Northbrook, IL 60062 -- (SBWIRE) -- 03/17/2023 -- According to a new market research report, the global lithium iron phosphate batteries market is projected to reach USD 24.6 billion by 2027 from an estimated market size of USD 13.0 billion in 2022, at a CAGR of 13.7% during the forecast period. The factors driving the growth for lithium iron phosphate batteries market is the rise in demand for lithium iron phosphates from the automotive industry, especially the EV application.

The leading players in the global lithium iron phosphate batteries market include BYD Company Ltd. (China), Contemporary Amperex Technology Co., Limited. (China), K2 Energy (US), A123 Systems (US) And Lithium Werks Inc. (China).

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The lithium iron phosphate batteries market , by design, is segmented into cells and battery packs. The battery packs segment is expected to be the largest segment for the lithium iron phosphate batteries market , by design, during the forecast period. The high adoption rate of these type of batteries can be attributed to the increasing demand from EV manufacturers.

Opportunities: Investments concerning LFP batteries by key global players

There has been a tremendous increase in the R&D initiatives undertaken by battery manufacturers for developing LFP batteries and enhancing their cell production capabilities. For instance, on the leading global LFP manufacturers Contemporary Amperex Technology Co. Limited (CATL), in 2021, is equipped with a cell production capacity of ~200 GWh and have planned to increase the capacity to over ~500 Gwh by 2025. Similarly, key global players of the LFP market are also witnessed to increase their R&D spendings and investment in enhancing the portfolio. Further, owing to the increase in the application of LFP batteries, market participants are also witnessed to expand and invest in the development of facilities to accommodate the potential growth in demand. For instance, American Battery Factory (ABF), a SME based out of the US, set up a network of LFP battery gigafactories across the U.S. Investments, capacity additions and various strategic expansion employed by these market players provide lucrative growth opportunity for the LFP battery market.

Challenges: Technological drawbacks of LFP batteries

Lithium iron phosphate batteries have low energy density as compared with the other lithium-ion batteries. In the current scenario, a key consideration is that batteries used in EVs should be small in size and light in weight. Therefore, batteries that have energy density much higher than 300 Wh/kg and 800 Wh/L are used. The particles in the electrode powder should be made smaller; this helps it to pack more densely. This would increase the electrolytes per volume by producing a large contact surface, thereby improving the charging rate of cell and its energy density. But it also results in more unwanted reactions as a result of larger contact surface and creation of more ions that degrade battery material and also shorten its lifetime. The solution to this is coating all particles with an ultrathin buffer layer. But again, the challenge lies in making these layers both highly conductive and chemically inert.

The lithium iron phosphate batteries market , by capacity, is segmented into 0–16,250 mAh, 16,251–50,000 mAh, 50,001–100,000 mAh and 100,001–540,000 mAh. The 100,001–540,000 mAh segment is expected to hold the largest size of the market for lithium iron phosphate batteries market . The high demand from the automotive industry and the rising demand from the power industry for energy storage systems is expected to reinforce the growth of the segment.
The lithium iron phosphate batteries market , by voltage, is segmented, into low (below 12V), medium (12V–36V) and high (above 36V). The high (above 36V) segment is expected to hold the largest size of the market for lithium iron phosphate during the forecast period. The higher market share of the high (above 36V) segment can be attributed to its superior operational efficiency.

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Asia Pacific is expected to dominate the global lithium iron phosphate battery market

The Asia Pacific region is estimated to be the largest market for the lithium iron phosphate batteries market, followed by Europe. The Asia Pacific region is also projected to be the fastest-growing market during the forecast period. The growth of the Asia Pacific market for lithium iron phosphate battery is primarily driven by the development of automotive and power industries in economies such as China, Japan, India and South Korea.

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