China Industrial - Solid-State Battery Brings New Investment Cycle

On September 28, China’s Ministry of Industry and Information Technology (MIIT) and six other agencies released the 15th Five-Year Plan for the New Battery Industry, targeting initial large-scale commercialization of all-solid-state batteries by 2030.  The plan prioritizes solvent-free coating, high-precision stacking and isostatic pressing equipment. While semi-solid-state batteries have begun commercialization, all-solid-state batteries are advancing from research to pilot production and mass-production validation. It is expected that such policy support will speed up industrialization and pilot-line investment. Hence, equipment suppliers will likely be the first batch of companies to benefit.

Solid-State Batteries – The Next Generation of Battery Technology: Solid-state technology could deliver higher energy density using high-capacity anodes such as lithium metal, alongside faster charging, longer cycle life, a wider operating temperature range and lower safety risks from flammable electrolytes. These advantages are ideal for premium electric vehicles, low-altitude aircraft and humanoid robots.

In terms of materials, all-solid-state batteries consist mainly of cathodes, solid electrolytes and anodes, replacing conventional liquid electrolytes and separators while retaining similar lithium-ion operating principles.

Higher-Precision Equipment Required: Given the technology gap between liquid batteries and all-solid-state batteries, it is estimated that only 20% in value of the existing production lines for liquid-batteries can be retained for producing all-solid-state batteries.  Of the 80% of value that requires new investment, about 30% can be upgraded from existing lines and 50% would require installation of new machinery.  Industry estimates the investment for an all-solid-state production-line at RMB400–500mn per GWh, or 2.7–4.2x the RMB120–150mn for conventional batteries.

Currently, liquid batteries rely on flowing electrolytes to penetrate electrodes and fill microscopic gaps, much like water soaking into a sponge. Solid-state batteries, however, resemble two uneven ceramic tiles pressed together.   As such, even under close contact, tiny gaps remain, restricting lithium-ion transport. They therefore require precise film formation, stacking and pressing to improve electrode-electrolyte contact, driving demand for dry-film equipment, precision stackers, isostatic presses and high-pressure formation systems.

Our View: We favor equipment suppliers benefiting from solid-state battery industrialization. EVTank forecasts global equipment market will grow from RMB4bn in 2024 to RMB108bn by 2030, including RMB62bn from semi-solid-state and RMB46bn from all-solid-state batteries.  While material suppliers may be exposed to technology-selection risks, equipment makers can benefit regardless of material chosen for. 

At the moment, semi-solid-state batteries have entered small-scale vehicle deployment, while all-solid-state batteries remain in pilot production, sample testing and automotive qualification. With materials yet to scale, equipment demand offers greater near-term visibility. CATL, BYD and Gotion High-Tech are accelerating pilot-line development, supporting industrialization.

The Chinese Government is also stepping up its policy support.  MIIT has established a RMB6bn national funding program, while the NDRC offers subsidies covering 15% of eligible solid-state battery project investment through ultra-long-term special government bonds. The Ministry of Finance has exempted solid-state batteries from consumption tax from September 2026 through end-2028, while conventional liquid lithium battery tax rates will gradually rise from 2% to 4%. Vehicle subsidies of RMB15k for semi-solid-state and RMB30k for all-solid-state electric vehicles will continue through 2027.

We favor Lead Intelligent Equipment (0470 HK, HK$23.86, HK$2.6bn), as its integrated solutions position it to benefit from long-term growth in this sector: Lead Intelligent has integrated production-line and flexibility across solid-state technologies. The company has a global and Chinese lithium battery equipment market shares of 15.5% and 19% in 2024, serving leading customers including CATL, Tesla, EVE Energy, Gotion High-Tech and BYD. Unlike single-process suppliers, Lead provides integrated all-solid-state production solutions across multiple technology routes.

New orders increased over 50% YoY to RMB18bn in 1H26, split equally between energy storage and power batteries. Solid-state equipment orders are expected to double from RMB1bn in 2025 to RMB2bn in 2026. In 3Q26, Lead continued securing orders from major solid-state battery customers, with equipment deliveries underway across several production lines. We expect conventional lithium battery and energy storage equipment to support near-term revenue and earnings, while solid-state industrialization creates medium-to-long-term growth opportunities. The counter is trading at 14x FY26E and 10x FY27E P/E. (Research Department)