LFP battery "penetration war"

LFP batteries are returning to the new energy passenger vehicle market with a brand new attitude and are moving from China to the international stage.

① Following Model 3, the standard range version of the domestically produced Model Y also adopted LFP batteries and began mass production and delivery. Tesla also signed a new battery supply contract with CATL.

② Volkswagen and Guoxuan High-tech have reached a strategic cooperation. The two parties plan to jointly develop ternary standard battery cells produced in Salzgitter, Germany, and further explore the cooperative development of LFP battery cells.

③ According to foreign media reports, Apple is currently visiting automakers in South Korea and Japan to prepare for the mass production of its AppleCar electric vehicles in 2024 , and may adopt LFP batteries for safety reasons.

④ Renault CEO Luca de Meo told foreign media that the company's all-electric Renault 5 is planned to be mass-produced in 2023 and will consider using LFP batteries.

⑤ Ford officially announced its new energy plan, including a dedicated pure electric platform, a new IonBoost battery, and product planning for future Ford electric vehicles. Among them, the IonBoost battery adopts the LFP system and is mainly used in commercial vehicles .

⑥Foreign media reported that LG Energy Solution began developing LFP battery technology at its Daejeon laboratory in South Korea at the end of last year, and is expected to build a pilot line as early as 2022 using a soft-pack technology route.

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The above series of dynamics reveal an important message, that is, the value of LFP batteries is becoming increasingly prominent and has attracted more and more attention from international OEMs and battery companies, which is expected to further open up the market space for LFP batteries in the field of new energy passenger vehicles.

It is worth noting that Japan, South Korea, Europe and the United States currently do not have the technology and complete industrial chain for large-scale mass production of LFP batteries. Only China has formed all-round competitive advantages in the field of LFP batteries in terms of market, technology, production capacity , cost, and supply chain collaboration.

This means that when LFP batteries are installed and applied on a large scale in the international new energy vehicle market, China's LFP technology route, which has been continuously developed for many years, is expected to break the long-standing situation in which ternary batteries have been the only ones in the global market, and China's lithium battery industry chain will also have more development opportunities.

LFP battery value is returning

Entering 2021, LFP batteries are making great strides in the domestic new energy passenger vehicle market with a more confident face, transforming from being gradually marginalized to becoming popular again.

Market data shows that in May this year, domestic LFP battery production reached 8.8GWh, a year-on-year increase of 317%, accounting for 64% of the total production, exceeding the 5.0GWh of ternary batteries for the first time; the cumulative LFP battery production in the first five months was 29.9GWh, accounting for 50% of the total production, a year-on-year increase of 361%.

According to the statistics of compulsory traffic insurance data from GGII, the installed capacity of new energy passenger vehicles in the first half of 2021 was about 41.17GWh, of which the installed capacity of LFP batteries was about 12.34 GWh, accounting for 30%, an increase of more than 2 times year-on-year.

In July, the installed capacity of LFP batteries surpassed that of ternary batteries for the first time in nearly three years, indicating that LFP batteries have regained a foothold in the power market.

In August, the installed capacity of domestic power batteries was 12.6GWh, a year-on-year increase of 144.9%. Among them, the installed capacity of ternary batteries was 5.3GWh, a month-on-month decrease of 2.1%; the installed capacity of LFP batteries was 7.2GWh, a month-on-month increase of 24.4%.

This shows that LFP batteries will further develop in the second half of the year, with installed capacity, output and growth rate significantly surpassing ternary batteries. GGII expects that by the end of this year, LFP batteries will account for more than 40% of the power market, and shipments in 2021 are expected to increase by more than 200% year-on-year.

The significant increase in LFP battery installed capacity is mainly driven by the surge in sales of phenomenal models such as the domestically produced Model 3, Hongguang Mini EV, Han EV, and Xiaopeng P7 that are equipped with LFP batteries. The acceptance of LFP batteries in OEMs continues to rise. In 2021, the supporting scope and intensity of LFP batteries in the field of new energy passenger vehicles will be further upgraded.

A more significant change is that, with its advantages in material cost and safety, LFP batteries are becoming the main battery supporting entry-level models of high-end brands of major OEMs and the main installed base of best-selling models. Models with a range of 500km and below have become the main target of LFP batteries. LFP batteries have fully covered the new energy passenger car market from A00 to B.

It is worth noting that in the latest 348th batch of "Announcement on Road Motor Vehicle Manufacturers and Products" issued by the Ministry of Industry and Information Technology, NIO applied for its first high-end pure electric sedan ET7. The biggest highlight of ET7 is the hybrid battery system equipped with ternary + LFP batteries, which means that LFP batteries have entered the high-end passenger car market.

At present, OEMs including BYD, Tesla, BAIC, GAC, Great Wall, Dongfeng, SAIC, Chery, Changan, JAC, Hozon, Xiaopeng, and Leapmotor have launched LFP versions of their main models. The product matrix is ​​constantly enriched, laying the foundation for further growth in the installed capacity of LFP batteries in the field of new energy passenger vehicles and even surpassing ternary batteries.

Behind the substantial growth in installed capacity of LFP batteries for new energy passenger vehicles, battery companies such as CATL, BYD, Hefei Guoxuan, AVIC Lithium Battery, EVE Energy, Ruipu Energy, and Penghui Energy are also actively expanding LFP battery production capacity and further enhancing the competitive advantages of LFP batteries through material system and design structure optimization, thereby seizing more market space.

Industry insiders believe that the continued growth in LFP battery installed capacity indicates that its value is returning and will accelerate its penetration into the passenger car market. Battery companies with competitive advantages in LFP battery product technology and production capacity will have more development opportunities.

LFP batteries enter the international supply chain

As the domestic new energy passenger vehicle market accelerates its return, LFP batteries are also beginning to move beyond the domestic market to compete in the international market.

Recently, foreign media reported that users in the United States who pre-ordered the standard range-enhanced version of Tesla Model 3 received an email saying that if they want to get the car in advance, they can choose the LFP battery version from China.

Musk also shared his personal experience with consumers, saying that he prefers LFP batteries, which can be charged to 100%, while ternary lithium batteries can only be charged to 90%.

Currently, Tesla only produces the LFP battery version of the Model 3 Standard Range model in its Shanghai factory in China, and has exported it to the European market on a large scale. Since August, the LFP battery version of the Model Y has also begun mass production and delivery, further expanding its application scope.

Earlier, there was news that starting from October 1, 2021, Tesla will produce the Model 3/Y standard range version with LFP batteries at its Fremont factory in California, USA, which means that Tesla has begun to introduce LFP technology into the US market.

In addition, Musk also said that Tesla will use cheaper LFP batteries in energy storage products and entry-level electric vehicles. In the future, two-thirds of the batteries will use iron-based batteries (LFP) and one-third may use nickel-based batteries (NCM/NCA).

Musk personally stood up for LFP batteries and placed two-thirds of battery demand on LFP batteries, indicating that Tesla fully affirmed the product performance and future development trends of LFP batteries, becoming the first international car company to fully invest in the LFP camp.

In addition to Tesla, other international OEMs have incorporated LFP battery technology into their electrification transformation plans.

In May this year, Ford announced its product plan for future Ford electric vehicles, including its exclusive pure electric platform, the new IonBoost battery, and announced that it would use LFP batteries in commercial vehicles; in July, Volkswagen and Guoxuan High-tech reached a strategic cooperation, and Guoxuan High-tech will develop mass-produced LFP battery cells for Volkswagen's entry-level electric vehicles and help Volkswagen achieve localized production of standard battery cells in Europe.

Foreign media reported that Apple, a new international car manufacturer, is also accelerating the pace of mass production of its electric vehicles. Considering safety issues, it will adopt LFP batteries and is discussing early cooperation matters with battery companies such as CATL and BYD.

In addition, Daimler and Volkswagen have also used LFP batteries in their electric trucks and buses. This means that LFP batteries have covered the fields of electric passenger cars and commercial vehicles in the international market and are expected to be recognized by more international OEMs in the future.

Behind the rise of LFP batteries in the international market is that China has taken the lead in LFP battery technology and supply chain. From the perspective of the global competition landscape, only China currently has the ability to mass-produce and supply LFP batteries and has the most complete supply chain.