Installed Capacity of LFP Batteries Likely to Grab 60% of Market Share by 2024

SHANGHAI, Apr 26 - According to Drew Baglino, Tesla's senior vice president of engineering, half of Tesla's vehicles are now installed with lithium iron phosphate (LFP) batteries.

This echoes a statement made by Tesla CEO Musk in the July earnings presentation in 2021. At that time, Musk said that Tesla would gradually move to a LFP battery solution in the future, and that in terms of battery composition, two-thirds of future Tesla vehicles would use LFP batteries and one-third nickel-based batteries.

Tesla's shift is actually following and in turn enhancing the market trend. In the China market, according to statistics from the China Automotive Power Battery Industry Innovation Alliance, the share of domestic LFP batteries in the installed power battery capacity has increased from 38% in 2020 to 52% in 2021, and the has surpassed that of ternary material batteries.

Tesla Shanghai’s standard models, the Model 3 and Model Y, are equipped with LFP batteries, and their production will soon be expanded to the factory in Fremont, California. In fact, Tesla may be planning a dedicated LFP battery factory closer to the US and may have been exploring the Chinese manufacturing potential.

Tiburon Consulting said that LFP batteries, with advantages like cost-effectiveness and with the continuous progress of technology, may take up 60% of global installed power battery capacity by 2024.

In fact, automotive-grade power battery is only one application scenario of LFP battery. In the non-power battery fields, LFP battery is also promising, such as 5G base station energy storage, new energy power generation-related energy storage.

At present, the domestic power-side energy storage projects that have been put into operation mostly use LFP energy storage batteries. Considering the cost efficiency of LFP batteries, it is still likely to become the main direction of domestic energy storage batteries. The new installed capacity of electrochemical energy storage in 2021 stood at 2.5/3.4GW, and the combined installed capacity is expected to reach 35.52/55.88GW by 2025. In 2025, electrochemical energy storage field will see an added demand of 13.0-23.1Gwh, equalling to the demand for 30,000-54,000 mt of LFP materials.

When talking about replacing lead-acid battery with LFP battery, the energy density of the latter is about four times that of lead-acid batteries, and the cycle life is also 3-4 times that of the former. The energy conversion efficiency of LFP battery is up to 97%, which is more environmentally friendly. Previously, the most outstanding advantage of lead-acid batteries is its low cost. And now, the prices of LFP batteries are close to that of lead-acid batteries. Considering the cost of a single cycle, the cost of LFP batteries is less than 1/3 of lead-acid batteries. As such, it is a destined trend to replace lead-acid batteries with LFP batteries.