Lithium iron phosphate battery market share is expected to increase

Lithium iron phosphate batteries are gaining favor from more automobile manufacturers, and their market share continues to increase. According to the latest data from the China Automotive Power Battery Industry Innovation Alliance, in January, my country’s lithium iron phosphate battery output was 5.2GWh, accounting for 43.1% of the total output, a year-on-year increase of 493.6%; the installed capacity of lithium iron phosphate batteries was 3.3GWh, a year-on-year increase of 349.8 %. The growth rate of production and loading far exceeds that of ternary batteries.

The agency believes that compared with ternary batteries, Lithium Iron phosphate batteries have the advantages of higher safety and lower cost, and are favored by more automobile manufacturers, and the industry is booming.

Enterprises have overweight lithium iron phosphate

The latest data from the China Automotive Power Battery Industry Innovation Alliance shows that in January, my country's power battery output totaled 12.0GWh, an increase of 317.2% year-on-year. Among them, the output of ternary batteries was 6.8GWh, accounting for 56.8% of the total output, an increase of 241.6%; the output of lithium iron phosphate batteries was 5.2GWh, accounting for 43.1% of the total output, an increase of 493.6%. The production growth rate of lithium iron phosphate batteries far exceeds that of ternary batteries, and the market share continues to increase.

In terms of loading, the loading of lithium iron phosphate batteries has also shown rapid growth. In January, my country's power battery installed vehicles totaled 8.7GWh, a year-on-year increase of 273.9%. The installed capacity of ternary batteries and lithium iron phosphate batteries were 5.4GWh and 3.3GWh, respectively, an increase of 241.9% and 349.8% year-on-year.

With the increase in demand for lithium iron phosphate batteries, lithium iron phosphate material suppliers have recently continued to expand their production capacity through additional investment and other means.

On February 19, Yiwei Lithium Energy announced that it agreed to the wholly-owned subsidiary Huizhou Yiwei Power Battery Co., Ltd., a wholly-owned subsidiary of Yiwei Power Hong Kong Co., Ltd., to invest in the construction of "Passenger Vehicle Lithium Battery Co., Ltd." with its own and self-raised funds. "Ion Power Battery Project (Phase I)" and "xHEV Battery System Project (Phase I)" have investment amounts of no more than 1 billion yuan and 2.6 billion yuan respectively. Yiwei Lithium Energy stated that this investment mainly meets the supporting needs of customers such as well-known international car companies and new domestic car manufacturers.

On February 2, Ningde Times announced that the company intends to invest in the construction of the fifth and sixth phases of the power battery Yibin manufacturing base in the Lingang Economic and Technological Development Zone of Yibin City, Sichuan Province. The total investment of the project will not exceed RMB 12 billion. On the same day, CATL also announced that it plans to invest in the Zhaoqing Project (Phase I) of CATL’s power and energy storage batteries, with a total investment of no more than RMB 12 billion.

On January 19, the German Nano announced that the company signed an investment agreement with Ningde Times and the People's Government of Jiang'an County, Yibin City, Sichuan Province, agreeing to invest in the construction of the "80,000 tons of lithium iron phosphate project" in Jiang'an County. The total investment of the project is about 1.8 billion yuan.

According to calculations by CITIC Securities, as of the end of 2020, the total effective production capacity of major lithium iron phosphate cathode material manufacturers in the country (including BYD and Guoxuan Hi-Tech) is about 230,000 tons, a year-on-year increase of over 30%. The top four manufacturing companies in the industry include Defang Nano, Hubei Wanrun, Hunan Yuneng, and Beiterui. The total production capacity of these companies accounts for more than 65%. It is estimated that by the end of 2021, the effective production capacity of major lithium iron phosphate cathode material manufacturers in the country will be approximately 325,000 tons, a year-on-year increase of more than 40%.

It is worth mentioning that Titanium Dioxide companies are currently increasing their layout in the lithium iron phosphate industry. On February 4, China Nuclear Titanium Dioxide announced that the company plans to invest 12.108 billion yuan to build a 500,000-ton lithium iron phosphate project through its wholly-owned subsidiary, Gansu Dongfang Titanium Industry Co., Ltd. According to reports, the project is constructed in three phases: the first phase is 100,000 tons, the second phase is 200,000 tons, and the third phase is 200,000 tons. The main construction is lithium iron phosphate production lines and supporting facilities. The final annual profit is expected to be 5.28 billion yuan. The products of the project will be used in fields such as new energy vehicles and energy storage.

According to industry insiders, waste acid, ferrous sulfate and other waste materials generated in the production process of titanium dioxide can be processed into lithium iron phosphate after further processing. As one of the materials for the power system of new energy vehicles, lithium iron phosphate has comparative advantages over ternary materials in terms of comprehensive indicators such as safety, cycle life, and production cost.

Hong Qian, a researcher at China Research Institute Puhua, said that there is currently no too high technical barriers in the production of lithium iron phosphate, the construction of the production line only takes a few months, and the establishment of a technical team is relatively quick. At the same time, due to factors such as the raw materials and environmental protection costs of the titanium dioxide manufacturers, the leader in the titanium dioxide industry has a very obvious advantage in entering the lithium iron phosphate industry.

Market share is expected to increase again

Behind the huge increase in demand for lithium iron phosphate batteries is the booming new energy vehicle market in my country.

According to data from the China Association of Automobile Manufacturers, in January, the production and sales of new energy vehicles increased steadily, and the monthly sales volume set a historical record for 7 consecutive months. Among them, the production and sales of pure electric vehicles increased the fastest, with a year-on-year increase of 415.5% and 319.8% respectively, reaching 158,000 and 143,000 respectively.

The reporter learned from many insiders that lithium iron phosphate batteries and ternary lithium batteries are widely used in the field of new energy vehicles. The market share of ternary lithium batteries in the field of electric vehicles is relatively higher, but in recent years, safety accidents have occurred frequently, coupled with the rise of lithium iron phosphate batteries, the industry structure is changing.

A senior investor in the new energy battery industry told a reporter from the China Securities Journal that from a structural point of view, the ternary lithium battery has high energy density, high charge and discharge efficiency, and is not resistant to high temperatures. The advantages of lithium iron phosphate are lower cost, stable structure, and longer charge-discharge cycle life, but it also has problems such as low energy density, low charge-discharge efficiency, and poor low-temperature performance.

According to industry insiders, under the current subsidy policy for new energy vehicles with high energy density and long cruising range as the core indicators, although ternary batteries are more dominant, after the subsidy declines, the entire industry will gradually return to real market demand. , Car companies will also give more consideration to costs.

According to calculations by Huaan Securities, the cost of using lithium iron phosphate is about 0.08 yuan/Wh, which can save 0.15 yuan to 0.21 yuan/Wh compared to ternary cathode materials, corresponding to a cost reduction of 65% to 72%. Under the current subsidy policy, the ternary battery with 55kWh of electricity and 405 kilometers of battery life is replaced with lithium iron phosphate battery, and the cost can be reduced by 4,600 yuan to 5,600 yuan.

In October 2020, Tesla reduced the starting price of the upgraded version of the Model 3 standard battery life from 271,000 yuan to 249,000 yuan by replacing it with a lithium iron phosphate battery. According to data from the Travel Association, in November 2020, the monthly sales of Tesla Model 3 reached 21,600, and sales increased by nearly 10,000 from the previous month.

Guorong Securities believes that lithium iron phosphate batteries have the advantages of higher safety and lower cost compared with ternary batteries, and are favored by more automakers. Tesla Model 3, BYD Han, and Wuling Hongguang Mini EV all use lithium iron phosphate batteries, and the downstream boom has brought continuous vigorous production and sales.

Galaxy Securities believes that as the R&D technology of power battery companies continues to mature, the promotion and application of CTP technology in the CATL era and BYD blade battery technology can reduce costs while increasing the energy density of the battery system, making lithium iron phosphate batteries both high With the characteristics of safety and low cost, the market competitiveness is enhanced. At the same time, competition in the domestic new energy vehicle market has become increasingly fierce. Lithium iron phosphate has a price advantage over ternary materials, prompting car manufacturers to use more lithium iron phosphate batteries to reduce production costs and seize market share. As industry competition intensifies and leading companies accelerate production expansion, the market share of lithium iron phosphate batteries is expected to increase again.