As the number of electric vehicles equipped with lithium iron phosphate (LFP) batteries increases, concerns are growing over the reliance on the LFP cathode material market dominated by Chinese manufacturing companies. Domestic materials companies, which have focused on nickel-cobalt-manganese (NCM) batteries, plan to accelerate LFP cathode production leveraging their technological capabilities.
According to industry sources, on the 22nd, LG Energy Solution is receiving cathode materials for LFP batteries from the Chinese corporation 'Sangju Liwon.' LG Energy Solution is the only domestic battery company to successfully secure large-scale orders for LFP batteries and plans to supply Renault starting in the second half of this year.
LG Energy Solution signed a contract with Sangju Liwon last year to receive 160,000 tons of LFP cathode material over five years. This amount is sufficient to produce 1 million electric vehicles capable of traveling over 400 kilometers. It is also known that a cathode supply contract has been signed with Rungpankuji.
While the global automotive industry is increasing the adoption of LFP batteries to compete on electric vehicle pricing, the reliance on Chinese corporations for LFP cathode materials remains high. Companies such as CATL and BYD accounted for over 80% of the global LFP battery market share last year, and the top five companies in the LFP cathode market are all Chinese corporations.
While domestic corporations focus on high-performance NCM and other ternary batteries, China has concentrated on LFP batteries. Although LFP batteries are known for their high stability and low price, they have the drawback of low density, resulting in reduced efficiency. However, technological advancements have improved performance, and the adoption of LFP is increasing to lower electric vehicle prices. The adoption rate of LFP, which was only 7% in 2018, expanded to 40% last year.
Domestic battery corporations, including LG Energy Solution, are expanding investments in LFP, but the production of domestic LFP cathode materials is expected to begin next year. L&F, Ecopro, and LOTTE Energy Materials are currently in pilot production, with L&F aiming for mass production in 2026.
Following LG Energy Solution, Samsung SDI and SK On plan to begin mass production of LFP batteries next year. Domestic materials companies aim to gain a competitive advantage over China based on their technological capabilities and local production in the United States.
According to SNE Research, the global electric vehicle cathode material load in January and February of this year reached 2.806 million tons, a 46.6% increase compared to the same period last year. The load of ternary cathode materials, where domestic companies have strengths, totaled 1.282 million tons, marking a 15.1% increase. During the same period, the load of LFP cathode materials, centered around Chinese corporations, surged 90.4% to 1.524 million tons.