[SMM Analysis] Lithium Iron Phosphate Battery burst into SUV Market Power demand may exceed expectations in 2021

SMM1 March 7: recently, there are rumors in the market that LIfeophosphate battery production line in Ningde era has been packed by Weilai Automobile, and the LiFePO4 version is under test preparation. The company did not deny this, saying only that it would not comment. This news once again brought up the fever of lithium iron phosphate, and the market speculated that the price of iron lithium battery might be reduced in Tesla Model Y. At the beginning of the year, the price of Model Y dropped sharply, from 488000 yuan to 339900 yuan, and the price was lower than 368000 yuan of EC6. Competition in the domestic SUV market was fierce, and it was more reasonable for Lailai to reduce its price in order to seize the market.

However, today, Li Bin, chairman of Xilai, responded that he was indeed discussing the possibility of iron-lithium batteries, but the Ningde-era iron-lithium production line was used to produce its own 100-degree batteries and would not mass-produce lithium iron phosphate batteries in the near future. In addition, Li Bin said that considering the use of lithium iron phosphate battery is not for the reason of cost reduction, but mainly to improve battery life and safety.

It can also be seen from the news that the domestic SUV market has begun to consider the use of lithium iron phosphate batteries. In addition to reducing costs and improving market competitiveness, the safety of lithium iron and the improvement of battery mileage driven by the development of battery structure have also become the main factors considered by the market. In addition to Weilai, Xiaopeng G3, a new domestic car-building force, also launched the version of lithium iron phosphate in December last year, and BYD's new SUV yuan EV also uses blade batteries, which shows that lithium-iron batteries are also gradually entering the Chinese SUV market this year.

In addition, last year, Tesla changed the standard version of Model 3 from a ternary battery to an iron-lithium battery. The price dropped to less than 250000 yuan, and sales increased by 65% compared with the previous year. Therefore, it does not rule out that this year Model Y will also consider switching to iron lithium batteries to reduce the price to less than 300000 yuan, impacting the inexpensive version of SUV market. Although foreign car companies, including Volkswagen, Mercedes-Benz and Audi, only use ternary lithium batteries now, they will also have the possibility of matching iron-lithium batteries in the future, considering the performance of iron-lithium batteries.

In the past, iron-lithium batteries mainly occupied the low-end market of A0 and A00, which did not rely on subsidies, although the market sales were considerable, but the power per car was low only about 10KWh, and the demand for iron-lithium batteries was not high. However, with the iron-lithium battery matching with the best-selling B-class car Tesla Model 3 and C-class BYD "Han", both cars carry electricity of about 60-80KWh, driving a substantial increase in the installed capacity of iron-lithium battery.

From the data of power battery installation in China from January to November, it can be seen that the installed capacity of iron lithium battery accounted for only 20% in March. Since June, the installed capacity of iron lithium battery has gradually increased, mainly in SAIC GM Wuling, Dongfeng Xiaokang and brilliance Xinyuan. BYD "Han" did not start production in June. The proportion of installed iron-lithium batteries reached 44% in November, mainly due to a substantial increase in the production of BYD "Han" and iron-lithium version Tesla Model 3, superimposed by SAIC GM Wuling this month to increase the proportion of iron-lithium installed in Ningde era. In addition, Chery Automobile, SAIC, Hezhong New Energy and other car companies also have a substantial increase in iron-lithium installed capacity.

Source: SMM

Since the second half of the year, major battery companies such as Ningde Times and BYD have gradually increased their installed capacity of iron-lithium batteries, with the two accounting for nearly 50% of the total in September. Recently, with the substantial increase in demand for iron-lithium batteries by car companies, BYD's demand for iron-lithium batteries has far exceeded that of ternary batteries. In December, the demand for ternary batteries began to decline, and orders for iron-lithium batteries increased significantly. In addition, the CTP technology of the Ningde era has also further increased the orders of car companies for iron-lithium batteries, which accounted for nearly 60 per cent of the demand for iron-lithium batteries in January. It can be seen that lithium iron phosphate battery is becoming more and more important in Chinese head battery enterprises.

Source: SMM

Source: SMM

Among the best-selling models in 2020, 55% are equipped with ternary lithium batteries, 33% are equipped with two batteries, and the remaining 12% are equipped with iron lithium batteries only. Among them, the quantity of iron lithium batteries is higher in Hongguang mini, Chery EQ1 and BYD Han, among which Hongguang mini and Chery EQ1 use ternary and iron lithium batteries, or the proportion of iron lithium has increased gradually since September because of cost considerations. Iron lithium is currently developing rapidly in A00, B, C class cars, it can be seen that its market potential is greater, for cost performance considerations, the A00 market will first be occupied by iron lithium battery, the B market and C class market or ternary iron lithium battery will be evenly divided, leaving the SUV high-end market will still be dominated by ternary battery, but it is expected that the proportion of iron lithium battery will gradually increase this year.

Source: SMM

Therefore, with the increase of iron lithium new models in 2021, and iron lithium began to enter the SUV market, China's new energy vehicle SUV market share has reached 26.11%, ranking first among all models. In addition, the SUV model has the highest demand for batteries of all models due to its high capacity per car, while most of the low-end models were equipped with low-end iron-lithium batteries before, so the installed capacity of iron-lithium batteries in 2021 is expected to be higher than expected.

SMM battery materials research team

Mei Wangqin 021-51666759

Huo Yuan 021-51666898

Liu Xiaoyi 021-51666716

Yuan Ye 021-51595792