Promoting　the　growth　of　the　lithium　battery　sector　has　been　a　critical　aspect　of　China’s　energy　policy　in　terms　of　achieving　carbon　neutrality.　However,　despite　significant　support　on　research　and　development　(R&D)　investments　that　have　resulted　in　increasing　size,　the　sector　seems　to　be　falling　behind　in　technological　areas.　To　guide　future　policies　and　understand　proper　ways　of　promoting　R&D　efficiency,　we　looked　into　the　lithium　battery　industry　of　China.　Specifically,　data　envelopment　analysis　(DEA)　was　used　as　the　primary　approach　based　on　evidence　from　22　listed　lithium　battery　enterprises.　The　performance　of　the　five　leading　players　was　compared　with　that　of　the　industry　as　a　whole.　Results　revealed　little　indication　of　a　meaningful　improvement　in　R&D　efficiency　throughout　our　sample　from　2010　to　2019.　However,　during　this　period,　a　significant　increase　in　R&D　expenditure　was　witnessed.　This　finding　was　supported,　as　the　results　showed　that　the　average　technical　efficiency　of　the　22　enterprises　was　0.442,　whereas　the　average　pure　technical　efficiency　was　at　0.503,　thus　suggesting　that　they　were　suffering　from　decreasing　returns　to　scale　(DRS).　In　contrast,　the　performance　of　the　five　leading　players　seemed　superior　because　their　average　efficiency　scores　were　higher　than　the　industry’s　average.　Moreover,　they　were　experiencing　increasing　scale　efficiency　(IRS).　We　draw　on　these　findings　to　suggest　to　policymakers　that　supporting　technologically　intensive　sectors　should　be　more　than　simply　increasing　investment　scale;　rather,　it　should　also　encompass　assisting　businesses　in　developing　efficient　managerial　processes　for　R&D.　©　2022,　The　Author(s).