[SMM Analysis] Forecast for the Future Development Trend of Ternary Materials

1. LFP will continue to encroach on the market share of ternary materials

2. High-nickel trend in ternary materials

LFP will continue to encroach on the market share of ternary materials:

Overseas:

Reasons: 1) South Korea, Europe and the US have a trend of transitioning to LFP. Hyundai and Kia Motors announced a joint development of LFP cathode active materials. LG has announced it will supply LFP batteries to Ampere, and Samsung is also heavily investing in the expansion of the LFP market. 2) Overseas NEV growth is lower-than-expected. In Q3, Europe decreased by 2.6% YoY. The US increased by 11% YoY, lower than the expected 30%.

China:

Reasons: In 2023, ternary batteries accounted for about 32% of the national lithium battery production. However, from January to September 2024, this share has dropped to 28%. As the advantages of LFP batteries in terms of safety, economy, and lifespan become more apparent, the demand for LFP and ternary batteries in the market is expected to continue to grow. However, since the growth rate of LFP batteries is significantly higher than that of ternary batteries, LFP batteries are expected to further encroach on the market share of ternary batteries.

High-nickel trend in ternary materials:

Reasons: In the medium to long term, consumer 6-series will gradually replace part of the consumer 5-series market share, and power 6-series will gradually replace part of the power 8-series market share. In the consumer sector, although the price of the 6-series is similar to that of the 5-series, its performance is significantly better than the 5-series. Therefore, in the medium to long term, the 6-series is expected to gradually occupy part of the 5-series market. In the power sector, the energy density of existing 6-series products can reach 735Wh/kg, close to the 739Wh/kg of the 8-series. Additionally, the 6-series is superior to the 8-series in terms of safety and price. Therefore, in the medium to long term, the proportion of 6-series materials is expected to gradually increase to be on par with the high-nickel 8-series. It is forecasted that ternary materials will maintain a trend of high-nickel and medium-nickel development in the future.