Looking back at the US electric vehicle market, the term "lithium iron phosphate" (LFP) may have only briefly appeared a decade ago. 2011-2012 was the era of A123's independent operation, and models like the CODA, Spark EV, and Fisker's range extenders all used LFP. However, with A123's acquisition, the US battery market entered the era of ternary lithium batteries. With Tesla preparing to bring its standard version batteries to the US market next month, LFP will reappear. We can see that in both Europe and the US, Tesla was the first to spearhead the use of LFP in entry-level models, significantly changing the game in a sense.
I. Tesla North American Factory
Tesla has previously been plagued by battery shortages in the US. Analysis suggests that the Model Y's move to outperform the Model 3 is actually a strategic move by Tesla, a choice forced upon them by battery limitations. From a market perspective, Tesla is clearly favoring the Model Y.
In other words, Model 3 quarterly deliveries in the US market are currently suppressed. Tesla's battery supply chain has always been in a state of tight balance.
As the supply of batteries from China increased, Tesla found a solution: shipping batteries to its US factory. This model reduced costs (while maintaining the selling price of $39,990 in the US) and also resolved the demand balance issue for the Model 3 and Model Y.
Tesla has introduced a new LFP (lithium iron phosphate) battery option for its entry-level Model 3 Standard Range Plus (SR+) in the US market, with the prismatic batteries supplied by CATL (Contemporary Amperex Technology Co., Limited) of China. Due to strong demand for the Model Y, the estimated delivery time for new orders of the Model SR+ using Panasonic NCA 21700 batteries is currently until January 2022. Tesla has begun contacting some order customers via email to conduct a small-scale survey, asking if they would accept the LFP version, which could be delivered as early as September. With the delivery of LFP batteries in North America, we can see that LFP is beginning to penetrate the global market at a low cost.
Based on current data, the EPA-estimated range for the LFP battery is 253 miles (407 km), while the NCA battery offers 263 miles (423 km), a difference of 10 miles. Elon Musk has also offered his personal advice regarding LFP batteries: Tesla's LFP batteries can be charged to 100% within the available State of Charge (SOC) window without worrying about battery life, and he recommends consumers buy them.
Personally, I think the main problem that lithium iron phosphate solved was the fast charging speed issue, which was addressed through software adjustments. The SOC algorithm was also modified, and after it was relatively perfected, it began to conquer the world.
II. Assessment of the global adoption rate of lithium iron phosphate
Based on Tesla's timeline, the lithium iron phosphate (LFP) version of the Model 3 is expected to be introduced to the US market in September 2021. With the LFP version of the Model Y ramping up production in China, it's estimated that it will take another 6-9 months to gradually roll out the LFP version to Europe and the US. Based on this assessment, around Q3 2022, regardless of the progress of the 4680 (presumably a specific model or product) rollout, the supply of the entry-level version should be sufficient.
Among European automakers, Volkswagen's 40kWh MEB lithium iron phosphate version may also need to be accelerated, with Europe potentially launching lithium iron phosphate batteries in 2023-2024, roughly 1-2 years later than Tesla.
The biggest problem now is whether the price of lithium carbonate can be controlled with the large-scale use of lithium iron phosphate. As mentioned before, the previously expected cost of lithium iron phosphate was very low, and to achieve this price, the price of raw materials must be driven down.
summary:
With the full-scale resurgence of lithium iron phosphate (LFP) batteries, the Chinese power battery market landscape is undergoing a reshaping process, potentially shifting from a system dominated by leading companies with high market share to a more balanced approach. This entirely depends on the speed at which all automakers adopt LFP batteries and the subsequent introduction of B-point suppliers.
