Since 2020, the lithium iron phosphate battery market has begun to recover and has entered a new growth cycle.
From the perspective of application market, lithium iron phosphate batteries are currently used in fields such as new energy vehicles, energy storage, 5G base stations, two-wheeled vehicles, heavy trucks, and electric ships.
The application of lithium iron phosphate batteries is the largest in the new energy vehicle sector, including new energy passenger vehicles, new energy buses, and new energy special vehicles. In the energy storage sector, lithium iron phosphate batteries currently account for more than 94% of the usage, including new batteries and secondary batteries, mainly used in UPS, backup power, and communication energy storage. The electric ship market has good future development prospects, and all applications in this sector are currently lithium iron phosphate batteries. Lithium iron phosphate batteries are also beginning to be used in the battery swapping market for two-wheeled vehicles.
As the market begins to move further away from policy-driven factors and towards true market-driven mechanisms, opportunities for lithium iron phosphate batteries will further open up.
In the new energy vehicle sector, Tesla's collaboration with CATL to enter the "cobalt-free battery" market at the beginning of 2020 brought lithium iron phosphate (LFP) batteries back to the forefront. Driven by significant sales growth in models such as the domestically produced Model 3, BYD Han EV, and Hongguang MINI EV, which are equipped with LFP batteries, many battery companies, including CATL, BYD, Guoxuan High-Tech, Ruipu Energy, and Penghui Energy, saw a substantial increase in the installed capacity of LFP batteries in the passenger vehicle market. According to industry statistics, the proportion of LFP battery shipments in total power battery shipments rebounded from 28% in 2019 to approximately 35-40% in 2020.
In the energy storage sector, the application of lithium iron phosphate batteries in 5G base stations has also shown rapid growth, opening up new market opportunities. In the first half of 2020, China Tower and China Mobile successively tendered for lithium iron phosphate battery energy storage projects as backup power for 5G base stations. Winning bidders included Penghui Energy, EVE Energy, Narada Power, Zhongtian Technology, Haisida, Shuangdeng Group, Xiongtao Power, Guangyu Power, and Lilang Battery.
It is understood that China will need to build or upgrade at least 14.38 million base stations in the future. Based on an estimated energy consumption of 2700W per station and 4 hours of emergency response, the 5G base station energy storage market will provide a demand space of 155GWh for lithium iron phosphate batteries, with a corresponding market size of over 100 billion yuan.
In the two-wheeled vehicle sector, lithium iron phosphate batteries have also found wide application. The implementation of the new national standard has brought about a large-scale replacement demand, which will drive the sales of two-wheeled electric vehicles to continue to rise. The continued development of the sharing economy and the large-scale deployment of shared electric bicycles in the market have also provided strong impetus for the increase in the production and sales of two-wheeled electric vehicles.
In the heavy-duty truck sector, the Ministry of Industry and Information Technology released the latest batch of "Announcements of Road Motor Vehicle Manufacturers and Products," which included 16 new energy logistics trucks, 10 of which were explicitly equipped with lithium iron phosphate batteries.
In the field of electric ships, all of the electric ships developed by EVE Energy, CATL, and Guoxuan High-Tech have adopted lithium iron phosphate batteries.
