QY Research Report: Annual Growth of 12.4%
Steady Demand from ESS and Mass-Market EVs
Improvements in Energy Density Through Nanotechnology and High-Density Materials
Korean Companies Such as LN Energy & Future, POSCO, and Lotte Compete in Mass Production
Lithium iron phosphate (LFP) cathode materials, which are increasingly being used in energy storage systems (ESS) and mass-market electric vehicles, are projected to grow at an annual rate of 12.4%. LFP cathode materials are overcoming their performance gap with ternary materials through nanotechnology and increased density. Following China, domestic materials companies are also actively entering mass production of LFP cathode materials.
On December 17, market research firm QY Research forecasted that the size of the LFP cathode materials market would grow from $15.77 billion (approximately 23.25 trillion KRW) in 2024 to $31.8 billion (approximately 46.8 trillion KRW) in 2031, representing an average annual growth rate of 12.4%.
LFP cathode materials refer to cathode materials that use lithium iron phosphate (LFP, LiFePO₄) as the active material. Compared to nickel and cobalt-based ternary cathode materials, LFP offers advantages such as thermal stability and a long cycle life. Although its energy density is lower, it does not use expensive rare metals, resulting in lower costs.
LFP cathode materials are typically produced using solid-state or hydrothermal synthesis methods. Technologies such as particle morphology control, doping, and carbon coating are employed to enhance conductivity and performance. LFP cathode materials have a stable olivine crystal structure, providing excellent structural stability during charging and discharging.
Due to these characteristics, batteries equipped with LFP cathode materials are increasingly preferred for stationary ESS, mass-market electric vehicles, and electric buses, leading to rising demand. In particular, Chinese companies are dominating the global market by significantly reducing production costs through large-scale manufacturing capabilities and supply chain integration. Outside of China, usage is also increasing due to the cost-effectiveness, long lifespan, and excellent thermal stability of LFP cathode materials.
QY Research identified several factors driving the global growth of LFP cathode materials in the lithium-ion battery market: automakers' efforts to reduce supply chain risks associated with cobalt and nickel; advancements in materials engineering such as nanosizing, surface modification, and lithium manganese iron phosphate (LMFP); the expansion of renewable energy and modernization of power grids; and the acceleration of local LFP production in regions such as North America and Europe.
In particular, the recent emergence of nano LFP cathode materials has led to improvements in electrochemical performance. Nano LFP refers to materials manufactured at the nanometer (nm) scale or designed with a nanostructure. Nano-sized particles offer increased surface area, shorter lithium-ion diffusion paths, and enhanced electrical conductivity. These features improve charging speed, power density, and cycle life.
LFP cathode materials are evolving into next-generation materials with significantly improved compaction density. Fourth-generation products (powder compaction density of 2.6-2.7g/cm³) have already been commercialized on a large scale, and fifth-generation products (powder compaction density of 2.70g/cm³ or higher) have also been introduced. These advancements are expected to increase battery energy density and enable faster charging speeds, allowing LFP cathode materials to compete with nickel cobalt manganese (NCM) cathode materials.
China's Dynanonic succeeded in developing fifth-generation high-performance LFP in September and has entered the pilot production stage. Hunan Yuneng has launched its fifth-generation high-voltage, high-capacity LFP cathode material (YN-13 series). This product has increased the voltage from 3.2V to 3.8V and achieved an energy density of 220Wh/kg, and it is already being mass-produced for use in semi-solid batteries.
As the LFP market is expected to continue growing, domestic companies are also actively developing LFP cathode materials. From 2026, domestic companies are expected to begin full-scale mass production of LFP cathode materials.
Lotte Energy Materials completed a pilot line for LFP cathode materials with an annual capacity of 1,000 tons at its second plant in Iksan, North Jeolla Province, in January. The company is currently developing third- and fourth-generation LFP cathode materials, aiming for mass production in 2026.
LN Energy & Future has started construction of an LFP cathode material plant in Daegu, with plans to establish an annual production system of 60,000 tons starting in the second half of 2026. The company has also finalized plans to build an LFP cathode material plant in Michigan, USA. The US plant is scheduled to begin construction in 2026 and start mass production in 2027.
POSCO Future M has decided to build a dedicated LFP cathode material plant in the Yeongilman 4 General Industrial Complex in Pohang through additional investment in C&P New Material Technology, a joint venture with China's CNGR. Construction is set to begin in 2026, with mass production scheduled to start in the second half of 2027. Separately, the company also plans to convert part of the NCM cathode material production line at its Pohang plant for LFP production, with supply beginning at the end of 2026.
EcoPro completed a cathode material plant in Debrecen, Hungary last month. Starting with high-nickel ternary cathode materials such as NCA and NCM from 2026, the company plans to expand its portfolio to include LFP cathode materials.
LG Chem is developing LFP cathode materials for use in electric vehicles and ESS. The company plans to commercialize the business after verifying new process technologies that allow the use of non-Chinese raw materials.
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