Market investigation and prospect of LMFP battery

With the development of the new energy vehicle (NEV) industry, the driving range of electric cars keeps climbing. According to data from the New Energy Vehicle Application & Recommendation Catalogue released by the Ministry of Industry and Information Technology of China, the average range of NEV has increased from 160 kilometers in 2014 to 480 km in 2022. However, the improvement in energy density of lithium iron phosphate (LFP) battery installed on NEVs hit a bottleneck in 2019 when it reached the peak of 164.5 Wh/kg, and the figure is now approaching the upper limit set for mass production (175-185 Wh/kg).

Figure 1-1: Driving range and energy density of electric vehicles

As shown in the figure above, the driving range of battery electric vehicle (BEV) increases by an average of 50 km annually. If this trend continues, the average range of BEV will rise to 500 km, 550 km, and 600 km in 2023, 2024 and 2025 respectively, and the average energy density will reach 150 Wh/kg, 172 Wh/kg, and 188 Wh/kg. Mysteel also predicts that the inferior position of LFP battery's energy density will gradually present in 2024, thus affecting its penetration rate in power battery installation.

At present, LFP batteries account for more than 60% of the installed batteries, with the market scale exceeding Yuan 200 billion per year. Nonetheless, as the industry gradually sees the disadvantage of LFP battery in terms of energy density, lithium manganese iron phosphate (LMFP) is considered as a substitute material. So, what are the advantages of LMFP compared to LFP in battery applications?

According to Mysteel's research, LFP and LMFP have different strengths and weaknesses in energy density, cycle life and levelized cost of electricity, despite certain similarities in performance.

In terms of performance, both LFP and LMFP batteries have higher thermal stability and safety compared with ternary lithium battery. But LMFP battery performs better than LFP battery at low temperatures, exhibiting a capacity retention of 75.1% as against LFP's 67.4%.

Regarding energy density, LMFP's voltage platform is 4.1 V, 0.7 V higher than that of LFP due to the addition of manganese. Therefore, its theoretical energy density is about 15% higher than that of LFP, though based on Mysteel's research results, LMFP battery's energy density is only 5%-10% higher compared with LFP battery, mainly as manganese particles have different radius and intergranular space than iron particles, leading to a lower compacted density and thus limiting the real energy density of LMFP battery.

As for cycle life, the addition of manganese causes easy precipitation of manganese crystal which damages the cycle life of LMFP battery. Currently, due to notable differences in production processes and formulas among different manufacturers, LMFP cycles are also quite different. According to Mysteel's survey, the current LMFP cycles range from 800 to 3000 times, lower than those of LFP. The major industry solution is modifying material performance through ion doping to improve cycle life of LMFP battery.

Table 1-1: Comparison of battery performance indicators

Source: Mysteel

LMFP and LFP also have great differences in production process and formula. It is not easy to transform LFP production lines, so LFP battery manufacturers have no obvious technological advantages in producing LMFP batteries. First, manganese is added in raw materials of LMFP, and the proportion of raw materials also varies from different manufacturers, so the overall formula needs to be adjusted and improved. Second, the main challenge in production process lies in optimization of LMFP performance through graphite coating, nanocrystallization, ion doping and other means.

As for production cost, LMFP is currently in the early stage of industrialization, so its cost per tonne is slightly higher. At present, the cost of LMFP battery's cathode materials is 5%-10% higher than that of LFP battery, mainly because the production technology of LMFP battery is not yet mature, and the cost difference between manufacturers is large as well, according to Mysteel's survey.

Calculating based on the battery cost model and this week's material prices, the levelized cost of electricity of LMFP battery (adding 50% manganese tetroxide) was Yuan 0.937/Wh, 3.87% higher than LFP battery's Yuan 0.903/Wh, mainly due to higher cost in manufacturing cathode materials.

From the analysis of specific costs of cathode materials, lithium carbonate makes up 73% the cost of LMFP battery's cathode materials, while the adding of manganese tetroxide has little impact on reduction of levelized cost of electricity. At present, LMFP's non-material cost such as manufacturing expenses is 30% higher than that of LFP. It is expected that with the maturity of the industry, the difference of non-material costs between LMFP and LFP will gradually narrow, and the cost of LFMP may eventually be 10% lower than that of LFP.

If prices of lithium compounds remain high at Yuan 400,000-450,000/tonne in 2023, the mismatch between supply and demand may not ease until the end of 2024. The lithium compound prices are expected to gradually decline to Yuan 100,000-150,000/t in 2025. In addition, many manufacturers will start producing LMFP cathode at the end of 2023, which will help pull down the cost through industrialization. Mysteel estimates the cost of LMFP battery to be 7.8% lower than that of LFP battery in 2025.

Figure 1-4: Cost forecast curves of LMFP and LFP batteries