Can't catch up with "Prince Ning", LG New Energy is anxious! | Electric power

The Door to the US market has been Opened by Contemporary Amperex Technology

Authors: Zhang Yi, Su Qin

Getting Restless

On February 14th, Contemporary Amperex Technology (CATL) announced that they had concluded an important partnership with Ford Motor Company, offering a Valentine’s Day gift to the whole world. According to reports, the two sides will build a lithium iron phosphate battery factory in Michigan, USA, with a $3.5 billion investment from Ford and technical authorization provided by CATL. This cooperation mode cleverly circumvents the restrictions placed on Chinese new energy enterprises by the US “Inflation Reduction Act” and breakthroughs the trade protection barriers, helping CATL open the door to the US market.

So how did CATL kick open the US market, which was previously dominated by Japanese and Korean batteries? Or, why does the US need CATL?

According to informed sources close to CATL interviewed by “First Financial Daily”, “Japanese and Korean companies that build factories in North America mainly follow the ternary lithium battery route while Ford will use lower-cost lithium iron phosphate batteries. Therefore, they chose Chinese power battery companies with advantages on the lithium iron phosphate technology route.”

As for why CATL is the Chinese power battery manufacturer of choice, Ford CEO Jim Farley explained that “there is no company of the same size as CATL that can be chosen. For Ford, CATL is the only choice. The iron phosphate battery, which will be produced by the new factory in collaboration with CATL, is 15% cheaper than the nickel-cobalt-manganese lithium battery (ternary lithium battery) used by Ford.”

Farley also said that “using lithium iron phosphate batteries is better for Ford and consumers.” Introduction of lithium iron phosphate battery technology will provide more choices for consumers and help Ford’s Model E business unit achieve a pre-tax profit margin goal of 8% after adjustments in 2026.

CATL’s successful entry into the US market has delighted some, but others are concerned about its implications. Recently, Korean media reported that LG Energy Solution is developing a new lithium iron phosphate soft pack battery with a “cobalt-free cathode,” which will be mass-produced in a few years, claiming that its energy density will be 20% higher than that of CATL’s lithium iron phosphate batteries supplied to Tesla.

LG Energy Solution’s release of core product information at such a crucial time is not hard to guess.## LG New Energy Used to Be the Top Leader of the Global Power Battery Industry, but Now Its Glory Has Faded Away as CATL Emerges in 2017

According to the data of global power battery installations from the past three years, CATL and LG New Energy have respectively ranked first and second, holding nearly half of the market share. CATL started from scratch in Fujian province and expanded its business globally with great momentum, while LG New Energy, despite being a strong player from a wealthy family and having clients such as Tesla, GM, and Volkswagen, has now become the second best in the presence of CATL. However, LG’s growth rate and market share have been declining year by year, while BYD has caught up and even surpassed LG in battery installations in 2022.

At the beginning of last year, when LG New Energy went public on the Korean Stock Exchange, its CEO Kwon Young-soo expressed his confidence in defeating its Chinese competitor, CATL, in the global electric vehicle battery market. However, a year has passed, and LG New Energy has not only failed to beat CATL, but also had to struggle to keep its second position. Their recent claim that their “cobalt-free cathode” has 20% higher energy density than that of CATL seems to be a weak response to CATL’s strong attack in the North American market.

Is LG’s claim genuine or just empty boasting? To emphasize the advanced technology of their phosphate-based lithium-ion battery, some Korean and Chinese media outlets focused on the “cobalt-free cathode” of LG’s battery, however, such a claim has many flaws.However, lithium iron phosphate batteries mainly rely on the redox reaction between lithium iron phosphate (LiFePO4) and iron phosphate (FePO4) during charge and discharge. The lithium iron phosphate battery itself does not contain cobalt “Co” and there is no process of “cobalt-containing to cobalt-free”.

Therefore, the so-called “cobalt-free cathode” is simply nonsense. It is purely a demonstration of a lack of professional ethics by some domestic and foreign media who ignore the facts and deliberately manipulate obscure technical terms to confuse non-industry professionals in order to praise LG’s new energy. Moreover, the claim that LG’s new energy has a 20% higher energy density than CATL is also ridiculous.

Soft-pack batteries usually use aluminum-plastic film packaging, while rectangular batteries often use steel or aluminum shell packaging. Under the same capacity, the weight of aluminum-plastic film is usually 40% lighter than steel shell and 20% lighter than aluminum shell. Under the same specification and size, soft-pack batteries have a higher capacity than steel shell batteries (10-15%) and aluminum shell batteries (5-10%).

LG’s new energy uses soft-pack battery design, and CATL currently supplies Tesla with rectangular battery design. LG’s new energy compares soft-pack batteries against CATL’s rectangular batteries, claiming a 20% higher energy density, which is far-fetched, lacks factual basis, and appears to be a hype for CATL’s flow.

In fact, although the aluminum-plastic film packaging improves the energy density of the individual cell of soft-pack batteries, it also sacrifices the structural strength. Therefore, it is usually necessary to install many brackets outside the battery cells to enhance their structural strength when assembling them in groups, which not only wastes precious space inside the battery pack, but also significantly lowers the grouping efficiency.

For this reason, the application of soft-pack batteries in the automotive market is not as widespread as that of rectangular batteries and is mostly used in 3C digital products such as mobile phones.

To truly compare the high and low energy densities, it is necessary to look at the energy density performance of the final battery pack. Only highlighting the high energy density of soft-pack batteries is oversimplification.In addition, it is a fallacy to compare the energy density of the future product, which is still several years away from mass production, with contemporary products produced by CATL.

Although LG Chem may resolve the issue of the throughput efficiency of the LiFePO4 soft pack battery system years from now, it is important not to overlook the capability that Chinese power battery manufacturers have accumulated over the years. Although they are at the forefront of LiFePO4 battery research and application, they are still tirelessly striving towards improving their efficiency.

Taking CATL as an example, the first Tesla vehicle equipped with CATL’s LiFePO4 battery appeared in 2020. By 2022, the system energy density of CATL’s mass-produced LiFePO4 models has been improved from 126Wh/kg to 157Wh/kg, a 25% increase. There are factors such as model differences and technological iteration that contribute to this improvement. LG Chem’s comparison with old standards may not even be able to catch up to CATL’s 25% self-surpassing, let alone surpassing them.

Overall, LG Chem is actively striving to catch up in technology, and so is CATL, which is continuously surpassing itself. Rushing to catch up with CATL is not useful; talk is cheap, it is better to work harder.

In terms of technology, LG Chem should do more and say less.

Exasperation of Partial Success

Why is LG Chem anxious in the face of CATL’s overseas expansion of LiFePO4 batteries? It all goes back to LG Chem’s persistent tendency to focus on “three-element lithium” and “light LiFePO4” batteries.

In 1947, LG Chem (the predecessor of LG Energy Solution) was established. In 1995, realizing the huge potential of the lithium battery market, LG Chem began research and development of lithium batteries. In 1997, LG Chem’s lithium battery trial production succeeded thanks to its own chemical expertise and the contact with Japanese lithium-related enterprises. It was officially mass-produced in 1999.

Like Japanese lithium battery manufacturers, LG Chem initially focused on 3C applications and then ventured into the field of new energy vehicles.

Material-wise, NCM is the core. The reason why they did not focus on LFP LiFePO4 is because LG Chem always had a “prejudice” against it.

LG New Energy stated during its Q4 2020 earnings conference call that, in addition to being cost-effective, lithium iron phosphate batteries have disadvantages in terms of product performance and weight:

The open-circuit voltage curve of lithium iron phosphate batteries is very flat, which means that it is difficult to measure the battery’s actual remaining energy through the vehicle’s battery management system, making it very difficult to measure the actual driving distance or possible range.

During the production process, lithium iron phosphate batteries are also very sensitive to the overall humidity standard and must have qualified facilities and proper operations to achieve the required humidity control for producing high-quality batteries.

Why does LG New Energy have a “bias” against lithium iron phosphate?

For any Chinese power battery company, this question is not difficult to answer: only problems that cannot be solved will be attributed to “so-called disadvantages.”

Taking CATL as an example, through years of supporting domestic and foreign automobile manufacturers with massive data and algorithm iterations, it has improved the accuracy of the BMS while innovatively introducing the “AB” battery technology to overcome the accuracy problem of estimating SOC for lithium iron phosphate batteries. Moreover, in order to produce high-quality lithium iron phosphate batteries, CATL has increased the product defect rate from ppm (parts per million) to ppb (parts per billion).

Although there is still a “bias” against lithium iron phosphate, LG New Energy had secretly decided to enter the field of lithium iron phosphate batteries. LG New Energy stated, “we will continue our R&D work to develop non-NCM chemical substances, including lithium iron phosphate batteries for electric vehicles.”

An important reason behind this change is that in 2020, lithium iron phosphate batteries became popular in the Chinese market and were the only power battery type with a year-on-year increase in sales. This change forced LG New Energy to re-examine the value of lithium iron phosphate batteries.

In September 2021, foreign media reported that LG New Energy had begun developing lithium iron phosphate batteries and that new products were expected to undergo trial production in 2022. It was reported that LG New Energy was already developing lithium iron phosphate batteries in its battery laboratory in Daegu, South Korea, and the new product would still use a soft pack form.

If the subtle changes in the Chinese power battery market in 2020 made LG New Energy consider developing lithium iron phosphate batteries, why is LG New Energy now in a hurry to disclose the progress of its lithium iron phosphate battery research and even release relevant core parameters ahead of schedule?It’s simple: keep the customers.

According to SNE Research, in 2022, LG Energy Solution’s installed capacity will decrease from 19.7% to 13.6%, with a volume of 70.4 GWh, and the gap with the number one player, CATL, is getting bigger.

One of the reasons for LG Energy Solution’s ups and downs in market share is that, in the domestic market, Tesla banished LG’s ternary lithium battery and chose CATL’s lithium iron phosphate battery as its main battery for its products. Of course, whether or not Tesla switches to LG Energy Solution’s batteries is not the main concern, as customer demand and market forces are the key drivers.

After Tesla, LG Energy Solution’s existing customers, Volkswagen and Ford, are also in urgent need of lithium iron phosphate batteries. However, LG Energy Solution does not yet have this type of battery.

In July of last year, LG Energy Solution announced plans to begin production of lithium iron phosphate batteries in its Chinese factory this year.

In response, Hao Hongmei, a lithium battery industry chain analyst at Longzhong Information, explained to the Securities Daily that “the penetration rate of lithium iron phosphate in the power battery industry is constantly increasing, and car companies such as Tesla are also shifting their focus to the lithium iron phosphate route. To improve market share and maintain existing customers, LG Energy Solution must further lay out lithium iron phosphate batteries.”

In LG Energy Solution’s disclosure of its research and development progress on lithium iron phosphate batteries, insiders also mentioned that “South Korea’s LG Energy Solution is developing lithium iron phosphate soft-pack batteries and may supply them to Tesla.”

But of course, LG Energy Solution’s decision to proactively disclose this core information may also be an indication to Ford, which is currently with CATL, that LG Energy Solution also has lithium iron phosphate batteries.

Is the reason why LG Energy Solution cannot win customers only because it does not have lithium iron phosphate batteries? Questions about the safety of LG Energy Solution’s ternary lithium battery may be another reason. It is reported that there have been several incidents of spontaneous combustion involving new energy vehicles that use LG Energy Solution’s ternary lithium batteries, such as the General Motors BOLT, as well as energy storage power stations, which has had a huge negative impact globally and has been detrimental to all parties involved.In the field of new energy vehicles. After investigating and providing evidence for a series of spontaneous combustion incidents of the BOLT, General Motors pointed out two defects in the ternary lithium batteries of LG New Energy (battery diaphragm folding and battery anode damage), disregarding the long-standing cooperation between the two sides. As a result, LG New Energy compensated General Motors with $1.9 billion.

In terms of energy storage. From August 2017 to November 2019, about 27 serious fires occurred in the Korean energy storage industry, and 17 of the accident devices were produced by LG New Energy’s ternary lithium batteries, according to media statistics.

This is in stark contrast to CATL, which has a record of nearly one million accident-free vehicles supplied to Tesla.

Faced with the extremely high frequency of energy storage incidents, LG New Energy’s solution is to replace ternary lithium batteries with lithium iron phosphate batteries.

In May 2022, LG New Energy showcased a new energy storage device equipped with lithium iron phosphate batteries at a German exhibition. LG New Energy also announced a plan to expand the shipment of lithium iron phosphate batteries from its Michigan battery plant from October 2023, and to consider using them in energy storage systems first.

The heartfelt voice of LG New Energy doing lithium iron phosphate may have been echoed by another Korean battery manufacturer that is also doing lithium iron phosphate. A month after LG New Energy was exposed to do lithium iron phosphate batteries, in October 2021, another Korean battery manufacturer, SKI, also announced the development of lithium iron phosphate batteries. SKI’s CEO revealed that 「although its energy density is lower than that of ternary batteries, its advantages in cost and thermal stability are obvious.」

LG New Energy is now embarrassed to the extreme being unable to handle ternary lithium batteries and not having lithium iron phosphate batteries. Who would have thought that LG New Energy’s biases against lithium iron phosphate batteries in the past would become their shortcomings today. Alas!

He who fights and runs away may live to fight another day

Of course, after all, as the self-proclaimed “millennium runner-up,” LG New Energy’s overall strength is still online, which must be admitted.

Especially in the international market, under the situation of anti-globalization, the Korean-American alliance is enough to allow LG New Energy to travel unimpeded, while CATL needs to be prepared to be targeted at any time. Now, CATL heads to the United States, while LG New Energy takes the opportunity to trip them up.

All in all, the competition between LG New Energy and CATL in recent years has only been a “minor scuffle,” but a real battle between them is sure to happen in the larger and more complex international market in the future.Eliminating uncertainties, CATL is currently leading by far, with a higher chance of winning. However, CATL cannot be complacent, after all, the market is still undergoing dramatic changes, and there are no eternal winners, only great products that last.

In the short term, liquid batteries are still the mainstream choice, and CATL’s dominant position is not easily shaken.

TrendForce has predicted that the cost-effectiveness advantage of lithium iron phosphate batteries is particularly significant, and in the next few years, it will become the mainstream of the terminal market. The ratio of lithium iron phosphate batteries to ternary lithium batteries in global installations will also shift to 6:4 by 2024.

In the long run, CATL, which has fully developed all battery technology routes, is not afraid of any sudden breakthrough in a specific battery.

In 2022, LG Energy revenue reached 25.59 trillion won, an increase of 43.4%, with a net profit of 779.8 billion won (approximately 6.347 billion U.S. dollars), a decrease of 16.1% from 2021. LG Energy attributed the cause to the interruption of the global supply chain. However, it is quite obvious that the deviation of product lines from the main market demand is the main reason for the decline of LG Energy’s market share and profit shrinkage.

Qi Haisheng, the president of Beijing TAE Technology Co., Ltd., said to Securities Daily, “The main reason why LG Energy lags behind CATL is still the lack of market sensitivity. CATL also has ternary lithium batteries, which used to be its main products. However, CATL’s development strategy of having multiple areas of focus is flexible and up-to-date. After all, the lithium battery industry is a dual-intensive industry of “technology + capital,” and product iteration and upgrades are fast. In this race, if one is not careful, they will fall behind.”

Objectively speaking, in battery technology research and development, whether it is in the field of materials (such as ternary lithium and lithium iron phosphate) or structure (such as CTP and CTC), China has already taken the lead in many aspects and has given birth to many leading power battery manufacturers including CATL. Therefore, some media outlets’ daily plaudits to foreign batteries in countries such as Japan and South Korea should now stop.

“This is a sign of the development of China’s industry to a new height, which means that China’s new energy vehicle technology and industry are already at the forefront of the world, and it has milestone significance. The ability to make money through patent licensing fully illustrates the excellence of CATL’s technology. The products and technology have undergone large-scale verification and have been highly recognized worldwide.” Ouyang Minggao, an academician of the Chinese Academy of Sciences.# Markdown示例






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This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email