On May 31, the lithium battery concept plate went up strongly again, and the lithium industry chain led by Ningde era rose sharply. In intraday trading, Ningde era stood above the trillion market capitalization mark, becoming the first stock in the gem to break through trillion yuan.

According to Reuters, the United States has passed the US Clean Energy Act, proposing detailed rules for changing subsidies for new energy vehicles, which removes the restriction on the decline of subsidies after a total of 200000 new energy vehicles have been sold by car companies. the tax rebate subsidy will not be phased out within three years until the penetration rate of new energy vehicles in the United States reaches 50%, and the subsidy policy exceeds market expectations.

You know, the penetration rate of new energy electric vehicles in the United States in 2020 is only 2.2%, which is significantly lower than 14.9% in Europe and 9.8% in China. With the landing of the policy and the substantial postponement of subsidies, new energy vehicle companies have significantly benefited, which will lead to a new round of global growth. The relevant sector market has been launched in an all-round way.

As the heart of the electric vehicle, the power battery accounts for nearly 40% of the total cost of the vehicle, of which the cathode material accounts for 3-40% of the whole power battery.

At present, there are no more than two kinds of mainstream cathode materials for electric vehicles, ternary materials and lithium iron phosphate. Both have their own advantages, high ternary energy density, long mileage, mostly used in passenger cars; lithium iron phosphate has good safety and long service life, and is used in commercial vehicles (including passenger cars and special-purpose vehicles).

The size of the passenger car is small, and the matching battery should not be too large, otherwise it will compress the internal space of the car body and at the same time want to have a good battery life, so it needs a battery with "small size and large capacity", which can be satisfied by the ternary battery.

Commercial vehicles are large, such as buses, trucks, trucks, etc., which can carry more lithium batteries, and lithium iron phosphate batteries are low-cost and durable, which is more in line with the economic needs of B-end customers.

However, as of September 2020, the permeability of lithium iron phosphate batteries in passenger cars and pure electric vehicles reached 99% and 91% respectively, and the market space was almost saturated. A month later, the price of lithium iron phosphate per ton fell to an all-time low of 32000 yuan per ton.

Unexpectedly, lithium iron phosphate, which was supposed to go all the way down, hit bottom and rebounded at that time. As of May this year, the simple price has rebounded to 51000 yuan, a V-shaped reversal trend, and the bottom has risen by 47.1% so far.

What happened behind the comeback of lithium iron phosphate this time? How is this different from the past? Will there be a reversal in the future?

A new battlefield of trillions of increments

Lithium iron phosphate battery, which dominates the world in the field of new energy commercial vehicles, has returned to the passenger car market by virtue of innovative battery package components, low cost, excellent safety and other factors, with the help of popular models to gradually increase the installed capacity.

The gap between lithium iron phosphate batteries and ternary batteries has been narrowing since October last year, and once exceeded in December 2020.

From the proportion of iron lithium and ternary loading, the two are already neck and neck. In March 2021, the loading capacity of the two types of batteries reached 3.89GWh and 5.09GWh, accounting for 43% and 57%, respectively, and the scissors of the two types of batteries narrowed to 14%.

The power battery with lithium iron phosphate as cathode material can make a comeback, which is inseparable from some popular hot-selling models to boost the demand.

At present, the permeability of new energy vehicles varies in different levels of passenger car market. In A0/A/B/C class, the penetration rate of new energy vehicles is only 3.7%, 3.3%, 8.2%, 4.5%.However, in the A00 field, the penetration rate of new energy vehicles is as high as 96.9%, much higher than the average of 5.9%.

A00 class passenger car refers to the wheelbase between 2m to 2.2m, service life in the 0~400km, generally can sit 2-4 people, representative models for Wuling Hongguang mini EV, Euler black cat, etc., the market positioning of this part of the car as a walking car, its sales target is also mainly to work white-collar workers.

In the "report on commuting in the country's major cities in 2020", the daily commuting distances of commuters in Beijing, Shanghai and Guangzhou are about 11km, 9km and 8.5km, respectively. The daily commuting distances in first-tier cities all exceed 5km. In addition, there are some use scenes such as shopping and picking up children. There is a huge demand for short-distance commuting.

In the ranking of sales of A00 new energy vehicles in 2020, Wuling Hongguang MINI EV firmly ranked first with sales of 119000 vehicles in the whole year, with a market share of 37.4%. Not only that, the car became the top seller of all new energy vehicles less than three months after its launch, and topped the list for eight months in a row.By the end of April this year, Wuling Hongguang mini EV sales had exceeded 200000.

Even for a simple scooter, Wuling Hongguang has three versions to meet different battery life needs, including 120km/h and 170km/h, all using lithium iron phosphate batteries, priced between 2.88 and 37600 yuan.

In January, Euler Black Cat, the second-largest seller of the A00-class EV, launched a cute version, changing its ternary battery to lithium iron phosphate battery, spending the battery costs on interiors and other devices to better serve the user experience.

In addition to the A00-class electric cars, other classes of passenger cars have also launched iron-lithium version configuration.In early March, XPeng Inc. announced the launch of the XPeng Inc. P7 rear-drive standard battery model, which uses lithium iron phosphate battery. The G3 also added a 460c Yue version with lithium iron phosphate battery. Another new car-building force, NIO Inc., also launched a lithium iron phosphate battery pack at the end of April.

It is believed that since the beginning of this year, due to the influence of inflation, a large number of raw materials have been rising, eroding the profit margins of downstream car companies, so car companies have set their sights on low-cost lithium iron phosphate batteries.

However, lithium iron phosphate battery is once again favored by new energy car companies, not a delaying tactic, but a strategic positioning for different consumer needs.

If the needs of people's cars and the mileage of EV vehicles are combined, they can be divided into several grades: 0~200km mainly meets the basic needs of rural transportation; 201~400km meets urban transport needs; 401~600km meets the needs of operating vehicles and cross-city travel; 600~800km can travel long distances; and mileage above 800km can be completely worry-free.

According to different needs, car companies will equip the same model with different batteries, such as 4.Lithium iron phosphate battery can be used for those below 00km; for 400~600km, lithium iron phosphate + CTP battery pack or ternary NCM523;600~800km battery pack with NCM523+CTP battery pack or above NCM811;800 can be equipped with NCM811 or NCA.

Take the B-class car Tesla, Inc. Model3 as an example, it is divided into standard range and long range, the mileage of the former is 450~468km/h, and the latter is 668km; in the domestic standard continued edition, it is divided into lithium iron phosphate and ternary, and the Model3 battery pack with lithium iron phosphate of Ningde era is better than that of Sanyuan.

This is the same as the current smartphone with low, standard and high specifications, the basic performance such as memory and storage capacity is different, can meet the diverse needs of consumers.

The iron-lithium version of the model will help EV car companies to capture the low-and middle-end consumers at more favorable prices, which are also the main consumers of the entire auto market. According to the data of the Federation of passengers, the number of people with consumer prices of 8-250000 cars in China is as high as 70%, of which the price of 8-120000 accounts for the largest proportion, about 30%.

It is a general trend to flexibly configure battery routes according to different levels of mileage, not the temporary launch of iron-lithium cars due to the rise in bulk raw materials. As early as last August at the China Automotive Forum, Volkswagen made it clear that lithium iron phosphate batteries would be used in the future, while Mercedes-Benz put forward the idea of using lithium iron phosphate batteries in medium and low battery life versions at a strategy conference in October.

In addition to cars, lithium iron phosphate batteries will also replace lead-acid batteries in areas such as two-wheeled electric vehicles.

Although the price of lithium iron phosphate battery is twice that of lead acid, the energy density and cycle life performance of lithium iron phosphate battery are 4 times higher than the latter, and the cost of single cycle is much lower than that of lead acid.

In 2019, China's lead-acid battery production reached 202.5GWh, accounting for 40 per cent of the global market share, of which two-wheeled electric vehicles accounted for 33 per cent of the battery, with a market size of 39.6 billion.

In addition to transportation, lithium iron phosphate batteries will also usher in a trillion-level energy storage market demand.

Under the background of carbon peak before 2030 and carbon neutralization in 2060, increasing the proportion of non-fossil energy consumption such as wind power and photovoltaic needs to be greatly increased. New energy sources such as photovoltaic and wind power are easily affected by the weather, so they need to use energy storage batteries to enhance their consumption capacity.

In terms of cost, cycle life, environmental protection and non-toxicity, lithium iron phosphate battery is better than ternary and lead-acid battery, and will become the main force of energy storage battery in the future.

At present, almost all of the energy storage batteries used in the domestic market are lithium iron phosphate batteries. According to GGII, China's energy storage battery shipments were 16Gwh in 2020, an increase of 68.4% over the same period last year. China's energy storage lithium battery shipments are expected to reach 68GWh by 2025, 4.2 times that of 2020, with a compound annual growth rate of more than 33%.

In early May, CATL announced that it signed a joint venture contract with ATL, in which CATL holds 70% of the shares and 30% of the shares. CATL plans to co-invest 14 billion to set up a new battery company, which is engaged in the research, development, production and sales of medium-sized batteries such as household energy storage and electric two-wheelers.

The two giants join hands to look forward to the future market demand for energy storage batteries. According to the estimation of Chuancai Securities, by 2025, the space provided by global 5G base stations, new energy vehicles and renewable energy grid for lithium iron phosphate will exceed 1 trillion yuan, and the domestic market space will also reach 600 billion yuan.

The base gas of lithium iron phosphate

The rejuvenation of lithium iron phosphate is essentially due to the innovation of battery pack components, such as BYD's blade battery and Ningde era's CTP (Cell to Pack).

For consumers and car companies, mileage is almost the first indicator of performance, and the battery life of lithium iron phosphate battery pack has been significantly improved through structural innovation.

Lithium iron phosphate battery has the advantages of high safety and long cycle life, but its disadvantages are also obvious, especially the lack of energy density and poor performance at low temperature. Compared with ternary materials 5 and 8, only 150Wh/kg can reach 210 and 260Wh/kg. At low temperature, the discharge capacity of the battery attenuates sharply, and the effective mileage of lithium iron phosphate will be reduced by nearly half at-20 ℃.

Because the current energy density (150Wh/kg) of lithium iron phosphate monomer is close to the theoretical limit (theoretical energy density 175Wh/kg), the space for improvement is very small.Therefore, to solve the problem of insufficient battery life, the mainstream solution is battery package innovation, and some auxiliary measures include building more charging piles, giving full play to fast charging performance (for example, 80% charging in 15 minutes), and comprehensively optimizing the user charging experience.

The blade battery of BYD is similar to the CTP of Ningde era, which belongs to the innovation of battery pack, which reduces the structure module and increases the energy density of the whole battery package to increase the mileage.

The core of the blade battery is to achieve a long strip cell through the inner series of small cells in multiple soft packages at the cell level, and densely assembled into PACK, reducing the number of structural components, looking long and flat, so it is vividly named "blade battery".

BYD "Han" is equipped with this battery, which has a 50% increase in energy density and a 30% reduction in cost compared with the same size battery pack, and can achieve 605km mileage, which is not inferior to that of mainstream ternary batteries.

The CTP of Ningde era also reduced modules and structural consumables, and the volume utilization of CTP battery packs increased by 20%, the number of parts decreased by 40%, and the energy density exceeded 180Wh/kg, which was comparable to NCM333 and had a range of up to 468km.

Due to the poor conductivity of lithium iron phosphate as a cathode material, it is easy to produce polarization at low temperature, thus reducing the capacity of the battery. in addition, the negative graphite in the battery will also be affected by low temperature, the speed of lithium intercalation will decrease, and lithium metal will precipitate from the surface. It is not safe to use it immediately after charging; in addition, the electrolyte will increase the viscosity at low temperature, and the lithium ion transfer impedance will also increase; and the adhesive problem …...

A variety of problems are intertwined, resulting in a particularly serious decline in the capacity of lithium iron phosphate batteries at sub-zero temperatures in winter. in a low temperature environment of-10 ℃, the battery capacity will decline by 20% 30% and nearly 50% for 20 ℃, and the actual mileage of the car will be directly halved.

Therefore, every winter, lithium iron phosphate electric car can not be driven by the news everywhere, not to mention enjoy the heating in the car in winter.

At present, both downstream vehicle manufacturers and lithium battery manufacturers have put forward corresponding solutions in this respect. The former focuses on BMS (Battery Management system), through thermal management technology, waste heat recovery, battery heating and other means to keep the cell temperature stable in a reasonable range.

Lithium battery manufacturers mainly start from the battery chemical system, take Penghui Energy as an example, through various attempts and exploration, it has been able to achieve a discharge retention rate of 91% under-20 ℃, with a substantial breakthrough in performance.

Three yuan to the left, iron lithium to the right

Since October last year, the prosperity of the lithium iron phosphate industry has rebounded, and the price per ton of lithium iron phosphate has rebounded from an all-time low of 32000 yuan / ton to 51000 yuan / ton, up 47.1% so far.

Among them, there is not only the pull of the demand side, but also the improvement of the supply side.At present, the competition pattern of the iron and lithium industry is clear. German Nano, Guoxuan Hi-Tech and Betteri account for 22%, 14% and 11% respectively, accounting for half of the country stably.

After a series of stages such as "demand growth leads to large-scale production expansion-overcapacity-both volume and price drop-tail capacity clearance", lithium iron phosphate CR3 has increased significantly from 6% in 2014 to 51% in 2020.

In contrast, the competition pattern of ternary materials is more scattered, with CR3 and CR5 at 35% and 52% respectively, with little difference in the market share of the top companies such as Rongbai, Bamo, long-term Lithium and so on.

At present, the top three iron lithium companies account for 50% of the industry's production capacity, of which German Nano and Beitre maintain high capacity utilization, reaching 95% and 89% respectively, while tail enterprises only have a 10-20% level.

The utilization rate of production capacity is directly linked to the unit manufacturing cost of the enterprise. the higher the utilization rate is, the lower the unit manufacturing cost and labor cost is. By dismantling the cost composition of German nanometer lithium iron phosphate cathode products, raw materials such as lithium, iron, carbon and phosphorus account for about 70% of the total cost, 20% of the manufacturing cost, and 10% of the labor cost. in other words, if the capacity utilization rate is increased by 50%, then the enterprise gross profit margin is 1020% space.

In addition, the industry's production expansion plans are focused on head companies. China International Capital Corporation estimates that the industry will release 160000 tons of production capacity in the next three years, of which 115000 tons will come from head German Nano, Beitre and Anda Technology (BYD subsidiary). The three account for 71.8 per cent of the total future increment.

As the head cathode material enterprises are often deeply bound with the downstream power battery manufacturers, production has supply, can maintain a high capacity utilization, while the tail enterprises have few sales, it is difficult to make a profit, the Matthew effect of the whole industry is further highlighted.

It is worth noting that the recovery of lithium iron phosphate industry in the short term does not mean that the high boom will continue all the time. From a longer-term point of view, lithium iron phosphate batteries have faced technical bottlenecks, and the reduction of ternary batteries will catch up with lithium iron in the future.

For car companies and battery manufacturers, cost reduction is not a simple digital price decline, which represents the decrease in raw material consumption per unit Wh brought about by the increase in battery energy density.

As mentioned above, the energy density of lithium iron phosphate monomer is close to the theoretical limit, in other words, the cost reduction of lithium iron phosphate can only depend on the unit price of raw materials and the reduction of scale effect.

In the future, ternary materials can reduce the proportion of cobalt and increase the energy density by continuously improving the material ratio, so as to reduce the cost per unit Wh.

Debang Securities predicts that by 2025, the price gap between lithium iron phosphate and ternary batteries will narrow from 20% to 5%, which is expected to achieve ternary parity.

Therefore, for power battery manufacturers, while grasping ternary high nickel, while continuing to push lithium iron phosphate is two parallel paths, together with car companies, consider the adaptation of batteries and models from different levels of consumer demand.