According to China Business News, on November 12, the China Automotive Power Battery Industry Innovation Alliance (hereinafter referred to as the “Power Battery Alliance”) released statistical data showing that from January to October, the cumulative domestic power battery installation volume reached 578.0 GWh, representing a year-on-year increase of 42.4%.

Among these, ternary lithium batteries accounted for 107.7GWh (18.6% of total installations), representing a 3.0% year-on-year decline. Lithium iron phosphate batteries reached 470.2GWh (81.3% of total installations), surging 59.7% year-on-year. The data reveals a distinct 80-20 market split between lithium iron phosphate and ternary lithium batteries.

This “80-20 pattern” emerged from the combined influence of multiple factors including technology, market dynamics, cost, and policy.

Both LFP and ternary lithium batteries can achieve high safety standards. Currently, LFP batteries hold a significantly higher market share than ternary lithium batteries in China. Each battery type offers distinct advantages, catering to different levels of automotive power requirements. LFP batteries offer lower costs and inherently superior safety, though their drawback is lower energy density, making them more suitable for mid-to-low-priced electric vehicles. Ternary batteries boast higher energy density and better power characteristics, but their disadvantages include relatively higher costs and requiring more safety enhancements, positioning them for high-end, premium electric vehicles.

Market Exhibits “80-20 Split” Pattern

From January to October this year, China's power battery installations reached 578.0 GWh, marking a 42.4% year-on-year increase. The market exhibits a clear “80-20 split”: Lithium iron phosphate batteries dominated with 470.2 GWh installed, accounting for 81.3% of the market share and growing 59.7% year-on-year, solidifying their leading position. Meanwhile, ternary lithium batteries saw their share shrink further to 18.6%, with cumulative installations declining by 3.0%.

In October alone, domestic power battery installations totaled 84.1 GWh, up 42.1% year-on-year. Ternary lithium batteries accounted for 16.5 GWh, representing 19.7% of total installations, with a month-on-month increase of 19.8% and a year-on-year growth of 35.8%. LFP battery installations reached 67.5 GWh, accounting for 80.3% of total installations, with an 8.6% month-on-month increase and a 43.7% year-on-year increase.

From January to October this year, new energy vehicle production and sales reached 13.015 million units and 12.943 million units respectively, representing year-on-year increases of 33.1% and 32.7%.

According to the Power Battery Alliance, the average battery capacity per new energy vehicle in China from January to October was 53.0 kWh. The average battery capacities for new energy passenger vehicles, trucks, buses, and special-purpose vehicles were 45.4 kWh, 188.5 kWh, 192.5 kWh, and 196.1 kWh, respectively.

By vehicle type, from January to October, pure electric vehicles accounted for 81.5% of installations, with cumulative year-on-year growth of 75.0%; plug-in hybrid electric vehicles accounted for 18.4%, with cumulative year-on-year growth of 38.4%; fuel cell vehicles accounted for 0.07%, with cumulative year-on-year decline of 3.2%.

From January to October, 51 power battery manufacturers supplied batteries to China's new energy vehicle market, unchanged from the same period last year. The top two, top five, and top ten battery manufacturers supplied 375.9 GWh, 472.3 GWh, and 545.7 GWh respectively, accounting for 65.0%, 81.7%, and 94.4% of total installations. The data indicates a high degree of market concentration within the power battery industry.

The Combined Influence of Cost and Technology

Lithium iron phosphate batteries commanding over 80% market share is no coincidence. After years of development, these batteries have precisely aligned with the current new energy vehicle industry's pursuit of ultimate cost-effectiveness during its scaling and mass adoption phase, thanks to their core attributes of safety, economy, and reliability.

In recent years, battery manufacturers have continuously pushed the energy density “ceiling” of LFP batteries through structural innovations, making ranges exceeding 600 kilometers achievable.

Simultaneously, advancements in fast-charging technology have significantly boosted LFP's energy replenishment efficiency, addressing a core user pain point.

Notably, the industry's recent “price wars” have made automakers extremely sensitive to battery costs, positioning LFP as a crucial choice for maintaining profit margins.

The rising market share of LFP batteries does not signal the demise of ternary lithium batteries, but rather their increased focus on high-performance, long-range premium vehicles and specific niche markets.

From the perspective of related industrial development, both lithium iron phosphate batteries and ternary lithium batteries are in demand. The low-altitude economy and robotics industries require power battery products with high energy density and excellent power characteristics, making ternary lithium batteries more promising. In the field of chemical energy storage, however, lithium iron phosphate batteries hold greater advantages.

China maintains world-leading capabilities in both lithium iron phosphate and ternary lithium battery technologies. Neglecting ternary lithium batteries would weaken our core competitiveness and leading edge.

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