globally in lithium resource reserves, it cannot meet the enormous domestic market demand.

Compared to lithium's crustal abundance of 0.0065%, sodium's crustal abundance is as high as 2.5%. Not only is it the sixth most abundant element in the Earth's crust, but it is also evenly distributed globally, making its price less susceptible to market demand fluctuations.

"In terms of battery industry scalability and popularisation, lithium batteries are relatively more mainstream, with clear advantages such as earlier large-scale industrialisation and a more mature industry chain. However, the sodium industry chain is currently less developed, leading to lower raw material costs but higher processing costs for its applications. These recently financed companies will use the capital to further improve the industrialisation chain in the future," Zhang Yi added.

Two Major Challenges Remain

Currently, there are three technical routes for sodium-ion batteries, distinguished mainly by the cathode materials used.

The first uses polyanion-type cathode materials, which offer fast charging and long cycle life but are relatively expensive.

The second involves Prussian blue-type sodium-ion battery cathode materials, which have higher energy density but are more challenging to synthesise. Some companies are already working on this route. CATL uses this system, and Guohai Securities believes there is significant room for cost reduction in the processing of Prussian blue analogues.

The third involves layered oxide materials, but these cathode materials contain nickel and cobalt, making them relatively costly. HiNa Battery has discovered that copper can replicate the performance of nickel and cobalt, with copper costing half as much as nickel and one-quarter as much as cobalt, leading to the development of copper-based sodium-ion layered oxide cathode materials.

The cost of sodium-ion battery anode materials is relatively high, primarily due to the high cost of hard carbon materials. According to a report by analysts at Guohai Securities, the cost of domestic amorphous carbon materials is approximately 80,000-200,000 yuan/mt, presenting high industry barriers. Additionally, Great Power Energy stated on its investor interaction platform that sodium-ion batteries do not have a significant cost advantage over lithium-ion batteries, mainly due to the high cost of hard carbon anode materials.

The high cost of anode materials means that sodium-ion batteries do not have a clear overall cost advantage compared to lithium-ion batteries.

Wang Zixuan, Chairman of Zhejiang Qingna, calculated that when lithium carbonate prices are at 200,000 yuan/mt, sodium-ion batteries have a marginal cost advantage of 24%; at 100,000 yuan/mt, the advantage drops to 12%; and if lithium carbonate prices return to 50,000 yuan/mt, the marginal cost advantage of sodium-ion batteries is only 5%.

In terms of energy density, sodium-ion batteries still have significant room for technological improvement. Currently, CATL's second-generation sodium-ion battery aims to achieve an energy density of over 200Wh/kg, with mass production expected by 2027. Meanwhile, CATL officially unveiled its 4C LFP Shenxing PLUS battery at the 2024 Beijing International Auto Show, with an energy density of 205Wh/kg.

Zhang Yi stated that sodium-ion batteries still face significant challenges, such as their application in the ESS sector, industrialisation progress, and maturity, all of which require substantial R&D efforts. However, leveraging the abundant resources and cost advantages of raw materials, these challenges can be addressed over time with increased R&D investment.

"Additionally, the advantages of sodium-ion batteries in low-temperature performance and versatility across various application scenarios could bring more innovation to the market," Zhang Yi added.

Just a Supplementary Market "Favourite"?

Although industry insiders are optimistic about the commercial prospects of sodium-ion batteries, most car models equipped with sodium-ion batteries are currently micro pure EVs, as well as range-extended and hybrid models.

In April 2023, Chery Automobile announced that CATL's sodium-ion batteries would debut in Chery car models. In December 2023, HiNa Battery announced that the sodium-ion battery version of the Hua Xianzi EV, jointly launched with JAC Yiwei, had rolled off the production line, with mass deliveries expected to begin in January 2024. This marks the world's first mass-produced sodium-ion battery vehicle. In the same month, the first sodium-ion battery pure electric A00-class car model, jointly launched by Farasis Energy and JMC Group NEV, officially rolled off the production line.

It is evident that the above-mentioned car models equipped with sodium-ion batteries are mostly A00-class (microcars) pure electric sedans or A0-class (small cars) pure electric sedans.

Currently, the energy density of ternary lithium batteries can reach 300Wh/kg, LFP batteries can reach approximately 180Wh/kg, while sodium-ion batteries generally range between 90-160Wh/kg. Even for CATL, a giant in the power battery industry, the energy density of its first-generation sodium-ion battery is only 160Wh/kg.

However, sodium-ion batteries, which currently have no place in the mid-to-high-end pure electric market, have unexpectedly become highly sought after in the range-extended and hybrid markets. The "hybrid" combination of lithium and sodium is expected to become an important development direction for sodium-ion batteries in the future.

In October 2024, CATL officially released the Xiaoyao Super Hybrid Battery. According to CATL, this is the world's first hybrid battery with a pure electric driving range of over 400 kilometers and 4C ultra-fast charging capability.

Notably, CATL has applied sodium-ion battery technology in the Xiaoyao Super Hybrid Battery. To further enhance the low-temperature performance of the Xiaoyao battery, CATL has made three technological innovations around sodium-ion battery technology.

First, leveraging CATL's pioneering AB battery system integration technology, the Xiaoyao battery pack integrates sodium-ion batteries and lithium-ion batteries in a certain proportion and arrangement through hybrid, series, and parallel connections, achieving a 5% improvement in low-temperature driving range.

Secondly, CATL uses sodium-ion batteries as the SOC monitoring benchmark for the AB battery system to assist in calibrating the lithium-ion battery's charge, improving the overall system control accuracy by 30% and adding more than 10km to the pure electric driving range.

Third, to address the issue of targeted partition management for different material systems within the same battery pack under low-temperature conditions, CATL developed an all-temperature-range precise power calculation BMS technology. This technology enables targeted partition management for different chemical systems in all-weather scenarios, effectively solving problems such as power prediction distortion or performance degradation in extreme high and low-temperature environments.

"Currently, the Xiaoyao Super Hybrid Battery has been applied to brands including Li Auto, Avatr, Deepal, Qiyuan, and Neta," said Gao Huan, Chief Technology Officer of CATL's Domestic Passenger Vehicle Division. It is expected that by 2025, nearly 30 hybrid models, including those from Geely, Chery, GAC, and VOYAH, will be equipped with CATL's Xiaoyao Super Hybrid Battery.

Zhang Yi analyzed that although the energy storage performance of sodium-ion batteries is limited, the current installed models are mainly micro pure electric cars, as well as some range-extended and hybrid models. However, to some extent, this also compensates for shortcomings, including those in energy storage and the maturity of industry chain support. Therefore, theoretically speaking, whether sodium-ion batteries can adapt to a wider range of car models and application scenarios in the future, I believe there is potential.