This article was originally published by a financial news outlet and has been rewritten for clarity and accuracy.
On the evening of July 24, Sunwoda Electronic Co., Ltd. (300207.SZ) issued an announcement regarding a capital increase and share expansion for its subsidiary, Sunwoda Power Technology Co., Ltd. Sungrow Power Supply Co., Ltd. (300274.SZ) and Tianqi Lithium (Shehong) Co., Ltd. plan to jointly invest a total of 805 million yuan in Sunwoda Power, acquiring a combined 2.93% stake in the subsidiary.
The announcement stated that this capital increase and share expansion is an industrial synergy move, introducing downstream core customer Sungrow Power Supply and upstream lithium resource supplier Tianqi Lithium as strategic investors in Sunwoda Power. Following the completion of this equity financing, the cooperative relationship between the subsidiary and its partners will be upgraded to a strategic alliance, building a long-term, stable upstream and downstream industrial collaboration system. On one hand, leveraging the equity partnership with Sungrow Power Supply, the strength of its energy storage cell business segment will be significantly enhanced, deepening its understanding of energy storage application scenarios and solidifying its industry-leading position. On the other hand, the strategic equity cooperation with the upstream lithium resource leader Tianqi Lithium will help ensure the stable, long-term supply of core lithium raw materials, thereby mitigating the negative impact of supply fluctuations on Sunwoda Power's operations.
In April of this year, Sungrow Power Supply (300274.SZ) disclosed that it might consider taking a stake in a cell manufacturer. According to an investor relations record released by Sungrow Power Supply on April 27, the company stated that its principle of being cell-neutral remains unchanged. It noted that heavy asset operations carry significant risk, and the company has not built its own cell production lines, adhering to a light-asset strategy. It is exploring more extensive and closer cooperation with cell manufacturers, particularly in strategic partnerships, supply chain collaboration, technology R&D, and market coordination, even considering mutual equity investments.
In 2025, Sungrow Power Supply achieved energy storage shipments of 43 GWh, but it has no proprietary cell capacity, primarily sourcing cells externally and then integrating them into storage systems for delivery. Industry sources indicate that since the beginning of the year, Sungrow Power Supply's energy storage business has been actively seeking cell capacity in the market to fulfill its integrated storage orders. When asked about the possibility of building its own cell factory, a Sungrow Power Supply representative stated that the company currently has no cell production lines and is uncertain about future plans in that area.
The energy storage cell market has experienced a "chip scarcity" and a price surge since the second half of last year. From October to November 2025, the average prices for 280Ah and 314Ah cell specifications rose from 0.303 yuan/Wh and 0.308 yuan/Wh to 0.305 yuan/Wh and 0.312 yuan/Wh, respectively. As of July 2026, the price for 314Ah cells is above approximately 0.365 yuan/Wh.
According to data from the Shanghai Metals Market (SMM), the global energy storage cell market in the first half of 2026 maintained a high growth rate and a state of tight balance. Driven by the spillover effect of a surge in large-scale storage orders from both domestic and international markets since the second half of last year, existing production capacity is facing immense delivery pressure. From January to June, cell manufacturers accelerated production, resulting in a cumulative industry-wide output of 437.8 GWh for energy storage cells, with a monthly compound average growth rate of 6%. Despite the significantly accelerated production pace, industry-wide cell inventories remain at extremely low levels and are continuously being depleted. Current industry-wide inventory is only around 28 GWh, and the inventory turnover cycle has been compressed to just 0.36 months. Energy storage integrators generally have to sacrifice margin premiums to secure supply.
An executive from a leading energy storage cell manufacturer pointed out that the long delivery cycle for storage orders exposes them to potential price fluctuations between contract signing and actual delivery. For example, orders placed in 2025 may require price renegotiation under the 2026 market conditions. In an investor relations record released on March 31, Sungrow Power Supply stated that on the supply side, it signs long-term agreements with core cell suppliers, leveraging its scale procurement advantages to lock in cell prices for a certain period, achieving significant competitiveness compared to market prices. On the technology front, the company continuously reduces costs through technological innovation and supply chain coordination. On the customer side, although price negotiations can be challenging, it consistently strives to effectively pass through costs, and customers generally recognize the company's value and past service capabilities.
Due to the rise in energy storage cell prices, the gross margin of Sungrow Power Supply's energy storage business declined in the second half of last year. According to its financial reports, the energy storage business achieved annual revenue of approximately 37.3 billion yuan in 2025, with a gross margin of about 36.49%, a 0.2% year-on-year decrease. Revenue in the first half of 2025 was about 17.8 billion yuan, with a gross margin of about 39.92%. The gross margin for the energy storage business in the second half of 2025 was approximately 33%, compared to about 35% in the second half of 2024. In the first quarter of this year, Sungrow Power Supply reported energy storage revenue of approximately 8.7 billion yuan. In an investor relations record released on April 27, the company noted that the year-on-year decline in first-quarter gross margin was mainly due to structural factors, such as lower prices in some regions compared to the same period last year and a decrease in the proportion of overseas revenue, though the margin showed a sequential increase.
Sungrow Power Supply's energy storage products are currently in a product iteration cycle, with limited suitable cell capacity available on the market. The company is primarily selecting the 684Ah cell as its next-generation large energy storage cell, adopting a lamination process instead of the traditional winding process. Cell manufacturers are currently offering a wide variety of large cell specifications. In September 2025, Sunwoda Electronic began mass production of its 684Ah laminated energy storage cell, whose specifications align with Sungrow Power Supply's product requirements. In comparison, Contemporary Amperex Technology Co., Ltd. (CATL) has opted for a 587Ah winding process large cell, while Hithium offers 1175Ah and 587Ah cells, CALB produces 392Ah, 588Ah, and 661Ah large cells, and EVE Energy offers 587Ah and 628Ah large cells. The SMM reported that early this year, the industry widely expected a rapid shift in new capacity for the large-scale storage sector towards the 500Ah and above specifications, but the progress has been slower than anticipated.