The peach and the plum trees say nothing, yet paths form beneath them.

Today, if we substitute “Li” for “plum,” wherever there is “substance,” there will naturally be buzz. This is the perfect way to describe the trend of “going global with lithium.”

The new energy race is in full swing, and lithium-ion batteries are racing ahead. BYD has launched the “Blade,” and GAC Aion has unveiled the “Magazine”—could these battery manufacturers have taken their names from the TV series *Bright Sword*?

Nowadays, who still focuses on the romance between NIO and Hefei?

While the competition among regions for the title of “Capital of New Energy Vehicles” has become a thing of the past, new titles have emerged: “World Lithium Capital,” “Asia Lithium Capital,” “Northern Lithium Capital,” and “Central Lithium Capital”…

As participants in the “Lithium Capital Competition” now include Ningde in Fujian, Yichun and Xinyu in Jiangxi, and Jingmen in Hubei, this indicates that regional clustering is a defining feature of the lithium battery industry—and has become a sound strategy for industrial transformation in some resource-based cities.

But what specific conditions are required to support each of these “Lithium Capitals”? What kind of city is best suited for developing the lithium battery industry?

For local investment promotion efforts, a single project represents a growth point, and a cluster of projects forms a growth hub. This is by no means just a catchy label, but rather a lithium battery industrial chain capable of generating economic benefits.

Strength Demands Recognition

If power batteries are the heart of new energy vehicles, then “lithium” is the blood vessels of that heart. The saying “He who controls lithium controls the world” is far from mere rhetoric.

Among the wealthiest individuals in China’s provinces, Fujian’s Zeng Yuqun, Anhui’s Wang Chuanfu, Yunnan’s Li Xiaoming, Jiangxi’s Li Liangbin, Guizhou’s Deng Weiming, and Qinghai’s Xiao Yongming all operate in lithium battery-related industries.

The wealth-creation legend of the lithium battery industry has also drawn local governments into the fray.

According to incomplete statistics, seven cities—Ningde, Changzhou, Yichun, Suining, Yibin, Xinyu, and Zaozhuang—spanning five provinces (Fujian, Jiangxi, Sichuan, Shandong, and Jiangsu) have proposed plans to build “Lithium Capitals.”

Among these regions, which ones are “sitting on a goldmine”—rich in mineral resources—and which ones are “backed by industry giants”—supported by leading enterprises in the industrial chain?

The original “Lithium Capital” was Ningde. As the saying goes, “One enterprise drives an industry; one industry revitalizes a city.” The first to enter this arena was CATL, the “top dog” of the power battery sector.

Of course, CATL—this “prized catch”—did not simply fall from the sky. Local officials in Ningde engaged in a three-year campaign of invitations and visits, ultimately winning over Zeng Yuqun, who harbors a deep attachment to his hometown.

With such a shining example to follow, naturally no one wanted to be left behind. Competition in the lithium battery sector has intensified, and local governments across the country are rushing to join the fray.

Sichuan boasts 80% of China’s hard-rock lithium reserves, with deposits concentrated in western Sichuan. Consequently, Suining stepped up to lead the development of the lithium battery industry.

In addition to Sichuan, Jiangxi is also a major lithium-mining province, with hard-rock lithium reserves second only to Sichuan. Among these, the Tonggu-Yifeng-Fengxin-Gao’an mineral belt in Yichun holds the world’s largest polymetallic lithium-bearing mica deposit.

These abundant lithium resources have inspired Yichun to envision itself as the “Lithium Capital of Asia,” with the goal of achieving over 150 billion yuan in revenue from the new energy (lithium battery) industry by 2025.

Thus, the two major provinces of Sichuan and Jiangxi possess the resource advantage of having “mines at home.” Meanwhile, the ability of Ningde, Zaozhuang, and Jingmen to compete for the title of “Lithium Capital” relies largely on the support of leading enterprises in the industrial chain.

It is worth noting that Changzhou, which has been quietly building its capabilities, has already emerged as the “hidden city champion” in the national power battery sector, effectively becoming the de facto “Lithium Battery Capital.”

In the power battery sector, nearly 50 large-scale enterprises have gathered there, with installed production capacity reaching 85.5 GWh—ranking first nationwide. Changzhou’s advantage lies in its strong foundation in industrial equipment and automotive components, which provides favorable conditions for power battery production.

Having said all this, a question arises: Who is truly suited to develop the lithium battery industry?

Quantitative Changes Do Not Necessarily Lead to Qualitative Changes

Undoubtedly, when local regions develop the lithium battery industry, basic resource factors are the primary consideration.

The lithium battery industry is highly energy-intensive, requiring abundant and affordable mineral resources, land, and green electricity. Currently, the region that best meets these criteria is likely western China.

Yichun is rich in lithium resources, boasting the world’s largest polymetallic lithium-bearing mica deposits and lithium-mica mines; Xinyu is hailed as the “Solar Capital of the World,” with its new energy vehicle sector experiencing rapid growth in recent years; Ningde, Jingmen, Suining, and Zaozhuang have leveraged local policies and the “siphon effect” of leading enterprises to attract a large number of lithium battery supply chain companies to establish operations there.

As the economic center of gravity shifts southward, the trend of the lithium battery industry “moving south” is becoming increasingly evident.

Judging by the current distribution of China’s lithium battery industry, southern cities such as Shenzhen, Huizhou, and Dongguan are also major hubs for the sector. Looking solely at listed companies, Guangdong Province boasts more than 20 lithium battery-listed firms, accounting for the highest proportion. Close behind is Zhejiang Province, where the private sector is particularly active, with nine relevant enterprises.

This indicates that southern cities hold a first-mover advantage in technology. Additionally, they benefit from a favorable business environment and well-developed supporting infrastructure.

Furthermore, as the primary hubs of the Shenzhen metropolitan area, Shenzhen, Dongguan, and Huizhou allow for the optimal allocation of production factors across these cities, and the market has long spontaneously formed a relatively mature lithium battery industry chain.

Each electric vehicle requires approximately 9 kg of lithium. In a new world where electric vehicles replace gasoline-powered cars, whoever controls the lithium resource supply chain will control the future of power batteries.

Therefore, when local governments attract investment to develop the lithium battery industry, two principles are essential: prioritize resources and prioritize technology.

Under the dual carbon goals, driven by the rapid development of the new energy vehicle and energy storage sectors, China’s lithium battery market is experiencing explosive growth.

However, a major challenge facing the development of local lithium battery industries at this stage is that the industrial chain is dominated by high-energy-consuming, primary processing activities—such as the mining and smelting of low-value-added mineral resources—and lacks leadership from core enterprises.

In particular, during the development of lithium battery industrial clusters, leading power battery companies have become the focal point of investment promotion efforts across regions. Yet, with overall overcapacity in the power battery sector and a persistent shortage of high-quality production capacity, quantitative expansion alone cannot drive qualitative improvement.

It is evident that the market continues to consolidate around first- and second-tier players, who already account for approximately 95% of the market share. Meanwhile, nearly half of battery manufacturers are being phased out of the market, accelerating industry consolidation.

Downstream and Midstream Sectors Integrating with Upstream

The development of the lithium battery industry is driven by demand for new energy vehicles (NEVs). A key industry metric is "penetration rate," which refers to the proportion of NEVs in total new vehicle sales.

This year, that figure stands at roughly 30%, meaning that approximately 30% of new car sales are new energy vehicles. This is an ongoing process of market penetration. It is therefore not difficult to understand why so many cities are eager to jump on the lithium battery “bandwagon.”

Behind this new round of the “lithium scramble” lie the cries of distress from companies in the mid- and downstream segments of the new energy vehicle supply chain.

Data shows that since last year, prices for battery raw materials such as lithium, cobalt, and nickel have skyrocketed—particularly lithium carbonate, which has surged from over 50,000 yuan per ton to more than 460,000 yuan per ton today.

Previously, one automaker complained, “I’m basically working for the battery companies right now.” Battery manufacturers, however, defended themselves with an air of innocence, saying, “The raw material suppliers are raking in all the profits.”

Consequently, as sales of new energy vehicles surge and power battery production capacity expands, both vehicle manufacturers and power battery companies are bound to intensify their investments in upstream battery materials.

In short, “the mid- and downstream sectors are integrating the upstream.”

The fundamental reason for this “mid- and downstream integration of the upstream” lies in the massive rise in power battery costs, which has severely impacted the profitability of mid- and downstream enterprises.

The advantages of this strategy boil down to two points:

First, it makes their products more price-competitive. Second, it allows them to develop new products using higher-quality raw materials.

Overall, adopting a strategy that spans the entire industrial chain is the most rational approach for both local governments seeking investment and automakers. Upstream companies control the availability of battery resources, while mid- and downstream companies determine how those resources are utilized.

Consequently, local investment promotion efforts must not focus solely on competing for “lithium resources”; instead, they should prioritize power battery recycling and promote the circular utilization of battery materials.

It is important to recognize that the more recycling there is, the cheaper it becomes; the more competition there is, the more expensive it gets.

For regions aspiring to develop a lithium-ion new energy industry chain, now appears to be an opportune moment for investment promotion.

However, just as in the era of traditional energy, where some domestic and international resource-based cities and old industrial zones experienced decline one after another, while making good use of lithium mines, the “resource curse” of the new energy era must not be overlooked.

Conclusion

From the grand sweep of history to the development of individual industries, nothing is ever achieved overnight. On the winding path of industrial development, the current stage is merely the midpoint of the battle.

In the course of industrial development and technological innovation, certain events are bound to occur—this is the natural law of progress. The process may be faltering, fraught with hardship, and intricately complex...

But adhering to the principle of first principles and looking back from the finish line, the upgrading of the lithium battery industry requires completing the journey from R&D to commercialization, and the process of transitioning related technologies from promotion to widespread adoption. All of this requires time...