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Global xEV Battery Value Chain – The Rise of LFP: Impact Across the Value Chain

Surging commodities prices, especially lithium, have led to significant cost inflation in battery materials, eroding margins across the global battery value chain.

CS Commodities Team estimates lithium prices could remain elevated -- at least until 2024 -- as the current tight supply situation is unlikely to be resolved even under a best-case scenario. Pricing dynamics have forced global auto OEMs to respond by switching to LFP batteries. The adaptations initially started in China and gradually spread across the US/Europe. We estimate China’s LFP market share to continue to rise next few years, and global (ex-China) LFP adoption to pick up as well.

Such a major shift would have significant implications across the global battery value chain, which was originally geared toward nickel-based batteries (NCM/NCA). Chinese battery makers and battery materials suppliers, which are already well placed in the LFP supply chain with a low-cost advantage, should be best positioned to ride the LFP demand surge and take higher global market share. Korean battery makers that used to focus solely on nickel-based batteries (NCM/NCA) are responding by announcing LFP capacity plans due to come on stream.

We have identified 58 companies in the global battery value chain as key beneficiaries of this LFP market share shift. We also leverage CS HOLT® to highlight key players that yield an attractive CFROI®.

@Horace Tse