According to industry sources, competition between CATL and BYD, China’s two biggest manufacturers of lithium iron phosphate (LFP) power batteries, has increased as the new energy vehicle market continues to grow. Recent Tesla orders also appear to have heightened their rivalry to a new level.
According to the resources, there were two key factors that contributed to the LFP battery market share increasing significantly in China in 2021, from 30% to 50% for ternary batteries, with sales staging a significant increase. One was that the cell-to-pack technology, which CATL and BYD both introduced in 2020, enabled LFP batteries to be optimized with a higher energy density and lighter weight at reduced production costs.
The other was that in the second half of 2020, Tesla took the initiative to use CATL’s LFP battery in its Model 3 EVs, prompting China EV providers to quickly follow suit.
The possibility that BYD would soon join the Tesla supply chain was first mentioned in late 2021, and the most recent reports from China’s media suggest that the company is prepared to provide LFP blade batteries for Model Y EVs made at Tesla’s gigafactory in Berlin, Germany.
Additionally, CATL is said to begin shipping its M3P batteries for the Tesla Model 3 and Model Y EVs in the fourth quarter of 2023. The new batteries, which have a 10% range increase over LFP ones, will be made available by the company at the beginning of the next year.
However, connected parties have not yet confirmed the reports.
BYD, another EV supplier, receives orders from Toyota and other well-known automakers in addition to using a large percentage of its battery output in its own cars. According to sources in the industry, this will set a new record for BYD battery sales along with potential orders from Tesla.
According to the sources, providing M3P batteries to Tesla can both assist CATL differentiate its products from those of BYD and encourage other EV manufacturers to do the same.
According to the sources, M3P batteries are based on the LMFP new material system (M standing for manganese), which has a greater energy density than LFP batteries and a lower price than ternary batteries.