With the rebound of lithium battery production in the second quarter, the output of lithium iron phosphate batteries has reached a new high.

According to the latest market data, the production of lithium iron phosphate batteries reached 302 GWh in the first half of 2024, a year-on-year increase of over 60%. In June, the production of lithium iron phosphate batteries reached 63.8GWh, which not only far exceeded the same period last year, but also set a new high for lithium iron phosphate battery production.

The rapid growth in production of lithium iron phosphate batteries is partly due to the transition from peak to off peak seasons for lithium batteries, which has led to a rapid increase in production scheduling for lithium iron phosphate related enterprises.

After entering the second quarter, enterprises from material suppliers to battery manufacturers gradually entered the peak production season, and the production scheduling of related enterprises significantly improved.

According to data from the High Tech Industry Research Institute, lithium battery production increased significantly month on month in March, with a growth rate exceeding expectations. From the perspective of lithium iron phosphate battery production, the month on month growth in March compared to February exceeded 80%, indicating a strong recovery momentum in the industry.

Regarding the industry situation since the second quarter, Hunan Yuneng stated that its capacity utilization rate has reached a high level, while EVE Energy stated that its capacity utilization rate has been steadily increasing and the overall operating condition is good.

On the other hand, it is the continuous increase in downstream installed capacity, especially the proportion of lithium iron phosphate batteries loaded onto vehicles.

Market data shows that the installed capacity of lithium iron phosphate batteries reached 69.3% in the first half of this year, further increasing compared to last year.

In terms of growth rate, the installed capacity of lithium iron phosphate batteries increased by 39.3% year-on-year in the first half of this year, faster than the growth rate of ternary batteries. The continuous growth in the installation volume of lithium iron phosphate batteries shows a strong demand for them in the market.

In addition, the proportion of lithium iron phosphate installed in new vehicles is constantly increasing.

According to the "Announcement of Road Motor Vehicle Production Enterprises and Products" (Batch 385) issued by the Ministry of Industry and Information Technology, the proportion of installed models of lithium iron phosphate batteries exceeds 90%, and the number of models exceeds 400. In comparison, there are only over 20 installed models of ternary batteries. The increase in the proportion of lithium iron phosphate batteries in terminal vehicle models has also strongly driven orders and operations of upstream related enterprises.

It can be said that the adjustment and recovery of the lithium battery industry in the first half of the year were mainly benefited from the recovery of demand for lithium iron phosphate batteries.

However, it should be noted that although the production and installation of lithium iron phosphate batteries have achieved significant growth in the first half of this year, the industry also faces many challenges.

The outstanding performance lies in the fact that lithium iron phosphate related enterprises increase their income without increasing their profits. Due to fierce market competition and continuous price wars in the downstream dynamic storage market, the profitability of related enterprises in the middle and upper reaches continues to be under pressure.

According to some companies' disclosed performance forecasts for the first half of the year, lithium iron phosphate material companies have shown poor profitability and even incurred losses.

Overall, the industrial adjustment has entered a new stage, and the industry is undergoing a transition from high-speed growth to high-quality development.

Faced with fierce market competition and squeezed profit margins, upstream and downstream enterprises in the lithium iron phosphate industry chain need to accelerate technological innovation, improve product performance and quality, and break through market bottlenecks with differentiated competitive advantages. Meanwhile, strengthening supply chain management, optimizing cost structure, and improving production efficiency have become key factors for enterprises to maintain and enhance profitability.

With the rapid development of the dual track of dynamic energy storage, the lithium iron phosphate industry still needs to keep up with market demand changes, adjust production capacity layout, avoid overcapacity caused by blind expansion, and explore new application scenarios and market opportunities, such as eVTOL, smart grid, distributed energy and other fields, which will also bring new growth points to the lithium iron phosphate industry.