Forecast and Analysis of China's Lithium Iron Phosphate Battery Market Status and Development Trend in 2022

Lithium iron phosphate has the characteristics of long life, safe use, large capacity, green environmental protection, etc., and its demand continues to increase in the fields of power batteries and energy storage. At present, the energy storage system with lithium iron phosphate batteries has become the mainstream choice in the market. In the first seven months of 2022, China's domestic lithium iron phosphate energy storage accounted for more than 90% of the electrochemical energy storage field.

Market Situation

1. Production and sales

Compared with ternary lithium batteries that require rare metals such as cobalt and nickel, lithium iron phosphate batteries have lower costs, especially when the prices of raw materials for lithium battery cathodes, anodes, and electrolytes are rising, and the cost pressure of large-scale production is less, so it is widely welcomed by domestic car companies.

According to relevant report statistics, in the first half of 2022, China's lithium iron phosphate battery output reached 123.21GWh, with a total output of 59.7%, a year-on-year increase of 226.8%; sales reached 121.3GWh, a year-on-year increase of 253.2%.

2. Loading capacity

With the increasingly fierce competition in the new energy vehicle market, most car companies are also reducing prices, so car companies are bound to purchase lower-cost lithium iron phosphate batteries. According to relevant report statistics, in recent years, the installed capacity of lithium iron phosphate batteries in China has increased significantly. In 2021, the installed capacity of lithium iron phosphate batteries reached 79.8GWh, a year-on-year increase of 227.05%. In 2022, the installed capacity of lithium iron phosphate batteries reached 64.4GWh, accounting for 58.5% of the total installed volume, a year-on-year increase of 189.7%.

Development Trend

1. The cost advantage continues to emerge, and the industry scale continues to expand

In the first half of 2022, the penetration rate of new energy vehicles in China was 21.6%. In the future, driven by both policies and the market, the development prospects of the new energy vehicle industry are broad, and the penetration rate will continue to increase. In the post-subsidy era, the cost advantage of lithium iron phosphate batteries continues to emerge. Especially under the continuous influence of the epidemic, the prices of bulk commodities continue to rise, the production costs of car companies continue to be under pressure, and the need for cost reduction is more urgent. In order to control costs, car companies will prefer lithium iron phosphate batteries with lower prices, and because lithium iron phosphate batteries do not contain precious metals such as cobalt and nickel, they are more advantageous in cost control.

At the same time, in recent years, with the efforts of major enterprises, the performance of lithium iron phosphate batteries has been improved to a greater extent, and has been continuously recognized by the market and enterprises. For example, in March 2020, BYD released a blade battery, which has a 50% increase in volume specific energy density compared to traditional iron batteries, and a 30% decrease in cost; in June 2022, CATL launched Qilin, the third generation of its CTP (cell-to-pack) technology, the volume utilization rate of the battery pack has been increased from 55% of the first generation to 72%, and the energy density has reached 255Wh/kg, which can achieve a cruising range of 1,000 kilometers for the whole vehicle. In the future, with the continuous innovation of lithium iron phosphate battery technology, the scale of the industry will continue to be expanded.

2. The Matthew effect is getting stronger, and the new entrants have little living space

From the perspective of enterprise structure, China's lithium iron phosphate battery industry structure is relatively concentrated, and leading enterprises have the industry's cutting-edge technology and core customer resources. Power batteries have a huge impact on car performance, and car companies are very cautious in choosing battery suppliers. The power battery industry is a technology-intensive and capital-intensive industry, with large investment in research and development and a long cycle, while technological innovation is the core force of enterprise competition, and the industry has formed high barriers to entry. In addition, in order to ensure the supply of the industrial chain, various OEMs have deployed in the field of lithium iron phosphate batteries, and there may be less living space for new entrants in the future.