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China’s battery makers stand to gain as Iran war reshapes energy storage demand: Fitch

Chinese battery cell manufacturers are poised to benefit from the US-Israeli war in Iran, according to Fitch Ratings, even as fierce competition, overcapacity and thin…

By Samantha Johnson / April 22, 2026
Chinese battery cell manufacturers are poised to benefit from the US-Israeli war in Iran, according to Fitch Ratings, even as fierce competition, overcapacity and thin margins weigh on some downstream firms.

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“We believe that China’s leading energy storage cell manufacturers will be the bigger winners because they hold an overwhelming advantage globally,” Wang added.

As an example, she noted that Chinese producers of lithium iron phosphate (LFP) batteries – commonly used in electric vehicles and energy storage systems – possessed “absolute” advantages in technology, cost-efficiency and industrial scale.

“Consequently, it will be difficult for competitors from other countries to replace them in the short term,” Wang said at a media briefing in Beijing on Tuesday, noting that leading Chinese manufacturers should expect a rise in overseas orders.

The global lithium-ion battery market expanded by more than 20 per cent to exceed US$150 billion last year, according to a February report by the International Energy Agency, reflecting the sector’s growing importance in automotive, AI and other strategic sectors.

The report, which warned of concentration risks in the global supply chain, said China produced more than 80 per cent of all batteries and accounted for “almost all global manufacturing capacity and the associated technical expertise” for LFP batteries.

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Chinese manufacturers are also much more cost-competitive than Western competitors, with production expenses in the United States and Europe up to 50 per cent higher, even when government support is excluded, according to the report.

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