It is estimated that the installed capacity of lithium iron phosphate batteries in the world will account for 60% in 2024, becoming the mainstream of the power battery market.

Affected by the rising price of raw materials for power batteries, in the first quarter of this year, a number of new energy vehicle brands around the world, including Tesla, BYD, Weilai, ideal and Volkswagen, successively raised the sales price of electric vehicles. Trendforce Jibang consulting believes that as the core component occupying the highest cost of electric vehicles, reducing the cost of power batteries will be an important strategy for enterprises to compete in the future. With the advantages of cost performance and the continuous progress of technology, lithium iron phosphate battery is expected to account for more than 60% of the installed capacity in the global power battery market by 2024.

From the perspective of China, the world's largest electric vehicle market, the power battery market reversed in 2021. Lithium iron phosphate battery officially surpassed ternary battery with 52% installed capacity. In the first quarter of this year, the installed capacity continued to rise to 58%, and the growth rate was much faster than ternary battery. However, in terms of the global electric vehicle market, thanks to the increased market penetration of new energy vehicles in Europe and the United States, ternary batteries still far exceed lithium iron phosphate batteries with a market share of more than 60% in 2021, with the latter accounting for about 32 ~ 36%.

Although there is still a big gap at present, observing the capacity planning of global new energy battery cathode materials industry in recent two years, the scale and speed of production expansion of lithium iron phosphate materials will far exceed that of ternary materials. According to trendforce Jibang Consulting survey, currently, the proposed production expansion projects announced by the global cathode material industry are concentrated in China and South Korea, with a nominal total planned capacity of more than 11 million tons, of which the planned capacity of lithium iron phosphate cathode accounts for about 64%. However, due to the planned capacity exceeding the market demand, there will be a certain gap between the total planned capacity and the actual capacity of the industry in the future, and the actual effective capacity in the future remains to be seen.

It is worth noting that with the obvious rise of lithium, cobalt, nickel and other core battery raw materials since the second half of 2021, and the global power battery supply chain affected by Russia Ukraine conflict, epidemic and other uncertain factors, there will be a gap in the growth rate between supply and demand of the industrial chain in the short term. Enterprises will focus more on reducing the cost of battery materials and supply chain security, which are related to future competitiveness. Under this trend, trendforce Jibang consulting expects that the cost performance advantage of lithium iron phosphate battery will be more prominent, and it may become the mainstream of the terminal market in the next 2-3 years. The global installed capacity ratio of lithium iron phosphate battery to ternary battery will also change from 3:7 to 6:4 in 2024.