The Chinese industry ministry has sounded the overcapacity alarm for yet another industry: batteries. Battery makers have grown unrestrained, and this has resulted in too much capacity, which is a threat to the industry, Reuters reported, citing a meeting at the industry ministry.
China is the world’s biggest market for electric vehicles and a top player in battery storage as well. But just like EVs and solar panels, these transition-linked industries have enjoyed years of generous subsidies that have allowed them to grow without any consideration of overcapacity and its consequences. 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 even though demand for battery storage is surging, thanks to the meteoric rise of the data center sector. An earlier Reuters report this week noted that battery storage is one of China’s most profitable exports. 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 brought in some $54 billion in sales.
Data centers 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.—are trying to find ways to reduce that drain, including by making data center operators secure their own backup supply so the data centers can be disconnected from the grid in case od demand spikes from the general population.
Meanwhile, Germany boasted record-high new energy storage additions last year, for a total of 7.3 GW, in further evidence that the battery storage market is quite hot, not least because battery storage is perhaps the only way to reduce the waste of wind and solar energy during times of low demand.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com