There is a forecast that lithium iron phosphate batteries will become the mainstream in the power battery market.

TrendForce announced on the 19th that the global market share of lithium iron phosphate batteries will reach 60% by 2024, establishing them as the mainstream in the power battery market.

Global new energy vehicle (NEV) brands such as Tesla, BYD, NIO, Li Auto, and Volkswagen have successively raised their electric vehicle (EV) sales prices in the 22nd quarter due to rising prices of raw materials for electric power batteries.

TrendForce believes that the power battery is the core component that accounts for the largest portion of the total cost of an electric vehicle, and reducing the cost of power batteries will be a key strategy for companies to maintain their future competitiveness.

As technological innovation continues, lithium iron phosphate batteries are expected to account for more than 60% of the installed capacity of the global power battery market by 2024.

TrendForce reported that in China, the world's largest electric vehicle market, the power battery market reversed in 2021, with lithium iron phosphate batteries officially surpassing tertiary batteries with 52% of installed capacity. Lithium iron phosphate plant capacity continued to grow steadily in the first quarter of 2022, reaching 58%, showing a growth rate that surpasses that of ternary batteries.

However, from the perspective of the global EV market, Samwon Battery still held a market share of over 60% in 2021, significantly outpacing lithium iron phosphate batteries, which held a market share of approximately 32-36%, thanks to the rising NEV penetration rate in Europe and the US.

▲ China's power battery installation capacity (Image source: TrendForce)

Although the current gap between these two materials is significant, the production capacity plans of global new energy battery cathode material manufacturers over the past two years indicate that the scale and speed of lithium iron phosphate materials will significantly exceed those of ternary materials.

According to TrendForce research, the planned expansion projects announced by global cathode material manufacturers are currently concentrated in China and South Korea, with a nominal total planned production capacity of over 11 million tons, of which the planned production capacity of lithium iron phosphate cathodes accounts for approximately 64%.

However, since the planned production capacity exceeds market demand, there is likely to be a gap between the industry's total planned production capacity and actual future production capacity.

It is unknown to what extent actual effective production capacity can be increased in the future.

Since the second half of 2021, prices for key battery raw materials such as lithium, cobalt, and nickel have been rising, and the global power battery supply chain is reeling from uncertainties such as the Russia-Ukraine War and the global pandemic.

There will be a short-term gap between the growth rates of supply and demand, and companies will have to adjust their future competitiveness.We will focus more on reducing the cost of battery materials and securing the supply chain, which are key issues.

Following this trend, TrendForce expects the cost-effectiveness of lithium iron phosphate batteries to become even more prominent, and anticipates that this type of battery will have the opportunity to become mainstream in the terminal market within the next two to three years.