In 1Q22, several global brands of new energy vehicles (NEVs), including Tesla, BYD and NIO, Li Auto, raised their electric vehicle (EV) sales prices as a result of rising power battery raw materials prices. It is believed that power batteries are the most expensive component of an electric vehicle’s overall cost. Therefore, companies will need to reduce the cost of power batteries in order to stay competitive. By 2024, lithium iron phosphate batteries will account for over 60% of the global power battery market’s installed capacity.
As per a report, the global EV market is reversing in 2021. In fact, lithium iron phosphate battery installations officially surpassed ternary with 52% of their installed capacity. The 1Q22 growth in lithium iron phosphate’s installed capacity grew to 58%. This is a rate that is far higher than the ternary battery. However, ternary batteries held a market share greater than 60% in 2021 due to increased penetration of NEVs in Europe, the United States and other countries. This is far more than that of lithium iron phosphate, which had a market share of around 32 36%.
The gap between the two materials is still substantial. However, production capacity planning by global new energy battery material manufacturers over the past two years shows that the expansion of lithium iron phosphate materials will be much faster than that of ternary. TrendForce research shows that global cathode materials manufacturers have announced a number of expansion projects. These plans are currently concentrated in China, South Korea and South Korea.
The nominal total production capacity for cathode materials is over 11 million tons. Of this, 64% of the planned production capacity for lithium iron phosphate cathodes is planned. The industry’s planned production capacity is greater than the market demand. This will result in a gap between actual future production capacity and total planned production. It is still to be seen how much the industry’s actual production capacity will rise in the future.
Noting that the price of core batteries raw materials like nickel, cobalt and lithium has risen clearly since 2H21, the supply chain for power batteries is afflicted by uncertainty, including the Russian-Ukrainian conflict and the global pandemic, companies will concentrate more on reducing costs and securing supply chains, which are two key issues to future competitiveness. It is believed that lithium iron phosphate batteries will be more popular due to their cost-effectiveness. This type of battery could become the mainstay of the terminal market within the next two years. In 2024, the global ratio of lithium iron phosphate batteries to ternary cells will change from 3:7 to 6.4
