“Right now, we don’t know who to sell polysilicon to, and we don’t know who to sell lithium batteries to either—but the situations for the two are polar opposites,” Lan Tianshi, co-CEO of GCL Technology—an energy materials subsidiary of GCL Group—recently told The Paper during the SNEC Solar and Energy Storage Exhibition. This single statement captures the stark contrast between the sluggish solar market and the booming energy storage sector: while polysilicon is mired in a deep slump, lithium batteries are soaring to new heights. As one of the world’s largest polysilicon producers and a top-ten supplier of lithium iron phosphate (LFP) cathode materials, GCL is currently experiencing this extreme contrast between ice and fire. This week, domestic solar-grade polysilicon prices stood at approximately 34,000 yuan per metric ton—a drop of nearly 90 percent from the peak four years ago—as the wave of losses continues. The market landscape for lithium iron phosphate is even more polarized, with high-voltage, high-density products in short supply and low-end capacity mired in oversupply. GCL’s products are positioned in this scarce segment: one month ago, GCL Lithium Battery launched its fifth-generation mass-produced high-density LiFePO₄ C18 product. With the volume remaining constant, a higher compaction density of the cathode material means that the active material is packed more tightly per unit volume, resulting in higher energy density for the battery. Currently, products of the third-and-a-half generation and above command a significant premium.

GCL’s bet on lithium battery materials was not a spur-of-the-moment decision. In 2019, Zhu Gongshan, Chairman of GCL Group, gave the go-ahead to launch a plan to expand the lithium battery business. In August 2022, GCL Lithium Battery established operations in the Renshou Economic and Technological Development Zone in Sichuan, with plans for an annual production capacity of 360,000 metric tons of lithium iron phosphate and a total investment of 5 billion yuan. In July 2023, Phase I of the Renshou facility began production. However, the entire lithium iron phosphate industry faced pressure in 2023 and 2024. It wasn’t until 2025 that a recovery inflection point arrived, with demand for energy storage and power batteries continuing to surge. GCL Lithium Battery entered the supply chains of leading companies such as CATL and Haichen Energy Storage, securing multiple large-scale long-term contracts.

In terms of technology, GCL has opted for the physical iron oxide method, which differs from mainstream lithium iron phosphate processes. Its current total production capacity stands at 350,000 metric tons per year, with 90% consisting of fourth-generation materials. Future expansion plans call for increasing capacity to 1 million metric tons per year, with all new capacity focused on fifth-generation high-voltage, high-density products. After years of honing its “lithium” capabilities, GCL Technology—which has long specialized in upstream photovoltaic silicon materials—recently announced a strategic transformation to build a three-pillar material system encompassing “silicon, lithium, and carbon,” with lithium iron phosphate positioned as the core growth engine. While the outlook for the lithium battery sector is certainly promising, as the lithium battery business gains momentum, the company’s core photovoltaic business remains mired in a deep slump. How can it provide financial support for a new sector that requires continuous, substantial cash flow investment? In response to a query from The Paper, Lan Tianshi explained that, on the one hand, the company’s photovoltaic business generated over 2.8 billion yuan in EBITDA (earnings before interest, taxes, depreciation, and amortization) last year, so “cash flow remains quite healthy.” As for lithium batteries tying up cash flow, “that’s a thing of the past. Now, as long as the quality is good, it doesn’t tie up cash at all—I’ll produce for whoever supplies me with lithium. “In the past, three-month payment terms were common in the downstream sector, but now they’ve been reduced to one month. In terms of CAPEX (capital expenditures), the ferric oxide process also offers a competitive advantage.”

“The lithium iron phosphate business is already profitable,” Lan Tianshi explained. Through a “processing fee plus risk hedging” model, GCL does not directly hold lithium raw material inventory, thereby avoiding the risk of sharp fluctuations in raw material prices. Since the beginning of this year, announcements of lithium iron phosphate capacity expansions have been constant. However, growing signs indicate that the lithium-ion battery industry is also unable to escape the fate of market cycles. “There will definitely be an oversupply, but the logic behind it differs from that of the solar industry,” Lan Tianshi told The Paper. “Many people see the high demand for lithium iron phosphate and want to jump in—which is easy to understand, as there aren’t many industries left with annual growth rates exceeding 50%.” “But will those who jump in survive? There’s no guarantee. The barriers to entry in the lithium-ion battery industry are far higher than in photovoltaics; the sector is more closed-off, R&D iterations are slower, and there is a deeper reverence for absolute safety.” Due to the extremely limited margin for error, the upstream and downstream segments of the lithium-ion battery industry are deeply intertwined; if a cathode supplier halts shipments, it faces high-cost claims from downstream players. In contrast, substitutes for photovoltaic materials are easier to find. This determines the different trajectories of supply and demand for the two sectors: lithium iron phosphate (LFP) will not experience the kind of overall, widespread oversupply seen in photovoltaics, but rather a structural divergence.

According to a research report by CITIC Securities, demand for high-voltage high-density lithium iron phosphate is projected to reach 1.69 million metric tons in 2026, commanding a premium of 1,000–2,000 yuan per metric ton over standard products. Recent tenders indicate that processing fees for high-voltage high-density products have reached 18,000–21,000 yuan per metric ton, reflecting a significant premium. However, only a handful of companies are capable of mass production, resulting in a market characterized by “shortages at the high end and oversupply at the low end.” In addition to lithium iron phosphate, GCL—which holds the world’s largest silane gas production capacity—is also turning its attention to silicon-carbon anodes. Silane gas is a direct raw material for producing granular silicon and one of the key precursors for manufacturing silicon-carbon anode materials. With photovoltaic demand currently at a low point, GCL Technology is shifting more of its silane gas production capacity toward silane-based anodes. Lan Tianshi revealed that the company is moving forward with the construction of a pilot production line for silicon-carbon anodes, with a planned capacity of 500–1,000 metric tons. Over the next three years, the share of GCL Technology’s revenue derived from photovoltaic products is expected to drop to around 20%.

A plan for polysilicon capacity consolidation led by industry leaders such as GCL was at one point close to being finalized. However, in January of this year, the proposal was suddenly halted amid allegations of monopolistic practices. Lan Tianshi emphasized that GCL Technology will no longer participate in any photovoltaic mergers and acquisitions, stating, “The only choice is to pull ourselves out of the quagmire, not to stir up even more trouble.”