South Korea-based LG Energy Solution will produce LFP (lithium iron phosphate) battery at its factory in Nanjing, China, with production expected to kick off in 2023, according to Chinese media.
As one of the global leaders in lithium ternary batteries, LG Energy began the R&D of pouch-type LFP batteries at the end of 2020. Recently, LG Energy has also demonstrated new LFP battery-based energy storage solutions in Germany.
Since China has the world’s most complete LFP batteries supply chain, LG Energy’s battery production at its Nanjing factory is expected to benefit from high production efficiency and easy access to material & equipment suppliers.
According to market analysts, LG Energy will initially focus on the LFP battery’s application in energy storage systems, as the time for product certification is much shorter compared to electric vehicles (EVs), leading to faster return on investment. Besides, batteries designated for energy storage systems have begun to shift from ternary lithium batteries to LFP ones, due to the former’s problem of spontaneous explosion.
In China’s EV market, the share of LFP batteries jumped from 30% to 50% in 2021, and demand for LFP batteries will remain strong in 2022. In addition to Chinese EV vendors, Hyundai Motor and SsanfYong have also ordered LFP batteries from Chinese suppliers like Contemporary Ampere Technology and BYD.
Therefore, LG Energy is expected to compete for LFP battery orders from international EV vendors, including existing automakers. In particular, LG Energy will reportedly cooperate with US-based automakers to produce LFP batteries targeting the US market, bringing a competitive edge to LG Energy, since Chinese LFP battery makers have yet to enter the US market.
LG Energy has supplied ternary lithium batteries for Tesla’s Gigafcatory 3 in Shanghai, China, and has also set up a joint venture with China’s Geely Automobile to manufacture ternary lithium batteries in China.