The US Apple negotiates with the two giants of China’s CATL and BYD that Apple Car may be equipped with lithium iron phosphate (LiFePO4) batteries. Tesla (Shanghai) Model Y plans to launch the car with LiFePO4 battery version in July. Tesla and EVE negotiate on the supply of LiFePO4 batteries that 70-degree (KWh) battery pack will use LiFePO4 in the near future.
Industry data shows that in May this year, Chinese single-month output of LiFePO4 batteries increased by 317.3% up to 8.8GWh, accounting for 63.6% of total power battery output, far exceeding the 5.0GWh of ternary battery. From January to May, the accumulated output of LiFePO4 in China is 29.9GWh, which has also exceeded the ternary battery. Obviously, this is a major signal that for the first time in the past three years, LiFePO4 battery has surpassed ternary battery in terms of output.
In China’s internal lithium battery market, since it was surpassed by ternary battery in 2018, the market share of LiFePO4 battery has been declining. There was a time when its market share was as low as 12.8%. However, starting from last year, LiFePO4 battery has begun to re-emerge. As downstream demand continues to be strong, the output of LiFePO4 battery has also continued to rise, and achieved a counterattack against ternary battery since May.
More and more lithium batteries for new energy vehicles in China use LiFePO4 as battery raw materials
However, from the perspective of installed capacity, the current LiFePO4 is still less than the ternary, but very close, and the growth rate far exceeds the ternary. Data show that in May this year, the domestic power battery installed capacity was 9.8GWh, a year-on-year increase of 178.2%. Among them, ternary batteries totaled 5.2GWh, an increase of 95.3% year-on-year; while LiFePO4 batteries totaled 4.5GWh, an increase of 458.6% year-on-year. If this momentum is followed, the installed capacity of LiFePO4 will exceed the ternary soon.
In fact, the LiFePO4 counterattack against the ternary has already begun in terms of installed capacity. In 2020, six of the top 10 new energy vehicles sold in the Chinese market have launched LiFePO4 versions. Explosive models such as Tesla Model 3, BYD Han, and Wuling Hongguang Mini EV all use LiFePO4 batteries. Reflecting on the data, the sales of ternary batteries in the Chinese market in 2020 are 34.8GWh, a year-on-year decrease of 34.4%, while the sales of LiFePO4 batteries are 30.8GWh, a year-on-year increase of 49.2%.
Under the “hot wind” of LiFePO4, Euler Black Cat Cute Pet Edition Battery Pack was replaced with a LiFePO4 battery at the beginning of this year. Xiaopeng Motors also took the lead in launching the P7 and G3 in LiFePO4 versions in the “new car-making forces”. In addition, Ideal Automobile also stated in an internal letter that future models will cover a price range of RMB 150,000 to 500,000, and it is reported that its low-priced models will also use LiFePO4 batteries.
Out from mainland China, LiFePO4 is also widely used in abroad. In addition to Tesla and Apple, Volkswagen plans to mass-produce “standard batteries” 50% lower than the current cost in 2023, and entry-level models will use LiFePO4 batteries. According to industry analysis, at present, mainstream overseas new energy vehicle companies such as Tesla and Daimler have clarified the path of LiFePO4 batteries. It is expected that other overseas car companies such as BMW will also choose LiFePO4 solutions in their electrification paths. LiFePO4 batteries are expected to achieve global matching.
In the next ten years, LiFePO4 is expected to become the main raw material for leading lithium batteries
The logic of LiFePO4 counterattack is not complicated. Huachuang Securities pointed out that LiFePO4 batteries are being favored by more and more mainstream models. Through technological innovation in the past two years, the current 400-600 km cruising range of LiFePO4 batteries has been able to meet the needs of most passenger car owners, and the price is also more advantageous. In terms of energy density, LiFePO4 has made up for the shortcomings. Ouyang Minggao, an academician of the Chinese Academy of Sciences, said that through a series of improvements such as lithium supplementation, silicon doping, and the use of solid-liquid mixed electrolytes, the current energy density of LiFePO4 batteries can exceed 200Wh/Kg. The volumetric efficiency of the battery cell to the system is increased from 40% to 60%. At the beginning of this year, Gotion Hi-Tech unveiled its LiFePO4 battery with an energy density of 210Wh/kg, and the single energy density has reached the level of the ternary NCM5 series.
In terms of cost, LiFePO4 is even more advantageous. According to the research of Hua’an Securities, LiFePO4 has 55% and 22% cost advantages over ternary at the positive and cell under extreme calculations. Under the current subsidy plan, even taking into account the difference in subsidies, switching from the ternary to the LiFePO4 version will bring about a 9%-11% cost reduction. After the subsidy declines in 2021, this cost reduction effect will be even greater.
The safety defects of ternary batteries have always been a key issue criticized, and the biggest advantage of LiFePO4 batteries is high safety. “Because the country’s pursuit of PACK energy density has come to an end in 2020, and safety requirements have been raised to a new level, LiFePO4 technology has once again stood in the center of the stage because of its good stability, safety and excellent cost advantages.” Said by Xu Xiaoming, general manager of Chi Technology.
According to the research report of Wood Mackenzie, an international market research organization, cost and safety will continue to be the first factors that battery suppliers need to consider in a variety of battery application scenarios. LiFePO4 is expected to surpass the ternary battery to become the dominant electrical energy storage chemical in the next 10 years. After gaining a foothold in the energy storage market, it will gradually occupy a dominant position in the field of electric vehicles. Regardless of performance and cost, in terms of supply stability and safety, LiFePO4 materials are extremely abundant and have natural advantages that ternary does not have. In Wang Chuanfu’s words, ternary batteries use a lot of cobalt and nickel. China does not have cobalt and there is very little nickel. China cannot switch from being stuck in oil to being stuck in cobalt and nickel. Batteries that are really used on a large scale cannot be relied on rare metals. It is not only that China cannot rely on rare metals, but when electrification is in full swing, the world cannot rely on rare metals. In the future, LiFePO4 is destined to shine.
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