China Records 40% Growth in its Domestic Market for EV Batteries

China’s electric vehicle battery market recorded a major milestone in 2025, growing by more than 40 percent compared to the previous year. This rapid expansion shows how fast the country is moving toward electric mobility and strengthening its position as the global leader in EV battery production.

In 2025, the total capacity of EV batteries produced in China reached about 769.7 GWh. This growth did not happen by chance. It was driven by strong demand for electric vehicles, government support for clean energy, and continuous improvements in battery technology. Battery production stayed higher than the previous year in every single month, showing steady and reliable growth across the entire year.

One of the biggest changes in China’s battery market is the clear dominance of lithium iron phosphate batteries, commonly known as LFP batteries. These batteries made up more than 80 percent of the total market in 2025. LFP batteries are popular because they are cheaper to produce, last longer, and are safer than other battery types. In the past, they were mainly used in lower-priced vehicles, but improvements in performance have made them suitable even for premium electric cars.

At the same time, nickel-manganese-cobalt batteries, or NMC batteries, are losing ground in China. In 2025, they accounted for less than 20 percent of the market. Their growth was very slow compared to LFP batteries. This shows a clear shift in preference among carmakers, who now favor batteries that offer better cost control and stability.

Battery production remained strong throughout the year, even during periods that are usually slower. February is often the weakest month due to Chinese New Year celebrations, but production in February 2025 was still much higher than in previous years. By December, monthly battery production nearly reached 100 GWh, highlighting how large and efficient China’s battery industry has become.

Two companies continue to dominate the market: CATL and BYD. CATL remained the largest battery producer in China, holding over 40 percent of the total market. BYD followed as the second-largest player. While a few smaller manufacturers increased their market shares slightly, CATL and BYD still control most of the industry.

CATL is especially dominant in the NMC battery segment, producing the majority of these batteries in China. In the LFP segment, competition is slightly stronger, but CATL and BYD still lead by a wide margin compared to other manufacturers.

Overall, China’s 40 percent growth in its domestic EV battery market shows a clear direction. LFP batteries are now the standard, production capacity is expanding quickly, and a small number of powerful companies continue to shape the industry. This growth not only supports China’s EV market but also strengthens its influence in the global clean energy transition.

Battery makers like QuantumScape Corp. (NYSE: QS) based in North America and other regions of the world have their work cut out to ramp up their operations in order to effectively compete with their Chinese counterparts.

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