An industry-wide price adjustment notice issued by leading companies signals the end of the era of competing for market share through “bleeding price cuts.” This is not an isolated price increase but a collective effort by the entire industry to pull itself out of a prolonged 36-month slump of continuous losses.

January 1, 2026, will mark a significant date for China’s and even the global lithium battery industry.

On that day, the processing fee for all lithium iron phosphate (LFP) products will be uniformly raised by 3,000 RMB/ton, a price defense line jointly established by multiple leading companies. As early as November 2025, some companies had already taken the lead, implementing a price increase of the same magnitude.

This move is seen as the translation of the industry’s “anti-involution” initiative from rhetoric to action. Behind it lies the industry’s search for a way out after material prices plummeted from a peak of 170,000 RMB/ton to a trough of 30,000 RMB/ton.

01 Behind the Price Increase

The immediate drivers of the price increase are dual pressures from rising costs and industry consensus.

Since the second half of 2025, the price of core raw material lithium carbonate has rebounded sharply from a low of 60,000 RMB/ton in June to nearly 100,000 RMB/ton in November — an increase of over 60%.

This has directly impacted LFP production. According to industry calculations, for every 10,000 RMB increase in lithium carbonate prices, the production cost of LFP rises by approximately 2,500 RMB.

Simultaneously, a more critical signal emerged in November 2025: The China Industrial Association of Power Sources, after precise calculations, publicly disclosed the industry average cost range for LFP for the first time — 15,714.8 to 16,439.3 RMB per ton.

This established a clear red line for defining “predatory low pricing.” The association subsequently explicitly demanded companies cease dumping practices that fall below this cost line.

02 Collective Losses

The deeper driver behind the price increase is the industry’s unbearable sustained financial bleeding.

Statistics show that from the end of 2022 to the third quarter of 2025, the entire LFP industry has suffered losses for over 36 consecutive months. Public financial reports reflect this harsh reality: Among leading companies, Dynanonic reported a loss of 527 million RMB in the first three quarters, Ronbay Technology a loss of 352 million RMB, and ADA a loss of 243 million RMB.

The average asset-liability ratio of these companies has climbed to a high of 67.81%. The prolonged “price war” has trapped the industry in a vicious cycle where increased production fails to generate revenue gains, and market share fails to translate into profitability.

An industry executive stated bluntly, “Apart from a very few companies, everyone is operating at a loss. A price increase is a common demand for survival.”

03 Reshaping the Landscape

This collective price hike is not merely a simple rebound but the beginning of a shift in the industry’s competitive logic — from a battle of “volume” to a contest of “quality.”

A significant divergence is emerging: While the industry’s nominal capacity is vast, the supply of high-end, high-density products that meet the performance requirements of next-generation batteries is actually in short supply.

For instance, production lines for products that enhance battery volumetric energy density are essentially running at full capacity with sold-out inventory. Yunnan Energy New Material revealed that its high-density series products are seeing a rapid increase in shipment share due to their alignment with the trend toward larger energy storage cells.

Meanwhile, low-end, generic capacity is being phased out amid fierce competition, with industry operating rates concentrating toward high-quality capacity from leading players, now exceeding 95%.

04 Demand Foundation

The confidence to raise prices ultimately stems from the sustained and robust real demand from downstream markets.

In the power battery sector, LFP has secured an 81.5% share of installed capacity in the first three quarters, thanks to its cost-effectiveness and safety advantages. In the even broader energy storage sector, its share reaches an astonishing 99.9%, nearly achieving a monopoly.

The global energy transition wave provides long-term certainty for the industry. The rising penetration of new energy vehicles and the explosive growth of the global energy storage market form the fundamental demand base.

Market analysts note that downstream battery manufacturers currently maintain relatively healthy inventory levels, providing some tolerance and room for cost pass-through of material price increases.

05 Future Dynamics

Will the 3,000 RMB/ton increase truly reverse the industry’s fortunes? This depends on subsequent industry chain negotiations and collective discipline.

If the price adjustment is successfully implemented, the industry’s average gross profit margin could recover from near zero to around 7.5%, offering a breathing space for companies to restore their capabilities in R&D and reinvestment.

Challenges remain: The stability of any price consensus needs continuous maintenance; acceptance of cost pass-through by downstream customers is uncertain; and the independence of the processing fee will be tested if lithium carbonate prices retreat.

The industry’s healthy development ultimately relies on building barriers through technological iteration. Only when companies are no longer forced to compete on price for survival can they allocate resources to R&D for next-generation technologies like lithium manganese iron phosphate and fast-charging LFP.

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Behind the price adjustment notices lies a quiet industry revolution. As LFP produced by Chinese companies now accounts for approximately 95% of the global market share, any fluctuation in its pricing power will reverberate throughout the global new energy industry.

The success or failure of this self-rescue operation is not only about the profitability of a single industry but also a crucial test of whether China’s lithium battery supply chain can break free from low-level competition and achieve high-quality development.

“Only when the industry is healthy can every company within it have a future.” This has become an increasingly clear consensus across the industry chain. The wheels of the price war have been halted, and new rules for competition are being written.