ESS helps, but we are not yet calling a cyclical bottom in batteries

Our battery supply-demand model (on an EV+ESS basis) points to a 2027E trough in ex-China demand-to-supply ratio. We now include energy storage system (ESS) in our global battery supply-demand model, after previously using an EV-only framework. On a combined EV+ESS basis, the ex-China battery demand-to-supply ratio bottoms at 104%/32% in 2027E (before/after adjusting for potential Chinese exports), down from 110%/33% in 2026E, before recovering to 131%/40% in 2030E. Given the projected deterioration in the demand-to-supply ratio towards 2027E, we remain selective and focused on relative value in the battery space, and would need confirmation from capacity closures and stronger EV penetration before turning more constructive. This caution holds even as our base-case battery demand trajectory already runs above forecasts from third-party consultancies such as Wood Mackenzie. On a global basis, we estimate the battery demand-to-supply ratio could bottom in 2029E - two years later than the