Two of China’s leading battery industry bodies on Monday called on power and energy storage battery makers to cap supplier payment terms at 60 calendar days for small and medium-sized enterprises.
The appeal extends to the battery supply chain a standardization drive that began in the automotive sector a year ago.
The China Automotive Battery Innovation Alliance (CABIA) and the Zhongguancun Energy Storage Industry and Technology Alliance (CNESA) jointly released the Initiative on Standardizing Accounts Payable Practices Between Power & Energy Storage Battery Enterprises and Their Suppliers.
Within hours of its release, battery giants CATL, CALB, Sunwoda and BYD‘s FinDreams Battery unit had endorsed the initiative.
Key Provisions
The initiative sets out five categories of requirements governing procurement relationships between battery makers and their upstream suppliers.
Under the payment and settlement section — the most closely watched portion of the document — battery enterprises must begin counting the payment clock from either the date of delivery or the date of acceptance for SME suppliers.
The total period must not exceed 60 calendar days.
“If the payment due date falls on a statutory holiday, payment may be deferred to the next business day,” the initiative states.
For non-SME suppliers, battery makers may agree to periodic consolidated reconciliations.
Battery makers must conduct centralized reconciliation at least once per month to confirm the quantity of goods accepted and the corresponding amount payable since the previous reconciliation.
Cash payments — defined to include bank transfers and wire transfers — are the preferred settlement method.
The initiative calls for the proportion of payments made through commercial acceptance bills, electronic payment vouchers and similar instruments to be “gradually reduced.”
For SME suppliers specifically, the document calls for full payment in cash.
On delivery and acceptance, suppliers must complete factory inspection before shipment.
Battery makers are required to complete acceptance of materials and components within seven working days of receiving goods.
For testing services, equipment and other goods or services, the acceptance period must be clearly specified in the contract. Once acceptance is complete, the buyer must immediately issue an acceptance certificate.
The document also requires standardized procurement contracts specifying product specifications, quantity, quality standards, delivery schedule, acceptance procedures, settlement method, payment term and liability for breach of contract.
Any amendment, suspension or cancellation of a contract requires mutual agreement.
“If one party unilaterally changes or terminates the cooperation and thereby causes losses to the other party, the responsible party shall provide compensation in accordance with applicable laws, regulations, and the contract,” the initiative states.
Industry Response
CATL, the world’s largest battery manufacturer, was among the first to endorse the initiative.
In a statement, the company said it views the effort as central to the industry’s long-term health.
“We deeply understand that the healthy and stable development of the industrial chain is the foundation for high-quality industry growth,” the battery giant said, adding that “safeguarding a fair and honest market environment and protecting suppliers’ legitimate rights and interests is an unshirkable responsibility of the company.”
CATL added that it would “resolutely implement the spirit of the initiative” and pledged to “work hand-in-hand with industrial chain partners to build an honest, compliant, symbiotic, and win-win industrial ecosystem.”
CALB, Sunwoda and FinDreams Battery — BYD‘s battery manufacturing subsidiary — issued similar commitments, pledging to refine payment mechanisms, protect suppliers’ legitimate rights and optimize order confirmation, delivery, acceptance and settlement processes.
Auto Sector’s Pledges
The battery industry initiative directly mirrors a standardization push that swept through China’s automotive sector starting in mid-2025, after Beijing tightened enforcement of the Regulation on Ensuring Payments to Small and Medium-sized Enterprises.
In June 2025, 17 major Chinese automakers publicly committed to capping supplier payment terms at no more than 60 days.
The pledges came amid an intense price war that had squeezed supplier margins and pushed payment cycles well beyond the regulatory limit.
The China Association of Automobile Manufacturers (CAAM) warned at the time that aggressive price-cutting was “disrupting operations and straining the supply chain, with suppliers reporting delayed payments well beyond the 60-day limit.”
Companies including BYD, Geely, Chery, Changan, GAC, FAW, Dongfeng, Seres Group, XPeng, Xiaomi, Great Wall Motor, Li Auto, Leapmotor, BAIC, Nio, JAC and SAIC all signed on.
The pledges marked a stark reversal for an industry where payment cycles had ballooned in preceding years.
Bloomberg data cited in a November 2024 report showed BYD‘s payment cycle had reached 280 days in 2023, up from 200 days in 2021. Nio reached 295 days, while XPeng‘s had risen to 221 days over the same period.
In September 2025, CAAM followed up with a formal Initiative on Standardizing Supplier Payment Practices for Vehicle Manufacturers, setting out detailed requirements for contract clauses, acceptance timelines and settlement processes.
Major automakers — including BYD, Xiaomi, Nio, Changan, Chery, Li Auto, among others — voiced support.
This February, a CAAM survey found that the 17 original automakers had reduced their average supplier payment cycle to approximately 54 days — roughly 10 days shorter year-on-year.
Four companies achieved averages below 50 days, and all 17 ensured SME payment terms remained within the 60-day limit.
Fifteen of the companies had shifted to relying exclusively on cash or bank acceptance bills, with only a small number still using commercial acceptance bills.
Why Batteries Are the Next Target
Power batteries represent 30% to 50% of new energy vehicle manufacturing costs, placing battery makers at a critical node in the supply chain.
They source upstream raw materials — lithium, nickel, cobalt and manganese compounds — while supplying finished cells and packs to automakers downstream.
Extended payment terms at this layer can cascade financial pressure in both directions.
The pressure on BYD‘s own supply chain practices has been particularly visible.
In the first quarter, BYD‘s bills payable more than doubled to 48.60 billion yuan ($6.7 billion), up 116.4% from three months earlier.
The surge came as Beijing pressured the company to pay suppliers faster, raising questions about a longstanding practice of using money owed to suppliers as a form of low-cost financing.
The battery-sector initiative now extends the same 60-day framework further upstream, aiming to prevent the financial strain that automakers had been passing down the chain from concentrating at the battery-material level.
CABIA and CNESA framed the effort as part of a broader push to “jointly build a collaborative and mutually beneficial industrial chain ecosystem” and support “the high-quality, sustainable, and healthy development of the power and energy storage battery industry.”
The initiative encourages battery makers and their suppliers to establish long-term framework agreements beyond individual procurement contracts.
“Party A [battery makers] and Party B [suppliers] are encouraged to establish long-term and stable cooperative relationships,” the document states, positioning supply chain stability as a shared objective rather than a concession.
The auto sector’s experience showed that public pledges paired with regulatory backing could produce measurable results — the average payment cycle fell by 10 days in under a year.
CAAM said in February that it would continue monitoring payment practices across the 17 automakers that signed on to the original initiative.
