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| German Chancellor Olaf Scholz, second from left, listens to CATL Europe CEO Mathias Huettenrauch, left, at the Chinese battery maker's exhibition pavilion at IAA Mobility 2023 in Munich, Sept. 5. AFP-Yonhap |
Hyundai Motor joins global carmakers to choose inexpensive LFP batteries
By Park Jae-hyuk
Concerns are growing that Korean battery makers could lose their dominance over Chinese competitors in the global market excluding China, as more electric vehicle (EV) manufacturers prefer to use inexpensive lithium iron phosphate (LFP) batteries instead of ternary batteries, according to industry officials, Monday.
Data compiled by market tracker SNE Research showed that CATL's share of the EV battery market, excluding China, rose to 27.6 percent from 20.6 percent during the first seven months of this year from the same period of 2022. The battery market shares of BYD and Farasis also rose to 1.6 percent from 0.5 percent and to 1.1 percent from 0.7 percent, respectively.
In contrast, LG Energy Solutions (LGES) saw its market share drop to 28.2 percent from 28.5 percent. SK on saw its market share fall to 11.2 percent from 15.2 percent, while Samsung SDI's share decreased to 8.8 percent from 10.5 percent.
"Until four to five years ago, China's LFP batteries were seen as low-priced products for domestic use," Eugene Investment & Securities analyst Han Byung-hwa said. "However, the latest LFP batteries from BYD, CATL and Gotion High-tech are not inferior to ternary batteries."
Korean battery makers have focused more on ternary batteries, such as nickel, cobalt and manganese (NCM) and nickel, cobalt and aluminum (NCA) batteries, because LFP batteries underperform at low temperatures and cars equipped with such batteries suffer from shorter mileage.
However, CATL enabled its latest LFP battery, Shenxing, to reach a range of over 700 kilometers on a single full charge. Gotion High-tech also enabled its LFP battery, Astroinn, to reach a range of over 1,000 kilometers.
Based on the price competitiveness and upgraded performance, Chinese LFP batteries have been chosen by global carmakers, such as Tesla, Ford, Volkswagen, BMW and Mercedes.
Hyundai Motor Group also decided to use CATL's LFP batteries in the Hyundai Kona Electric and Kia Ray EVs. KG Mobility's Torres EVX will also be equipped with BYD's LFP batteries.
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| The Kia Ray EV equipped with CATL's lithium iron phosphate (LFP) battery / Courtesy of Kia |
"Carmakers have no choice but to choose LFP batteries, in order to make a certain level of profit or to minimize losses, when they sell massive volumes of budget EVs," Han said.
He also warned that the U.S. Inflation Reduction Act will be insufficient to prevent the use of Chinese batteries by global carmakers, considering that Chinese companies are aggressively trying to circumvent the U.S. law through their investments in the construction of joint plants in North America.
Against this backdrop, LGES CEO Kwon Young-soo said that the company plans to start the mass production of LFP batteries for EVs from 2025. SK on also disclosed the prototype of its LFP battery at InterBattery 2023 in Seoul in March.
Samsung SDI unveiled its lithium manganese iron phosphate (LMFP) battery, an LFP battery that includes manganese as a cathode component, during IAA Mobility 2023 in Munich last week.
"It is true that Samsung SDI was late in entering the LFP battery market, compared to Chinese competitors," Samsung SDI Executive Vice President Michael Son said in a recent conference call. "However, we will take advantage of our technologies and experience to distinguish ourselves from our competitors in the LFP battery market."
Some experts advised investors not to overreact to the growth of Chinese battery makers.
"Considering the previous cases, Chinese companies' announcements could be exaggerated," said Chae Hee-geun, researcher at KB Financial Group Research Institute. "You should not ignore the fact that demand for batteries with higher energy densities will continue to grow for various mobility and robotics industries"
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