Ternary and lithium iron phosphate, who will dominate the battery market in 2022

What will be the output and installed capacity of ternary batteries and lithium iron phosphate batteries in the coming year?

The ternary cost disadvantage is weakening

In 2021, the entire ternary lithium battery market will indeed be impacted by lithium iron phosphate batteries.

After three years of ternary lithium batteries having a significant market share advantage over lithium iron phosphate batteries, lithium iron phosphate batteries achieved a counterattack in 2021. Throughout the year, ternary lithium batteries were overtaken by lithium iron phosphate batteries in terms of production, sales and installed capacity:

Production

The annual output of ternary lithium batteries was 93.9GWh, a year-on-year increase of 93.6%, accounting for 42.7% of the total output, which was inferior to the output of lithium iron phosphate of 125.4GWh, a year-on-year increase of 262.9%, accounting for 57.1%.

Sales

The annual sales volume of ternary lithium batteries was 79.6GWh, a year-on-year increase of 128.9%, accounting for 42.8% of the total sales.

Installed capacity

The annual installed capacity of ternary lithium batteries was 74.3GWh, a year-on-year increase of 91.3%, accounting for 48.1% of the total installed capacity.

The study believes that although lithium iron phosphate batteries will perform well in 2021, ternary lithium batteries and lithium iron phosphate batteries will continue to coexist for a long time in the future. There is no complete rolling and substitution relationship, and there are only periodic ups and downs.

This has been reflected in the share of the three stages of ternary lithium batteries and lithium iron phosphate batteries surpassing each other in the past 12 years from 2009 to 2021.

In addition, ternary low-nickel batteries such as 3-series and 5-series batteries are only slightly higher than lithium iron phosphate due to their energy density and other properties, but their thermal runaway and other management costs are similar to those of the 8-series. Considering the price/performance ratio, it is easy to be seized by lithium iron phosphate batteries.

However, the high-nickel, ultra-high nickel and cobalt-free ternary batteries that gradually occupy the ternary share still have obvious competitive advantages in the high-end market, and their high-quality performance is unmatched and replaced by lithium iron phosphate batteries.

Although the number of car companies interested in lithium iron phosphate batteries is gradually increasing, the proportion of high-end brands using them is still low. In 2021, the terminal supporting car companies are still mainly concentrated in BYD, SAIC-GM-Wuling and Tesla, accounting for nearly 80%.

Even Tesla, which first proposed the use of lithium iron phosphate batteries in 2021, will only use lithium iron phosphate batteries on standard models around the world, while other high-performance models such as high-endurance models and high-end models such as Model X and Model S will still use ternary lithium batteries with high nickel and low cobalt, especially their 4680 large cylindrical batteries will be officially used in 2022.

It is worth noting that for the whole year of 2021, in terms of material prices of lithium iron phosphate batteries and ternary lithium batteries, although the absolute price of ternary materials is still higher than that of lithium iron phosphate, the price increase of lithium iron phosphate is higher than that of lithium iron phosphate. It has far exceeded the ternary material, which will weaken the cost disadvantage of ternary relative to iron and lithium.

The price of lithium iron phosphate (power type) has risen from 40,000 RMB/ton at the beginning of 2021 to 111,000 RMB/ton at the end of the year, an increase of 177.5%. As of January 14, the price has risen again to 126,000 RMB/ton.

The prices of the three most commonly used ternary materials, type 523, type 622 and type 811, have risen from 123,500 RMB/ton, 145,500 RMB/ton and 170,000 RMB/ton at the beginning of the year to 248,000 RMB/ton at the end of the year. , 266,000 RMB / ton and 276,000 RMB / ton, an increase of 100%, 83% and 62% respectively.

Full introduction of lithium iron phosphate into the market

In 2021, the output of lithium iron phosphate and the installed capacity of batteries have risen sharply. The main reason is that the price of upstream raw materials for lithium batteries mentioned in the study, such as the four major materials and copper foil, has risen sharply, resulting in a lower cost of lithium iron phosphate.

Batteries have obvious cost-effective advantages, and it also lies in the changes in the preferences of terminal car companies for the power batteries they use, especially the changes in the power battery matching of popular passenger cars.

Previously, due to the preference of the subsidy policy for battery energy density and vehicle cruising range, lithium iron phosphate batteries were mainly used in commercial vehicles. In 2021, the sales volume of commercial vehicles was 186,000 units, a year-on-year increase of only 46.6%, which was comparable to that of passenger vehicles.

The sales volume of 3.521 million vehicles is far behind the growth rate of 1.1 times, while the installed capacity of lithium iron phosphate for commercial vehicles is around 10GWh, a year-on-year increase of only single digits, which can be said to be basically the same as the installed capacity in 2020.

However, the installed capacity of lithium iron phosphate in passenger cars has exceeded 30GWh, a year-on-year increase of more than 900%, accounting for more than 75% of the total installed capacity of lithium iron phosphate power batteries. This is the main reason for the large increase in the installed capacity of lithium iron phosphate batteries in 2021.

This is reflected in the choices of major mainstream car companies in 2021. Domestic car companies such as BYD, Xiaopeng, Geely, and SAIC, as well as car companies such as Volkswagen, Tesla, Daimler, Ford, and Hyundai have all indicated that they will introduce lithium iron phosphate batteries.

Among the representative car companies such as Tesla’s current sales of Model 3 and Model Y in China, the iron-lithium version accounts for nearly 80% of the sales, and further standard battery life versions of Model 3 and Model Y in other markets around the world are also sold. Began to use lithium iron phosphate battery.

The Chinese car company BYD is also a leader in lithium iron phosphate batteries. The proportion of lithium iron phosphate batteries and ternary lithium batteries used in its models has suddenly increased from 5.5:4.5 in 2020 to 9.4:0.6 in 2021.

The collective preferences of major terminal car companies have also caused battery manufacturers to change their direction. LG New Energy and SK Innovation, which previously focused on ternary lithium batteries, also announced their entry into lithium iron phosphate in 2021.

Overall, the top ten battery manufacturers in terms of installed capacity of power batteries, except for Panasonic, have begun to deploy lithium iron phosphate batteries. Obviously, the substantial growth in the installed capacity and output of lithium iron phosphate batteries in mid-2021 is highly related to the change in power battery preferences of Chinese foreign car companies and the layout of power battery manufacturers.

Of course, the trend of accelerating the proportion of lithium iron phosphate in the whole year of 2021 is mainly concentrated in the Chinese market. The demand for lithium iron phosphate in other countries is not as high as that in China, and it is still dominated by ternary lithium batteries, but this trend is expected to be Changes will come in 2022.

If it is said that 2021 is the year when lithium iron phosphate batteries set off production and installed capacity of ternary lithium batteries in the domestic power battery market, then in the new year 2022, lithium iron phosphate batteries will continue to maintain their advantages in the Chinese power battery market.

In the international power battery market where ternary lithium batteries have always maintained a dominant position (in other countries, whether in the field of energy storage or new energy vehicles, ternary lithium batteries account for more than two-thirds) or will also face a rapid increase in market share , does not rule out the possibility of overtaking ternary lithium batteries for the first time.

The prospect of ternary and lithium iron phosphate

In 2021, the lithium iron phosphate industry chain will be in a high boom almost all year round.

Among them, the main players of lithium iron phosphate cathode materials are still professional players such as German Nano, Hunan Yuneng, Hubei Wanrun, etc. The annual output of lithium iron phosphate totaled 410,000 tons, a year-on-year increase of 179%.

The growth rate is almost the same as the sales of new energy vehicles (2.989 million units of retail sales, an increase of 169.1% year-on-year), and the overall balance between supply and demand, but by 2022, there will be many new players entering the game and conducting large-scale capacity expansion .

Phosphorus chemical companies (Chuanheng, Xingfa Group and other companies with upstream phosphorus resources), titanium dioxide companies (China Nuclear Titanium Dioxide and other chemical companies with raw materials and ferrous sulfate by-products), and companies that focus on ternary materials (Dangsheng Technology, Xiamen Tungsten New Energy, Long-term Lithium, etc. have all officially announced their entry into the lithium iron phosphate industry).

The production capacity planning is as high as 100,000 tons. Although these phosphorus chemical projects are gradually becoming stricter due to the current energy evaluation and safety evaluation approval, the new production capacity also has problems such as production capacity climbing, and the planned production capacity may not be able to come out quickly. However, in the long run, the supply of lithium iron phosphate may be in excess.

This will have a certain impact on the lithium iron phosphate industry. Once the demand for the lithium iron phosphate battery market by terminal car companies weakens, it may cause the overall overcapacity, especially the high homogeneity of the products of new players, there is no advantage over peers, and it is easy to cause vicious competition at low prices.

As for the ternary lithium battery, although it will be overtaken by the lithium iron phosphate battery in 2021, there is a lot of distance in terms of growth rate.However, in 2022, the launch of 4680 batteries and the process of high nickel and cobalt-free are expected to bring opportunities and a substantial increase in volume to ternary lithium batteries, and comprehensively increase the proportion of high-nickel ternary lithium batteries in the entire ternary lithium battery.

In 2021, my country’s output of ternary high-nickel materials, including NCA and NCM 811, will reach about 140,000 tons, a year-on-year increase of over 260%, with the supply side, cobalt-free lithium batteries, quaternary lithium batteries, and 4680 batteries suitable for high nickel ternary batteries with reduced costs and improved performance will be launched in 2022.

As well as the demand side, the high-end models and high-end brands of terminal car companies continue to increase the demand for high-nickel ternary batteries, and high-nickel ternary lithium batteries are expected to continue to maintain rapid growth, further occupy the share of medium and low nickel ternary, and realize the reversal of lithium iron phosphate batteries.