We prefer second-tier battery companies on market share gain and recovering margins. We initiate coverage on the following battery value chain names: (1) EVE (Outperform); (2) Farasis (Neutral); (3) Dynanonic (Outperform); (4) Ronbay (Neutral); (5) CNGR (Neutral); and (6) Putailai (Outperform). We prefer the battery sector the most, given its over-40% growth outlook, especially tier 2 battery companies that should enjoy margin recovery (by 2-5pp through 2022E) and market share gain (by ~5-10%, not pp), as our sector analyst turns negative on electrolyte and expects lithium prices to peak soon. We are also cautious on cathode in China, South Korea and Europe, given cathode makers’ weak pricing power against customers and rising raw material costs.