Why companies are moving towards LFP batteries?

Why companies are moving towards LFP batteries?

A LFP battery is a type of lithium ion battery that has a cathode made of lithium iron phosphate (LiFePO4) and an anode made of carbon. The LiFePO4 battery has no nickel or cobalt, the raw material supply is more constant, and it has a greater cost advantage than ternary lithium batteries.

LiFePO4 batteries have gained popularity in recent years due to their benefits of long cycle life, good safety performance, high stability, and inexpensive cost. Tesla, BYD, Volkswagen, Tesla, Ford, Toyota, and a slew of other automakers have stated that they have or are exploring using lithium iron phosphate batteries into new vehicles.

In 2025, LiFePO4 batteries are expected to account for 36% of the batteries used in pure electric vehicles. However, in terms of cruising range, energy density, and low temperature tolerance, lithium iron phosphate batteries are marginally inferior to ternary batteries.

Globally companies are focusing on LFP Batteries

Globally, China’s LiFePO4 battery technology is at the forefront. China has made significant investments in the advancement of battery technology. Over the last decade, Chinese companies have aggressively promoted LiFePO4 batteries as an alternative to the more popular nickel-cobalt-manganese ternary batteries in the West.

When European and American companies abandoned lithium iron phosphate technology, some Chinese battery companies spent ten years researching it, improving the energy density of batteries and systems, and making it the mainstream technology route for low-end and mid-range models.

In comparison to other countries, China’s LiFePO4 battery technology has consistently achieved advancements and has greater benefits. China’s LiFePO4 battery technology has advanced significantly in the last two years. BYD, for example, introduced the blade battery, which not only retains the safety benefits of lithium iron phosphate materials but also compensates for energy density inadequacies with CTP technology. It is a product with all-around performance.

China dominance of LFP Batteries

Majority of the world’s lithium iron phosphate manufacturing capacity is currently located in China. With a steady increase in demand in international markets over the last two years, China’s lithium iron phosphate goods have been gradually deployed through export and local factory construction. It is a fantastic chance for China to supply lithium iron phosphate battery goods and materials to other countries.

Companies can use China’s lithium iron phosphate sector to secure global clients. Even if they eventually switch to the ternary method, this supply channel will help to develop the worldwide market. According to available data, China dominates LiFePO4 battery production and will account for 99.5% of world supply this year. China’s LiFePO4 battery production capacity is expected to account for 97% of global planned production capacity by 2030.

LFP Market Share to increase

The installed capacity of lithium iron phosphate battery technology in the international market is predicted to grow further due to constant innovation and development. The installed capacity of lithium iron phosphate batteries has officially surpassed that of ternary batteries, according to China’s power battery pattern.

According to relevant research institutions, lithium iron phosphate batteries rely on their cost-effective advantages, and with continuous technological advancement, the installed capacity of lithium iron phosphate batteries is expected to exceed 60% in the global power battery market in 2024.

Another point of view stated that there is still a lot of room for development in the energy density of lithium iron phosphate batteries with additional optimisation of the material system and process in the future. In this context, relevant Chinese enterprises have launched phosphoric acid material system battery products with higher energy density and improved low-temperature performance, such as lithium manganese iron phosphate.

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