Demand for lithium iron phosphate (LFP) batteries is showing signs of recovery in China.
According to data from the China Association of Automobile Manufactures (CAAM), 2.4GWh of LFP batteries were used in China in the month of October, an on-year increase of 127.5%.
This continues the demand increase from August to September. LFP battery use increased by 100.1% year-on-year in August and 146.1% in September. In September, 2.3GWh of LFP batteries were used, according to CAAM.
The growth is likely led by Chinese battery giants CATL and BYD and their module-less technology. CATL supplies its cell to pack batteries to Tesla for the Model 3. BYD offers its blade battery technology.
Tesla begun exporting Model 3 with LFP batteries made in China to Europe.
If these Model 3 are imported to South Korea, car prices may be cut by over 5 million won. Currently, Model 3 in South Korea costs around 40 million won with subsidies.
LFP batteries are cheaper than NCM (nickel, cobalt and manganese) batteries. LFP’s price is 70 to 80 to NCM’s 100. LFP batteries are also considered safer. However, they are heavier and lack in energy density.
LFP batteries, however, is unlikely to become the mainstream battery. CATL and BYD are expanding their capacity for NCM batteries. Companies like Svolt and EVE Energy are doing the same. LFP batteries are also difficult for non-Chinese companies to produce as they need to secure materials and production know-how by building factories in China.
However, LFP batteries will likely be used more for industrial use, electric buses and radio stations. BYD is dominating the global electric bus industry.
LFP batteries will account for 30% of all batteries in 2030, according to market research firm Wood Mackenzie. LFP batteries accounted for 10% of the total back in 2015.