Ternary batteries "turn from offense to defense" and lithium iron phosphate makes a strong breakthrough

Once a powerful force in the field of passenger cars, are the "invincible" ternary batteries really no longer so popular? Things are changing, and now ternary batteries are "turning from offense to defense" and even losing ground. The "return of the king" lithium iron phosphate has launched a new round of strong counterattack.

Best-selling models are all equipped with lithium iron phosphate

Driven by Tesla Model 3, more and more popular models are scrambling to replace lithium iron phosphate! Among several new car-making forces such as Weilai and Ideal, Xiaopeng Motors took the lead in launching lithium iron phosphate models; the industry predicts that Weilai and Ideal will also launch lithium iron phosphate models in the future.

Recently, Xiaopeng Motors launched the P7 rear-wheel drive standard range model, which uses Ningde Times' lithium iron phosphate battery and has a comprehensive range of 480km. With the same configuration, the lithium iron phosphate version is 20,000 yuan cheaper than the ternary lithium battery version. At the same time, the lithium iron phosphate version of Xiaopeng G3 was also launched. Not only Xiaopeng, Great Wall Ora announced the official launch of the Ora Black Cat Cute Pet Edition at the beginning of this year, and its battery pack has been replaced from the original ternary battery to lithium iron phosphate battery.

According to relevant statistics, six of the top 10 new energy vehicle models sold in the Chinese market in 2020 have launched lithium iron phosphate versions. It goes without saying that popular high-end models such as Tesla Model 3 and BYD Han, as well as low-end popular "national god cars" such as Wuling Hongguang Mini EV, with an average monthly sales of more than 30,000 units, also use lithium iron phosphate batteries.

Recently, Tesla CEO Elon Musk said that he will consider equipping more electric vehicles with lithium iron phosphate batteries. At present, all the standard range Model 3s produced at Tesla (Shanghai) Factory have switched to lithium iron phosphate batteries. Musk's statement means that the standard range Model 3s mass-produced in the United States and other factories outside of China may all be replaced with lithium iron phosphate batteries.

Once upon a time, the market share of lithium iron phosphate was as low as a pitiful 12.8%. Today, with the advantages of higher safety and lower cost, lithium iron phosphate is making a comeback against ternary batteries. In 2020, the sales of ternary batteries in the Chinese market were 34.8GWh, a year-on-year decrease of 34.4%; the sales of lithium iron phosphate batteries were 30.8GWh, a year-on-year increase of 49.2%.

In the "Recommended Model Catalog for the Promotion and Application of New Energy Vehicles (2021 First Batch)" released by the Ministry of Industry and Information Technology, lithium iron phosphate battery models account for as high as 78%. In addition to traditional special-purpose vehicles that still choose to be equipped with lithium iron phosphate batteries, the proportion of lithium iron phosphate batteries in passenger cars has also increased from the previous highest of 40% to 50%. Obviously, the power battery industry is undergoing drastic changes, and lithium iron phosphate batteries will usher in a new rise.

Price increase! Out of stock! In short supply

In the view of industry insiders, 2021 will usher in a big year for the growth of demand for lithium iron phosphate batteries, with an expected year-on-year growth of 80%. In order to catch up with the progress of orders, many battery manufacturers' production lines are running at full capacity. Penghui Energy said that the company's power batteries continue to be shipped, the power battery production line is at full capacity, and sales continue to increase. All the power batteries for new energy vehicles produced and sold by the company are lithium iron phosphate batteries. Guoxuan High-tech also stated that the company is working overtime to increase the production of lithium iron phosphate batteries.

In fact, due to the continued strong demand from the downstream side, the supply of lithium iron phosphate materials is also very tight. Many manufacturers are running out of production capacity, and out-of-stock situations occur frequently. Some leading lithium iron phosphate material manufacturers have even stopped accepting new orders.

"Leading companies are no longer quoting prices to the outside world because they are so overwhelmed with orders and their production capacity is clearly insufficient." According to industry insiders, the monthly demand of CATL and BYD alone exceeded 40,000 tons, which is far beyond expected demand.

According to Battery China, the lithium iron phosphate production capacity of Defang Nano, Hunan Yuneng, BYD, Wanrun New Energy and other companies is currently quite tight. "There is a structural shortage of lithium iron phosphate supply and demand at present, and the market gap still exists, and supply exceeds demand." A relevant staff member of Defang Nano said.

According to the data, my country's lithium iron phosphate production reached 20,630 tons in January 2021, compared with only 4,660 tons in the same period last year, a year-on-year increase of 342.7%. However, even so, the production of lithium iron phosphate is still in short supply.

Although companies are also working hard to expand production, "distant water cannot quench immediate thirst." Industry insiders analyzed that judging from the expansion of lithium iron phosphate material companies, the release of new production capacity will have to wait until the second quarter at the earliest, and large-scale production may be at the end of the year or early next year, which will not alleviate the relative shortage of lithium iron phosphate in the short term.

It is worth noting that the surge in demand for lithium iron phosphate has triggered a series of price increases. According to data from Sino-Trade, on March 3, the lithium iron phosphate materials of Defang Nano and BYD jumped by 3,500 yuan/ton and 4,000 yuan/ton respectively. As of March 3, the average price of domestic high-quality power lithium iron phosphate was 43,000 yuan/ton, up 16.22% from the market average price of 37,000 yuan/ton in January, an increase of 6,000 yuan/ton.

Data source: Biz.com

On the other hand, as the price of lithium carbonate, the main raw material for lithium iron phosphate, has continued to soar in recent months, the cost side of lithium iron phosphate manufacturers has also been under great pressure. Recently, there have been reports that lithium iron phosphate material companies have sent price increase letters to customers.

However, the price increase letter has not yet been issued to all customers. According to industry insiders, some companies have not changed the price for large customers. "This price increase letter is mainly for small and medium-sized customers. Large customers generally sign long-term contracts or use formula pricing, referring to the prices of major raw materials such as lithium carbonate for adjustment."

At present, lithium iron phosphate materials are in great demand. According to relevant reports, since February this year, due to the suspension and reduction of production by some companies (or due to material cost pressure), the supply and demand relationship has further deteriorated, and the phenomenon of battery manufacturers sending personnel to lithium iron phosphate material companies to "supervise production" has become increasingly common.

The power of lithium iron phosphate continues to ferment

Upon closer inspection, the popularity of lithium iron phosphate does have an internal logic. Although ternary batteries have the advantage of high energy density, they also have problems. Musk has expressed his concerns more than once. With the increase in market demand for power batteries, nickel prices are subject to greater volatility and uncertainty. "Nickel metal is the biggest problem with lithium battery production capacity now." In addition, the high price of cobalt is also a worry.

Compared with ternary batteries, the production cost of raw materials required for lithium iron phosphate batteries is very low, and the output is very large. It is understood that waste acid, ferrous sulfate, and waste generated during the production of titanium dioxide can be further processed to make lithium iron phosphate. Therefore, in the long run, lithium iron phosphate batteries do not have to worry about the supply of raw materials.

According to industry estimates, the cost of using lithium iron phosphate is about 0.08 yuan/Wh, which can save 0.15 yuan/Wh compared with ternary cathode materials. In addition, with the continuous maturity of technology, lithium iron phosphate has "changed its fate". The promotion and application of CTP technology and blade battery technology can reduce costs while increasing the system energy density of lithium iron phosphate batteries, and its market competitiveness will continue to increase in the future.

Judging from the current market situation, the "latecomer power" of lithium iron phosphate is becoming more and more obvious. With the support of star car companies such as Tesla, BYD, Xiaopeng, and Great Wall Ora, the "counterattack strength" of lithium iron phosphate against ternary will probably increase in the future. The industry expects that BMW, Volkswagen, and Daimler will also launch lithium iron phosphate solutions in the future.

Once the "domino effect" starts, it will be unstoppable.