The authors are analysts of NH Investment & Securities. They can be reached at email@example.com and firstname.lastname@example.org, respectively -- Ed.
With the advent of cell-to-pack (CTP) technology, the importance of material reliability is increasing -- a factor highlighting the potential of lithium phosphate (LFP) cathode. In order to drive up growth, Tesla is considering adopting CTP+LFP technology at its Shanghai plant. Rather than spreading globally, however, the use of LFP cathode is likely to center on China for the time being.
LFP growth story led by CTP tech and Tesla
Helped by the advent of cell-to-pack (CTP) technology, the growth potential of lithium phosphate (LFP) cathode is beginning to shine. When applying CTP technology, the design structure of a rechargeable battery changes from the existing ‘cell → module → pack’ to ‘cell → pack’. However, the application of CTP technology means that improving cell stability is essential. One way to enhance the structural stability of cells is to use LFP cathode. As LFP materials are olivine-based, structural oxygen emissions are limited, a factor which helps to improve cell stability. Of note, CATL and BYD have showcased their CTP technologies based on LFP cathode.
Media reports on Tesla’s adoption of CTP+LFP has brightened the growth outlook for LFP players. In detail, we believe that there is a high possibility that Tesla will introduce CTP+LFP technology at its Shanghai Giga factory. When applying CTP+LFP technology, costs can be reduced by 28-30% compared to nickel cobalt aluminum (NCA)/nickel manganese cobalt (NMC), while energy density is known to be 145-165Wh/kg, which is similar to NCA/NCM.
Anticipate LFP market growth, driven by Chinese market
Looking at 2019 global cathode shipments, the portion of LFP was about 20%. But, LFP occupied the largest portion of 2019 Chinese cathode shipments, showing a hefty 36%. We point out that LFP is mostly produced in China, and both CATL and BYD have officially shared plans to start mass production of CTP+LFP for use in electric vehicles from 2020 -- BYD’s mass production is slated to being in March. Of note, the portion of LFP in 2020E rechargeable battery shipments is estimated at 35% for CATL and 28% for BYD.
Beneficiaries of anticipated Chinese market-driven LFP market growth should include CATL (cell), BYD (cell), Guoxuan High-Tech (cell), Eve Energy (cell), Dynanonic (LFP cathode), Baoan Group (LFP cathode), Xiangtan Electrochemical Scientific (LFP cathode), and Tinci Materials Technology (LFP cathode precursor).