Lithium Iron Phosphate Opens A New Round Of Production Capacity "Expansion"

Lithium iron phosphate (LifePo4) material manufacturers are making every effort to increase production capacity. On August 30,2021, the Ningxiang High-tech Zone in Hunan, China signed a contract with an investment company for the lithium iron phosphate project. With a total investment of 12 billion yuan, the project will build a lithium iron phosphate project with an annual output of 200,000 tons, and will deploy 40 production lines. The product market is mainly for China's top battery companies such as CATL, BYD, and BSLBATT.

Prior to this, on August 27, Longpan Technology issued a non-public issuance of A shares, stating that it is expected to raise 2.2 billion yuan, which will be mainly used for large-scale production projects of new energy vehicle power and energy storage battery cathode materials. Among them, the new energy project will build a lithium iron phosphate(LiFePo4) production line by introducing advanced production equipment at home and abroad.

Earlier, Felicity Precision disclosed a non-public offering plan in June this year. The company intends to issue shares to no more than 35 specific targets including the company’s controlling shareholders. The total raised funds will not exceed 1.5 billion yuan, which will be used for the investment year. Production of 50,000 tons of new energy lithium battery cathode material projects, new energy vehicle intelligent electronic control systems and key components projects and supplementary working capital.

In addition, in the second half of 2021, Defang Nano is expected to expand the production capacity of lithium iron phosphate (LiFePo4) by 70,000 tons, Yuneng New Energy will expand its production capacity by 50,000 tons, and Wanrun New Energy will expand its production capacity by 30,000 tons. Not only that, even the Longbai Group, China Nuclear Titanium Dioxide, and other titanium dioxide manufacturers also use the cost advantage of by-products to produce lithium iron phosphate (LiFePo4) across the border. On August 12, Longbai Group announced that its two subsidiaries will invest 2 billion yuan and 1.2 billion yuan respectively to build two LiFePo4 battery projects.

Industry-related statistics show that in July this year, the domestic LiFePo4 battery installed capacity historically exceeded the ternary battery: The total domestic power battery installed capacity in July was 11.3GWh, of which the total installed ternary lithium battery was 5.5GWh, an increase of 67.5% year-on-year. A month-on-month decrease of 8.2%; LiFePo4 batteries total installed 5.8GWh, a year-on-year increase of 235.5%, and a month-on-month increase of 13.4%.

In fact, as early as last year, the growth rate of LiFePo4 battery loading has exceeded three yuan. In 2020, the total installed capacity of ternary lithium batteries was 38.9GWh, accounting for 61.1% of the total installed vehicles, a cumulative decrease of 4.1% year-on-year; the cumulative installed capacity of LiFePo4 batteries was 24.4GWh, accounting for 38.3% of the total installed vehicles, a cumulative increase of 20.6% year-on-year.

In terms of output, LiFePo4 battery has already been rolled over ternary. From January to July this year, the cumulative production of ternary lithium batteries was 44.8GWh, accounting for 48.7% of the total output, a cumulative year-on-year increase of 148.2%; the cumulative production of LiFePo4 batteries was 47.0GWh, accounting for 51.1% of the total output, a cumulative increase of 310.6% year-on-year.

Facing the strong counterattack of lithium iron phosphate, BYD Chairman and President Wang Chuanfu said with excitement: “BYD blade battery has pulled LiFePo4 back from marginalization with its own efforts.” The chairman of CATL, Zeng Yuqun, also claimed that CATL will gradually increase the proportion of LiFePo4 battery production capacity in the next 3 to 4 years, and the ratio of ternary battery production capacity will gradually decrease.

It is worth noting that recently, users in the United States who have ordered the enhanced standard battery life version of the Model 3 received an email saying that if they want to get the car in advance, they can choose LiFePo4 batteries from China. At the same time, LiFePo4 battery models also appeared in the US model inventory. Tesla CEO Musk claimed that he prefers LiFePo4 batteries because they can be charged to 100%, while ternary lithium batteries are only recommended to 90%.

In fact, as early as last year, six of the top 10 new energy vehicles sold in the Chinese market had already launched lithium iron phosphate versions. Explosive models such as Tesla Model3, BYD Han and Wuling Hongguang Mini EV all use LiFePo4 batteries.

Lithium iron phosphate is expected to surpass ternary batteries to become the dominant electrical energy storage chemical in the next 10 years. After gaining a foothold in the energy storage market, it will gradually occupy a dominant position in the field of electric vehicles.