Great reversal of power battery: output and loading of lithium iron phosphate surpass ternary in an all-round way

For lithium iron phosphate batteries in 2021, an important key word is "anti-overshoot".

Monthly data from the latest issue of the China Automotive Power Battery Industry Innovation Alliance show that in August 2021, China's power battery production totaled 19.5 GWH, an increase of 161.7 percent over the same period last year and 12.3 percent month-on-month growth. Among them, the output of lithium iron phosphate battery was 11.1GWH, accounting for 56.9% of the total output, up 268.2% from the same period last year and 18.8% from the previous year; the output of ternary battery was 8.4GWH, accounting for 42.9% of the total output, up 91.5% from the same period last year and 4.8% from the previous year.

In fact, in terms of production alone, lithium iron phosphate batteries achieved a reverse overshoot of ternary batteries in May this year. In that month, the output of lithium iron phosphate battery was 8.8 GWH, accounting for 63.6% of the total output, and the output of ternary battery was 5.0 GWH, accounting for 36.2% of the total output. This is the first month in which the output of lithium iron phosphate batteries exceeds that of ternary batteries for the first time in nearly three years.

And in that month, the cumulative output of lithium iron phosphate battery exceeded that of ternary battery for the first time, and the output from January to May was 29.4GWh and 29.9GWh respectively. From 2018 to 2020, the annual output of lithium iron phosphate batteries in China is lower than that of ternary batteries.

In the following June, lithium iron phosphate batteries continued to take the lead over ternary batteries in terms of production. In that month, the output of lithium iron phosphate battery was 7.8GWH, accounting for 51.2% of the total output, and the output of ternary battery was 7.4GWH, accounting for 48.4% of the total output.

In July, lithium iron phosphate battery production continued to take the lead, with the output of lithium iron phosphate battery 9.3 GWh, accounting for 53.8% of the total output, and the ternary battery production of 8 GWH accounted for 46% of the total output.

Until August, the output of lithium iron phosphate batteries exceeded that of ternary batteries for the fourth month in a row, and the gap between the two was further widened, with a market share of 56.9% and 42.9%, respectively. So far, the market share of lithium iron phosphate battery has exceeded that of ternary battery by nearly 14 percentage points.

From January to August, the output of lithium iron phosphate batteries totaled 58.1GWH, accounting for 52.1% of the total output, an increase of 301.8% over the same period last year, while the output of ternary batteries totaled 53.2GWH, accounting for 47.7% of the total output, an increase of 137.2% over the same period last year. This means that in terms of production, lithium iron phosphate batteries surpass ternary lithium batteries both in volume and year-on-year growth.

With the reverse excess of production, the proportion of lithium iron phosphate batteries has been on the rise since May and surpassed that of ternary lithium batteries in July.

Data show that in July 2021, lithium iron phosphate batteries loaded 5.8GWH, up 235.5% from the same period last year, 13.4% from the previous month, accounting for 51.3% of the total installed capacity; the total loading of ternary batteries was 5.5%, up 67% from the same period last year, down 8.2% from the previous month, and the proportion of loading fell to 48.7% from 54.1% in the previous month.

In August, the proportion of ternary lithium batteries continued to fall to 43%, while the proportion of lithium iron phosphate batteries increased to 57%. In the same month, lithium iron triphosphate batteries totaled 7.2GWh, up 361.8 percent from the same period last year and 24.4 percent from the previous month; ternary lithium batteries totaled 5.3GWhs, up 51.9 percent from the same period last year and down 2.1 percent from the previous year.

The performance-to-price ratio and safety are prominent, and lithium iron phosphate surpasses ternary in an all-round way.

It can be seen that in May and July this year, lithium iron phosphate batteries exceeded the output and installed capacity of ternary lithium batteries respectively. Since then, until August, the growth rate of lithium iron phosphate battery is much higher than that of ternary lithium battery.

For the return of the strong return of lithium iron phosphate battery, analysts at the Global Automotive Research Institute said that it is inseparable from its two major advantages, one is cost-effective, the other is safety.

In recent years, with the continuous innovation of battery technology structure, the performance-to-price ratio of lithium iron phosphate battery is becoming more and more prominent, such as CTP, blade battery and other structural innovation to improve the battery life performance and performance-to-price ratio of LFP battery. In addition, with the gradual decline of new energy subsidies, middle and low-end passenger cars, buses, logistics vehicles and other sensitivity to cost, with a more cost-effective LFP battery is more favored by car companies.

Huaan Securities has pointed out in the industry research report that in terms of cathode materials, lithium iron phosphate can reduce the cost by 65% compared with ternary batteries by 65%; even if the limit calculation of cobalt-free and ternary prices is taken into account, the cost of lithium iron phosphate is still significantly better than ternary, with 55% and 22% cost reduction advantages in cathode and battery respectively.

In addition, the frequency of spontaneous combustion accidents of new energy vehicles also makes the industry pay more attention to the safety of power batteries. Compared with ternary batteries, lithium iron phosphate batteries have inherent advantages in this respect. The experimental results show that the LFP battery has great advantages in safety performance and cycle life. 1C charge and discharge cycle life can reach 2000 times, puncture does not explode, and it is not easy to explode and burn when overcharged.

On the basis of these two major reasons, at present, many star car companies and new car-building forces have launched lithium iron phosphate models, and international car brands also intend to test the use of lithium iron phosphate batteries, which plays a positive role in improving the market share of lithium iron phosphate batteries. For example, some popular products with LFP batteries, such as Tesla model3, BYD Han and Wuling Hongguang MINIEV, have directly driven the growth of LFP battery installation, and this promotion is expected to continue. The proportion of lithium iron phosphate models in the new energy vehicle declaration catalogue of the Ministry of Industry and Information Technology has increased, and the proportion of passenger vehicles installed has increased more significantly.

Another industry insiders pointed out that an important reason for the increase in market share of lithium iron phosphate batteries is that the current power battery market is in a state of shortage, while the production capacity of domestic lithium iron phosphate battery materials is greater than that of nickel-cobalt-manganese ternary lithium battery materials, and there are also more lithium iron phosphate battery manufacturers that can produce lithium iron phosphate batteries that meet the needs of automobile companies, so lithium iron phosphate batteries can be used more widely.

The performance has its own advantages and disadvantages, and lithium iron phosphate / ternary will go hand in hand.

It should be pointed out that the lithium iron phosphate battery also had a glorious moment before this anti-overrun. According to the observation and analysis of the Global Automotive Research Institute, lithium iron phosphate batteries won 73% of the market share in 2016 by virtue of the installed capacity of 19.98GWh (new energy commercial vehicles installed about 18.24GWh, new energy passenger vehicles installed 1.74GWh).

Since then, with the rapid rise of new energy passenger cars equipped with ternary lithium batteries, the market share of ternary lithium batteries has soared from 27% in 2016 to 65% in 2019, while lithium iron phosphate batteries have declined all the way to 32% in 2019. However, the situation showed signs of reversal in 2020.

In 2020, the total loading of lithium iron phosphate batteries was 24.4 GWH, accounting for 38.3% of the total loading, an increase of 20.6% over the same period last year. Although the total loading of ternary lithium batteries reached 38.9 GWH, accounting for 61.1% of the total loading, its growth rate decreased by 4.1% compared with the same period last year.

In 2021, the warming trend of lithium iron phosphate battery is becoming more and more obvious, and the output and installed capacity of ternary lithium battery have been reversed, and the monthly growth rate of ternary lithium battery is much higher than that of ternary lithium battery.

As the two mainstream battery technology routes in the global electric vehicle industry, the "war" between lithium iron phosphate batteries and ternary lithium batteries has never stopped. And from 2016 to 2021, lithium iron phosphate battery and ternary battery showed an obvious trend. The reason for this situation, in addition to their respective advantages and disadvantages, there is also an important reason is the new energy vehicle subsidy policy.

In December 2016, the state included the energy density of the battery system in the assessment criteria for the first time, and products with higher energy density and longer mileage will receive higher subsidies, which has directly contributed to the rapid expansion of the ternary lithium battery market with higher energy density. By 2020, the new energy subsidy policy gradually declined, and the state stopped further promoting the energy density and mileage of vehicle battery packs, and instead began to improve battery safety to the level of policy. this has become an important driving factor for the return of lithium iron phosphate batteries.

If we say that before 2020, the subsidy policy is an important starting point for determining the development of lithium iron phosphate batteries and ternary lithium batteries. Then after the subsidy declines in 2020, the advance and retreat of the two will depend on their respective abilities. For the full return of lithium iron phosphate battery, the industry has also put forward some thoughts on the development prospect of the whole power battery market, including ternary lithium battery.

At present, a common point of view is that lithium iron phosphate battery and ternary battery have their own advantages and disadvantages in terms of performance, in which ternary battery has high energy density and good low temperature performance, while lithium iron phosphate battery has low cost, good high temperature performance, long life and high safety. Based on this, ternary battery and lithium iron phosphate battery will go hand in hand in the future. Overall, the main high-performance models will continue to use ternary batteries, while more cost-effective models will give priority to lithium iron phosphate batteries, vehicle enterprises will make targeted choices according to different market needs.

Zeng Yuqun, chairman of Ningde Times, predicted in April this year that in the power battery market, the market share of lithium iron phosphate will gradually increase, while the proportion of ternary batteries will decrease, but there will still be demand for battery life and high energy density for many high-end models, so ternary batteries will still have market space.