Depends on the timing with respect to market demand / production volume of EVs. As battery prices come down due to increased production / economies of scale, EV demand will go up so it could be a smooth transition. It could also turn into a glut/bust scenario like you say, but I think we'll see the factories scale up production to meet demand rather than running at 100% from day 1.

The blow could be cushioned if they drop the prices enough that grid tie battery systems become economical and generate enormous orders to soak up the excess capacity.

Crazy idea time, but I wonder if the scale of battery packs being increased significantly couldn’t help market penetration. It’d obviously require much cheaper and better/lighter tech, but imagine if a battery pack was more close to 1MWh than dozens of KWh and could still charge in hours. It’d make sense to walk a mall for hours once a week for apartment dwellers. I know I’d at least flesh out the purchase idea if I won the lotto.

Batteries have uses other than EVs, with a big one being power storage. There's a big push to reduce fossil fuel usage and get more power from renewables (solar/wind), but these aren't constant sources of power, so massive banks of batteries would be very useful here for utility-scale use of renewables without needing nuclear or fossil fuel plants for a baseline.

With V2G, EVs and power storage are one and the same.

the last time I checked the CTO of Tesla said that vehicle2grid had negative return on investment but that might have been politically motivated.

Demand for batteries far outstrips demand for DRAM.

PC & Server markets have been flat or declining for the last 5 years, so the DRAM demand is more or less constant (probably propped up by laptop sales).

Maybe they'll start following a boom/bust cycle once the market becomes mature, but considering how much we need to invest in renewables paired with energy storage, thats not going to be for at least a few decades.

Demand alone has not made many of these industries happen in China, DRAM being a great example of that at least. Unless they have some sort of new espionage, or a miraculous groundswell of native research, I won't believe the battery claims until they're on the market.