According to China Chemical Industry News, the lithium battery industry is experiencing robust growth momentum. From January to September 2025, China's lithium-ion battery exports reached $55.38 billion, marking a 26.75% year-on-year increase. The domestic new energy vehicle penetration rate surpassed 45%, while energy storage installations surged by 60% year-on-year. The industry's total output value is projected to exceed the 3 trillion RMB threshold this year. As a core enabler, lithium iron phosphate (LFP) materials—accounting for nearly 74% of cathode material shipments—form the foundation for transportation electrification and the green energy transition.

However, the industry faces structural contradictions. In 2024, China's LFP cathode material capacity approached 4.7 million tons, yet actual output remained at just over 2.3 million tons, with capacity utilization hovering around 50%. From late 2022 to August 2025, LFP material prices plummeted from 173,000 RMB/ton to 34,000 RMB/ton—an 80.2% decline—plunging the entire industry into over 36 consecutive months of losses. Six listed companies recorded an average debt-to-asset ratio of 67.81%.

Despite surging demand since June 2025 driven by rapid growth in downstream new energy vehicle and energy storage markets—with leading companies' order backlogs extending into 2026 and production operating at full capacity—cost pressures for LFP materials remain unresolved. Disorderly competition coupled with irrational profit distribution along the supply chain is steadily eroding China's hard-won global supply chain advantages.

The cost structure of LFP materials is characterized by “raw materials accounting for the largest share, with energy consumption and direct expenses equally significant.” Raw material costs constitute 35%–40% of total expenses, while energy consumption and direct expenses each account for approximately 19%, period expenses make up 16%, and auxiliary material costs represent only 5%–6%, clearly outlining the cost composition. Only 16.7% of companies in the industry are profitable, far below the profitability rates of other core lithium battery material producers like ternary cathodes and anodes. Profit pressures and financial risks demand urgent resolution.

China's lithium iron phosphate industry peers propose: - Adopting cost indices as the “standard of measurement” to rebuild market pricing logic and curb destructive “internal competition”; - Using innovation and upgrading as the “breakthrough point” to pioneer new value growth avenues, propelling the industry's transition from “scale competition” to “quality competition”; - Focusing on supply-demand balance as the “lever” to build a collaborative development ecosystem and guide orderly capacity release.

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