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The global lithium iron phosphate battery market size was USD 8.37 billion in 2020. The market is projected to grow from USD 10.12 billion in 2021 to USD 49.96 billion by 2028 at a CAGR of 25.6% during the forecast period 2021-2028. The global impact of COVID-19 has been unprecedented and staggering, with LifePO4 batteries witnessing a negative demand across all the regions. Based on our analysis, the market exhibited a lower growth of about 6.2% in 2020 than average year-on-year growth during 2017-2019. The rise in CAGR is attributable to this market demand and growth, returning to pre-pandemic levels once the pandemic is over.
Lithium iron phosphate (LFP) battery is a lithium-ion rechargeable battery capable of charging and discharging at high speed compared to other types of batteries. LFP battery packs provide power density, high voltage, high energy density, long life cycle, low discharge rate, less heating, and increased safety; therefore, various batteries are adopted by multiple applications. The growth is mainly attributed to the improved demand for LifePO4 batteries in passenger cars, buses, low-speed- electric vehicles, and hybrid electric vehicles due to their safety and low cost.
Impact of COVID-19 on Global Lithium Iron Phosphate Battery Market to Dent Production
The outbreak of COVID-19 has hampered the growth of LFP batteries. The growth of LFP batteries is declining due to the pandemic, which has restricted the supply of batteries and other critical components due to severe disruptions in business and the global economy. The key components of batteries are mainly available in the Asia Pacific, especially in China. The country has suffered through massive lockdown owing to the pandemic, impacting the battery manufacturers in Europe and North America.
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Rising Trend of Electric Vehicles and Hybrid-Electric Vehicles Owing to Increasing Fuel Prices will Propel the Adoption of LFP Battery
The demand for Electric Vehicles (EV) and Hybrid Electric Vehicles (HEV) is increasing due to the rise in fuel prices and incentives rolled out by government bodies. The governments across various countries are encouraging the usage of e-mobility to cut down the dependency on crude oil and reduce vehicle pollutions. In 2020, Tesla Inc., an American electric vehicles company, announced that they would be using LifePO4 batteries, moving away from their traditional Nickel-based batteries.
Growing Renewable Energy Projects to Support Growth of LFP Batteries
The rising awareness towards maintaining a clean environment has propelled the growth of renewable energy projects, such as photovoltaic installation, on-grid solar power backup systems, and nuclear power plants; wind energy projects are driving the growth of LifePO4 batteries. In addition, the growing usage of energy storage devices is supporting the expansion of LFP batteries.
Increased Adoption of Batteries in Power Grid and Energy Storage Systems to Play a Critical Role
Implementing strict government regulation to regulate rising pollution levels encourages the industries to use LFP batteries. Worldwide the power industry is working towards producing renewable energy and storing it for the future. Low cost, low-self discharge rate, and minimal installation space are critical factors driving the adoption of LFP batteries in grids and energy storage devices. Since these batteries are more resistant to high temperatures, they are ideal for use in remote areas and thermal control applications.
Falling Prices of Lithium-Ion Batteries Have Catalyzed Adoption in Various Sector
The primary factor restraining the adoption of lithium-ion batteries since 1990 was their prices. Lithium-ion batteries contain many components, and the main element of any lithium iron phosphate battery is its cell, which accounts for 50% of its cost. However, recent developments by lithium-ion manufacturing companies have helped in declining prices of batteries, which will further reduce in the future. The reduction in costs of components and the adoption of advanced technologies to increase battery capacity are key factors that boost the growth and adoption of lithium-ion batteries.
Growing Demand for Other Batteries Is Hindering the Market Growth
The increasing demand for other batteries, such as lead-acid batteries, sodium- nickel chloride, flow batteries, and lithium-air batteries in consumer electronics, electric vehicles, and energy storage systems is expected to hinder the growth of LFP batteries. In addition, the introduction of new energy devices, such as flywheel batteries, is also restraining the market growth.
Portable Batteries Set To Lead Market with Rising Demand from Automotive Sector
Based on type, the LFP battery market is bifurcated into portable and stationary batteries. The portable batteries segment will dominate the market share in 2020 due to the growing adoption of these batteries in the automotive sector. LifePO4 batteries are widely adopted by the automotive industry in the manufacturing of electric or hybrid electric vehicles. However, the stationary segment will also observe significant growth due to renewable energy storage projects.
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Growing Demand for Electric Vehicles in Automotive Industry Will Propel the Adoption of LFP Batteries
By application, the market is segmented into automotive, industrial, energy storage systems, consumer electronics, and others. The automotive sector dominated the global LFP battery market. The growing awareness about the benefits of battery-operated vehicles & rising prices of petrol and diesel, specifically in the Asia Pacific, North America, and Europe, has attracted consumers to these electric or hybrid vehicles. In addition, the government bodies are also enforcing the usage of electric or hybrid cars to reduce the dependency on importing crude oil. The growing demand for energy storage devices also promotes the usage of lithium iron phosphate batteries due to their properties, such as less heating and low discharge rate.
Asia Pacific Lithium Iron Phosphate Battery Market Size, 2020 (USD Billion)
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Geographically, this market is studied across five key regions, including Europe, North America, Asia Pacific, the Middle East & Africa, and Latin America. As per our findings, Asia Pacific will dominate the global market share during the forecast timeframe. China and Japan are considered the world's largest markets of electric vehicles. LFP batteries are widely adopted in the automotive sector owing to their advanced features. They are cheap and provide the highest safety in all LFP battery categories. In addition, the LifePO4 battery also offers other benefits, such as a longer life span, no maintenance, lightweight, improved discharge, and charge efficiency; subsequently, the Asia Pacific region is considered a key market for LifePo4 batteries. In addition, the growing demand for smartphones, laptops, and other electronic devices in China, India, Japan, and Singapore is expected to boost the market for LFP batteries in the region.
North America witnessed considerable lithium iron phosphate battery market share in the global LFP battery market, with the U.S. leading the region's market. The increasing sales of electronics vehicles and energy storage devices will contribute to the demand for LFP batteries.
The increasing focus of the government bodies towards greenhouse gas emissions in the European region has supported the lithium iron phosphate battery market growth. Several countries in the area, such as Germany, France, and others, have set their target of zero-emission of CO2 by 2050, helping boost the usage of lithium-ion batteries in the region. The European Commission and the Batteries European Partnership Associations launched a public-private partnership to inspire research into innovative battery technology in Europe.
The Middle East & Africa is likely to witness significant growth as many countries are observing massive construction activities, and cities are developing at a larger scale. This will lead to the necessity of industrial and construction tools that use LFP batteries. Key nations in the regions which are actively operating include South Africa and Gulf Cooperation Council (GCC) countries.
The market players in the market such as BYD Company, A123 System, Contemporary Amperex Technology Co. Ltd (CATL), and RELion Batteries are consistently enhancing their batteries to provide a competitive product in the market. The rising trends of LFP batteries in electric vehicles and consumer electronic devices have made the competitors focus on research and development of these batteries to occupy a larger market share.
An Infographic Representation of Lithium-Ion (Li-Ion) Phosphate Batteries Market
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The report offers qualitative and quantitative insights on the lithium iron phosphate batteries market and a detailed analysis of market size & growth rate for all possible segments in the market.
Along with this, the report provides an elaborative analysis of market dynamics, emerging trends, and competitive landscape. Key insights offered in the report are advancement in technology for LFP batteries by individual segments, recent industry developments such as partnerships, mergers & acquisitions, consolidated SWOT analysis of key players, Porter’s five forces analysis, business strategies of leading market players, macro and micro-economic indicators, and key industry trends.
Value (USD Billion)
By Type, By Application, and By Region
As per the Fortune Business Insights study, the global market was USD 8.37 billion in 2020.
The global market is projected to grow at a CAGR of 25.6% in the forecast period.
The market size of the Asia-Pacific was valued at USD 4.05 billion in 2020 and will witness a similar growth trajectory during the forecast period.
Various industries, such as consumer electronics, automotive, energy storage systems, industrial, and energy storage systems are among the major end-users.
The global market is anticipated to reach USD 49.96 billion by 2028.
Based on type, the portable battery segment holds the highest share in the market across the globe.
The top players in the industry are BYD Company, LG Chem, CATL, Toshiba Corporation, Hitachi, and Samsung SDI.
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