Central China Securities has released a research report indicating that the lithium battery sector is worth watching. In August 2026, the lithium battery index climbed 6.51%, outperforming the CSI 300 Index. New energy vehicle sales in China reached 1.643 million units for the month, with monthly sales accounting for 60.58% of total vehicle sales, a record high. Power battery installations totaled 79.0 GWh during the same period.

Upstream raw material prices are under short-term pressure overall. As of September 15, 2026, the price of battery-grade lithium carbonate had fallen 7.69% from early August levels. Given the industry's growth prospects, the firm maintains an "outperform" rating on the sector and recommends paying attention to investment opportunities in the near term, while focusing on leaders in specific sub-sectors over the medium to long term.

Where the market stands now

In August 2026, the lithium battery index rose 6.51%, while the new energy vehicle index gained 1.06%. The CSI 300 Index rose 0.80% over the same period, meaning the lithium battery index outpaced the broader market benchmark for the month.

New energy vehicles maintain over 60% monthly share

China sold 1.643 million new energy vehicles in August 2026, up 17.78% year-over-year and 5.25% month-over-month. The monthly sales share of 60.58% set another record high, supported largely by sustained strong growth in exports of new energy vehicles. In August 2026, domestic power battery installations reached 79.0 GWh, a 26.40% increase year-over-year. Ternary material accounted for 13.92% of installations, with CATL, BYD, and CALB ranking as the top three installers.

Raw material prices face short-term headwinds

As of September 15, 2026, battery-grade lithium carbonate was priced at RMB 132,000 per ton, down 7.69% from the beginning of August. Lithium hydroxide stood at RMB 126,500 per ton, a decline of 5.60% from early August. Both are expected to fluctuate within a range in the near term. Electrolytic cobalt was priced at RMB 287,000 per ton, down 17.29% from early August and expected to consolidate. Lithium cobalt oxide dropped 16.57% to RMB 287,000 per ton. Ternary 523 cathode material fell 11.62% to RMB 155,200 per ton. Lithium iron phosphate slipped 4.08% to RMB 52,900 per ton, with short-term consolidation likely. Lithium hexafluorophosphate, however, rose 8.49% from early August to RMB 115,000 per ton, warranting continued attention to lithium carbonate price trends. Electrolyte increased 1.52% to RMB 33,500 per ton, with overall sideways movement anticipated in the short term.

Maintaining an 'outperform' rating

As of September 15, 2026, the price-to-earnings ratios for the lithium battery sector and the ChiNext Board stood at 20.01 times and 37.76 times, respectively. Based on industry prospects, the firm keeps its "outperform" rating. The lithium battery sector's stronger performance in August compared with the CSI 300 Index can be attributed to a rebound following oversold conditions in July, along with sustained high growth in the sector's first-half earnings.

Considering domestic and international industry dynamics, price movements in sub-sectors, monthly sales figures, and broader development trends, the industry's momentum continues to improve. In the near term, attention should be focused on upstream raw material prices, monthly sales data, relevant policies at home and abroad, and progress in solid-state battery technology. Taking into account policy statements, raw material price trends, sector earnings, current valuation levels, and future growth expectations, short-term investment opportunities in the sector are worth noting, with close monitoring of index movements and market style shifts.

Over the medium to long term, growth prospects for the new energy vehicle industry are well-defined both domestically and internationally, making the sector worthy of close attention. However, individual stock performance and earnings are expected to diverge, so investors should continue to build positions around leaders in specific sub-sectors.

Risks to consider include weaker-than-expected policy implementation, significant price volatility in sub-sectors, lower-than-expected new energy vehicle sales, intensifying industry competition, and systemic risks.