An engineer inspecting Ionic 5 (Image courtesy of Hyundai Motor Co.)
SEOUL, Aug. 21 (Korea Bizwire) – In the wake of electric vehicle (EV) fire controversies, lithium iron phosphate (LFP) batteries are gaining attention in the global market.
Known for their stability and cost-effectiveness, LFP batteries are seeing steady demand compared to their premium counterparts, nickel-cobalt-manganese (NCM) batteries.
However, South Korean battery manufacturers find themselves in a race against time, with mass production of LFP batteries not expected until 2026.
Industry insiders report a growing spotlight on LFP batteries, particularly in the mid-to-low-price EV segment. LFP batteries use iron phosphate, which is significantly cheaper than the cobalt used in NCM batteries, resulting in lower production costs.
Their olivine crystal structure also contributes to better stability, reducing the risk of overcharging and over-discharging.
The three major South Korean battery makers — LG Energy Solution, SK On, and Samsung SDI — are in various stages of preparing for LFP battery production. LG Energy Solution plans to supply 590,000 pouch-type LFP batteries to Renault’s Ampere by late 2025.
SK On anticipates starting EV LFP battery production as early as 2026, while Samsung SDI is focusing on energy storage systems (ESS) LFP batteries for the same year.
This delayed entry into the LFP market stems from the South Korean companies’ previous focus on developing NCM batteries for the premium market.
An industry insider explained, “With China dominating the LFP battery market for decades, Korean battery makers strategically targeted the premium NCM battery market.”
However, the landscape has shifted with the increasing popularization of EVs. As price competitiveness becomes crucial, the more affordable LFP batteries are gaining favor over expensive NCM alternatives.
Additionally, consumer perceptions about LFP batteries’ shorter driving range are improving as EV adoption becomes more widespread.
Currently, China dominates the global LFP battery market, producing over 95% of LFP batteries in circulation worldwide.
The country has established a comprehensive domestic supply chain, from raw materials like lithium carbonate and iron phosphate to finished products. Since 2021, more than half of Chinese EVs have been equipped with LFP batteries.
A report by the Korea Institute for International Economic Policy emphasized the challenges ahead: “Competition between Chinese companies with vertically integrated supply chains and Korean firms just entering the LFP battery business will be tough. Korean companies must also prepare for competition in securing resources as they build their LFP supply chains.”
Despite the late start, the Korean battery industry remains optimistic. An industry representative stated, “While there’s regret about not entering the LFP market two years earlier, we believe there’s a good chance to compete with Chinese firms once our mass production begins in 2026, especially given the demand from North American clients for LFP batteries.”
As the global EV market continues to evolve, the success of South Korean battery makers in the LFP segment could reshape the industry landscape, potentially challenging China’s current dominance.
Kevin Lee (kevinlee@koreabizwire.com)
