- The Chinese industry ministry has sounded the overcapacity alarm for yet another industry: batteries.
- The Chinese government has already had to clamp down on EVs and solar panels, and now, it seems, it’s the turn of batteries.
The Chinese industry ministry has sounded the overcapacity alarm for yet another industry: batteries. Battery makers have grown unrestrained, resulting in excessive capacity, which poses a threat to the industry.
China is the world’s biggest market for electric vehicles and a top player in battery storage as well. However, just like EVs and solar panels, these transition-linked industries have enjoyed years of generous subsidies that have allowed them to grow without considering the consequences of overcapacity.
The Chinese government has already had to clamp down on EVs and solar panels, and now, it seems, it’s the turn of batteries.
It is worth noting that the Chinese battery storage industry is facing overcapacity, despite surging demand for battery storage, largely due to the meteoric rise of the data centre sector.
Over the first ten months of 2025, these exports brought in $66 billion in sales. That made it the top transition export from China, followed by electric vehicles, which generated approximately $54 billion in sales.
Data centres are driving higher battery storage demand because they are proving to be a major drain on grids and grid operators—for now in the U.S.—they are trying to find ways to reduce that drain, including by making data centre operators secure their own backup supply so the data centres can be disconnected from the grid in case of demand spikes from the general population.
Meanwhile, Germany boasted record-high new energy storage additions last year, totalling 7.3 GW, further evidence that the battery storage market is quite hot. Notably, battery storage is perhaps the only way to reduce the waste of wind and solar energy during periods of low demand.