Lithium iron phosphate will dominate the global 3TWh lithium-ion battery market by 2030

According to the new analysis of lithium-ion battery manufacturing released by Wood Mackenzie Power & Renewables, it is estimated that lithium iron phosphate (LFP) will become the main battery chemical composition surpassing nickel-manganese-cobalt (NMC) by 2028, and the global market demand will exceed 3000GWh by 2030.

Asia-Pacific region will continue to lead the market

The top two manufacturers adding the most capacity are Ningde Times and South Korea's LG, which alone plans to have annual 800GWh capacity online by 2030. The top 15 manufacturers in 2021 have 200GWh's new production line running, with cumulative production capacity reaching 600GWh by the end of last year.

So far, Chinese manufacturers have comprehensively announced plans to build more capacity than 3000GWh. As a result, the Asia-Pacific region will continue to lead the market, with the world announcing that there will be 5500GWh manufacturing capacity in 300 plants by 2030, but then Europe and the US will begin to erode its share.

Although 90 per cent of the world's batteries are made in the Asia-Pacific region, most of them in China, that proportion will fall to 69 per cent by 2030, when Europe will account for 20 per cent, according to Wood Mackenzie.

Benchmark Mineral Intelligence calculates that by 2030, 18 different manufacturers in Europe will set up 27 super-factories, which will reach 789.2GWh capacity, accounting for 14% of the global market.

Soaring demand

Like Wood Mackenzie, the Clean Energy Association (CEA) has noticed a dynamic increase in competition between LFP and NMC batteries. Both companies point out that safety advantages, longer life cycles and lower costs have led electric carmakers to accept lower energy density tradeoffs when using LFP batteries.

LFP has been accepted by the fixed battery energy storage system (BESS) department, in which the energy density is often not a decisive factor.

Among the batteries sold by Chinese manufacturers, LFP outsold NMC and its market share grew throughout the year, according to CEA: 44 per cent of 100GWh lithium batteries used in EV and ESS were NMC and most of the rest were LFP.

Compared with NMC's more mature market technology, LFP's advantages make it attractive in power and energy applications. It is worth noting that supply chain problems in the battery market are unlikely to ease in 2022, especially with rising oil prices and a continued contraction in raw material commodities leading to an increase in demand for electric vehicles.

Nearly 80% of lithium-ion battery demand comes from the electric vehicle market, and zero-emission transport policies introduced in response to rising fuel costs are leading to a surge in demand for lithium-ion batteries. Still, more new factories are expected to be released this year.