Power battery market situation: why lithium iron phosphate battery get more share?

The power battery, known as the “heart” of new energy vehicles, has attracted much attention with the warming of the new energy vehicle market. At present, new changes are taking place in the field of power batteries due to the continuous change of technology and the fluctuation of raw material prices.

For a long time, lithium iron phosphate battery (LFP) and ternary lithium battery (NCM, cathode materials are nickel cobalt manganese) have been in full swing against “enemies”. Previously, lithium iron phosphate battery has been the dominant power battery in China for many years, but it has been caught up by ternary lithium battery in recent years and surpassed by ternary lithium battery for the first time in 2018, and the gap has widened year by year. In the first half of 2020, the proportion of ternary lithium battery in the power battery market at the peak even exceeded 70%.

However, the market is unpredictable. After a lapse of nearly three years, the output of lithium iron phosphate battery will exceed that of ternary lithium battery for the first time in May 2021. According to the prediction of insiders, the loading volume of lithium iron phosphate battery is expected to exceed that of ternary lithium battery in June, regaining the champion of power battery market.

Why lithium iron phosphate battery counterattack?

Lithium iron phosphate battery is pulling back by relying on price advantages and technologies such as improving energy density and endurance.

Recently, according to the data of China automotive power battery industry innovation alliance, in May 2021, China’s power battery output totaled 13.8gwh, a year-on-year increase of 165.8%. Among them, the output of lithium iron phosphate battery in May was 8.8gwh, accounting for 63.6% of the total output, with a year-on-year increase of 317.3% and a month on month increase of 41.6%; The output of ternary lithium battery was 5.0gwh, accounting for 36.2% of the total output, with a year-on-year increase of 62.9% and a month on month decrease of 25.4%. Due to the surge in May this year, the output of lithium iron phosphate batteries exceeded that of ternary lithium batteries for the first time since 2018. The cumulative output from January to May this year was 29.9gwh, accounting for 50.3% of the total output; In the same period, the cumulative output of ternary lithium battery was 29.5gwh, accounting for 49.6% of the total output.

In terms of loading capacity, lithium iron phosphate battery is slightly inferior to ternary lithium battery. In May, the loading volume of lithium iron phosphate battery increased by 458.6% to 4.5 GWH year-on-year, and the loading volume of ternary lithium battery increased by 95.3% to 5.2gwh year-on-year. In the first five months of this year, China’s power battery loading volume totaled 41.4gwh, a year-on-year increase of 223.9%. Among them, the total loading volume of ternary lithium battery was 24.2gwh, a year-on-year increase of 151.7%, accounting for 58.5% of the total loading volume; The cumulative loading volume of lithium iron phosphate battery was 17.1gwh, with a year-on-year increase of 456.6%, accounting for 41.3% of the total loading volume. However, it is worth noting that the growth rate of lithium iron phosphate battery in output and loading volume is far higher than that of ternary lithium battery. At this rate, the loading volume of lithium iron phosphate battery in June may also exceed that of ternary lithium battery.

OEMs have changed their minds. According to the data of the passenger Federation, from January to May this year, the top five new energy models in China’s sales are Wuling Light Mini EV, Tesla Model 3, Tesla Model y, BYD Han EV and GAC aion s. Among the five models, Wuling Hongguang Mini EV and BYD Han EV all use lithium iron phosphate batteries. The basic version of Tesla Model 3 and some versions of GAC aion s also use lithium iron phosphate batteries. This is different from the previous rush of new energy passenger vehicle enterprises to ternary lithium batteries.

From January to May this year, CATL, as a battery supplier of many car enterprises such as Tesla, BMW and Wuling Hongguang, took the lead with 20.3 GWH loading volume, ranking first in China’s power battery loading volume list, and BYD and LG chemistry ranked second and third with 5.9 GWH and 3.9 GWH loading volume respectively. Among them, CATL and BYD walk on two legs of lithium iron phosphate and ternary lithium, while LG is basically dominated by ternary lithium. In the first half of last year, LG Chemical surpassed the CATL by becoming Tesla’s ternary lithium battery supplier, taking the top place in the loading volume of global power batteries. However, the situation has changed since this year, and CATL has turned against LG chemistry.

As for the proportion of lithium iron phosphate and ternary lithium, CATL and BYD responded in an interview with the first financial reporter, which was inconvenient to disclose. However, the reporter learned that the loading volume of lithium iron phosphate batteries of the two enterprises has increased faster this year.

Before the launch of a new generation of lithium iron phosphate battery blade battery in March last year, the vast majority of BYD new energy passenger cars used ternary lithium, but now the situation has greatly reversed. In an interview with the first financial reporter, BYD insiders said that each production line can flexibly adjust the production according to the needs of customers. BYD will produce whatever battery customers want. At present, according to the vehicle production schedule, blade batteries should account for a large proportion. At present, the popular Hanhe DM-I models use blade batteries. In May, the sales volume of BYD new energy vehicles was 31681, of which, the sales volume of BYD Han in May was 8214, and the sales volume of the new song plus DM-I model was also growing rapidly.

CATL began to supply lithium iron phosphate batteries to Tesla in the second half of last year, which to a certain extent meets Tesla’s demands of continuously reducing costs and continuously reducing the price of models. With the improvement of lithium iron phosphate battery technology and the prominent cost advantage, new power enterprises such as Xiaopeng, Nezha and Zero run have gradually adopted lithium iron phosphate batteries on some models.

“Since this year, lithium iron phosphate batteries have rebounded, which is also related to the rise in the price of raw materials for power batteries.” Wu Hui, general manager of the research department of Yiwei Economic Research Institute and President of China Battery Industry Research Institute, said in an interview with China first finance and economics.

The reporter found from the business website that the domestic cobalt price fluctuated greatly in recent months, but showed a rising posture on the whole. As of June 22, the cobalt price was 354666.66 yuan / ton, up 6.9% compared with the price of 331833.34 yuan / ton on February 9

Wu Hui said that even if the price of cobalt does not rise, lithium iron phosphate has more advantages in cost than ternary lithium battery. With the sharp decline of subsidies for new energy vehicles and even their cancellation in the future, OEMs pay more and more attention to the cost of batteries.

Which battery is the king in the future

At present, the market share of power batteries is basically dominated by lithium iron phosphate and ternary lithium batteries, and the power batteries of other routes are like a spark.

However, lithium iron phosphate batteries and ternary lithium batteries have their own short boards. Although ternary lithium battery has high energy density and good power characteristics, its safety is poor. Lithium iron phosphate has stable performance, good safety, is not subject to rare metals, lower cost, but low energy density and relatively poor tolerance to low temperature. In recent years, electric vehicles of Tesla, velai, BYD and other car companies equipped with ternary lithium batteries have spontaneous combustion. Hyundai launched a large-scale recall in February this year due to the fire of models provided with ternary lithium batteries by LG chemistry. Tesla Model 3 and BYD Han, which are equipped with lithium iron phosphate batteries, are criticized for battery life attenuation in northern cities in winter.

The technology of power battery needs further breakthrough, and we should continue to make efforts in materials, process and design. Which technical route will win in the future?

The power batteries of CATL and BYD account for more than half of the total installed capacity of domestic power batteries. CATL has power battery production bases in Fujian, Jiangsu, Qinghai, Sichuan, Guangdong and Germany. In addition to its battery production plants in Chongqing, Shenzhen, Xi’an, Qinghai, Changsha and Guiyang, BYD also has lithium iron phosphate battery plants in Brazil.

BYD chairman Wang Chuanfu chose to bet on lithium iron phosphate battery. At the 2021 Chongqing auto show held this month, Wang Chuanfu said in his speech that the auto industry is in a critical period of change, which requires innovative technologies and can solve the pain points of the market. The blade battery solves the safety pain point most concerned by consumers. BYD has reversed the product structure of power battery by relying on the power of blade battery, and pulled lithium iron phosphate back to the right path of the industry from a very difficult situation. He stressed that battery technology must consider product safety and social resource tolerance. Without security, the full popularization of new energy vehicles is impossible. Meanwhile, if rare metals such as nickel and cobalt are widely used in power batteries, the contradiction between supply and demand of raw materials will be inevitable when raw materials cannot be stably supplied or all fuel vehicles will be replaced by new energy vehicles in the future.

In order to overcome the short board of lithium iron phosphate energy density, BYD is seeking a breakthrough. The energy density of the battery pack that launched the blade battery last year is 140wh / kg. In the future, it will further improve the material itself and design at the cell level. It is expected to be greater than 180wh / kg by 2025.

With regard to the proportion of lithium ternary and lithium iron phosphate, Zeng Yuqun, chairman of CATL, also talked about “asking about the future – high-end dialogue between entrepreneurs and alumni of new energy smart cars” at Shanghai Jiaotong University not long ago. He is optimistic about lithium iron phosphate recently. The growth rate of lithium iron phosphate battery will be very fast because it is relatively cheap. He said that with more and more charging piles, consumers’ mileage anxiety will be relieved, and the mileage of electric vehicles will not need to be so long. Therefore, the proportion of lithium iron phosphate will gradually increase and the proportion of ternary lithium will decrease. However, some high-end vehicles still need long endurance, so the market of ternary lithium with high energy density still exists. The supply chain of ternary lithium battery materials will change greatly.

However, Wu Hui believes that although lithium iron phosphate battery has cost advantages in the short term, it always has limitations in terms of energy density, and it is very difficult to reach 200wh / kg. The ternary lithium can exceed 300wh / kg, and its safety can be continuously improved. In addition, its price reduction space in the future may be greater than that of lithium iron phosphate battery. According to the calculation of Yiwei Economic Research Institute, in 2021, the average prices of 1kwh lithium iron phosphate battery and ternary lithium battery will be 600 yuan and 700 yuan respectively, while by 2030, the prices of the two will be 320 yuan and 300 yuan respectively. He is still optimistic about ternary lithium battery in the long run.

As one of the power battery users, GAC AEAN and battery suppliers jointly launched the magazine battery system safety technology this year, including two battery routes: lithium ternary and lithium iron phosphate. Gu Huinan, general manager of GAC AIAN, said in an interview with the first financial reporter that lithium iron phosphate and ternary lithium have developed in parallel for a long time. From the perspective of performance and price, they have their own advantages. In the future, high-end models will have high requirements for mileage. Ternary lithium is mainly used for long endurance and high-performance models. For example, ternary lithium will be used for models that emphasize acceleration performance and fast charging performance, and lithium iron phosphate will be used for others, which have their own markets. Battery technology is developing very fast and emerging one after another. In addition to the above two technical routes, there are graphene cells and hydrogen fuel cells. In addition, a variety of new batteries such as solid-state batteries will continue to emerge.

At present, there is an upsurge of solid-state battery research and development in the industry. However, according to Zeng Yuqun’s judgment, all solid-state batteries that can be used in the car within 3 ~ 5 years are not all solid-state batteries. It will take some time for batteries such as semi-solid batteries or solid-state batteries to make breakthroughs in technology and cost, but there are also views that semi-solid batteries or solid-state batteries may become the mainstream in the future. The field of power battery is increasingly diversified, and the war is escalating. Who is the king in the future? There are many variables. Zeng Yuqun mentioned that the future is not necessarily ternary lithium or lithium iron phosphate. There are some new things in CATL, but it is not convenient to speak to the outside world now.

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