Lithium iron phosphate (LFP) battery is a lithium-ion battery that uses lithium iron phosphate (LiFePO4) as the positive electrode material. It has the advantages of high energy density, high safety, long cycle life, and no memory effect, and is one of the mainstream lithium-ion battery products in the market. With the rapid development of the new energy vehicle industry, the demand for lithium iron phosphate batteries as power batteries has grown rapidly. From 2018 to 2021, the market for lithium iron phosphate batteries in China has experienced significant fluctuations due to factors such as range, cost, and policies.

Our country's policies encourage the development of the new energy vehicle industry, and the subsidy for power batteries with higher energy density is greater. Compared with ternary batteries, lithium iron phosphate batteries have weaker energy density advantages. From 2018 to 2019, their demand in the power battery field continued to decline, with ternary batteries dominating. In the positive electrode materials of ternary batteries, nickel and cobalt are indispensable, and their prices are relatively high. Since 2020, due to tight market supply, the prices of nickel and cobalt have rapidly increased. Coupled with the decline of China's power battery subsidy policies, the cost pressure of ternary batteries continues to increase, providing opportunities for the development of lithium iron phosphate batteries.

In order to further improve energy density, ternary batteries are developing towards high nickel content, which has led to a decrease in their safety. The repeated occurrence of electric vehicle spontaneous combustion accidents has led to a decline in market trust. Compared to this, the safety advantage of lithium iron phosphate batteries is prominent, and in March 2020, BYD launched an improved lithium iron phosphate blade battery, which has a significant safety effect. At the same time, lithium iron phosphate batteries are constantly improving their internal architecture to enhance their energy density. In 2020, the installed capacity of lithium iron phosphate batteries rapidly increased due to its cost, safety advantages, and narrowing range gap.

According to the "2021-2025 Market Supply and Demand Status and Development Trends Forecast Report of China's Lithium Iron Phosphate Battery Industry" released by the Xinsijie Industry Research Center, the production and installed capacity of lithium iron phosphate batteries in China exceeded that of ternary batteries from May to July 2021. From January to September 2021, the installed capacity of power batteries in China exceeded 82GWh, with ternary batteries accounting for 58% of the total installed capacity. Although the installed capacity of lithium iron phosphate batteries in China was still lower than that of ternary batteries in the first three quarters, their proportion is rapidly increasing, and they have provided supporting facilities for best-selling and high-end cars. The number of supporting models continues to increase. From the full year of 2021, the development trend of the lithium iron phosphate battery industry is even stronger.

Industry analysts from Xinsijie stated that due to the decline in demand for lithium iron phosphate batteries in China from 2018 to 2019, the market is gradually approaching leading enterprises, weaker companies are gradually withdrawing, and industry concentration is constantly increasing. In 2020, the total installed capacity of lithium iron phosphate batteries in China reached 90%, with Ningde Times, BYD, and Guoxuan High tech accounting for a high market concentration. But in 2021, the demand for lithium iron phosphate batteries continues to explode, and it is expected that other enterprises besides leading enterprises will also increase their output. From 2021 to 2022, the competition in China's lithium iron phosphate battery market will become increasingly fierce.