Analysis of the Impact of CATL's Locking of 8.73 Million Tons of Lithium Iron Phosphate (LFP) Capacity on the Industry Competitive Landscape

Based on the latest data and information I have collected, I am now writing a systematic and comprehensive analysis report for you.

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Recently, Contemporary Amperex Technology Co., Limited (CATL, 300750.SZ) has locked in a large scale of LFP cathode material capacity through a series of long-term supply agreements, with a total order volume exceeding

and an estimated total agreement value exceeding [1][2].

Supplier	Agreement Term	Order Volume	Estimated Amount	Cooperation Model
Rongbai Technology	2026-2031	3.05 million tons	Over RMB 120 billion	Exclusive LFP supply agreement
Fulin Seiko	2026-2028	3.0 million tons	Over RMB 60 billion	“Capital + Market” dual-binding
Wanrun New Energy	2025-2030	1.3231 million tons	Over RMB 46 billion	80% minimum purchase commitment
Longpan Technology	2025-2031	0.86 million tons	Over RMB 13 billion	Domestic and overseas capacity layout
Hunan Yuneng	Continuous cooperation	~500,000 tons/year	Strategic cooperation	Equity binding (holding nearly 10% of shares)

Based on the industry’s general consumption rate of

, the annual supply scale locked in by CATL can support an annual battery output of approximately . This scale is close to the national total lithium battery output in 2024 (1.17TWh)[1]. In the first three quarters of 2025, CATL’s shipments were approximately 450GWh, with full-year shipments expected to reach nearly 650GWh. This means that the capacity it has locked in far exceeds its current demand, reflecting far-reaching strategic layout considerations[0][3].

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The dominant position of lithium iron phosphate (LFP) batteries in the domestic power battery market is unshakable. According to data from the China Automotive Power Battery Industry Innovation Alliance, from January to November 2025:

• Cumulative Loading Volume of LFP Batteries
  : 625.3GWh, accounting for
  81.2%
  , with a year-on-year increase of 52.9%
• Cumulative Loading Volume of Ternary Lithium Batteries
  : 144.1GWh, accounting for
  18.7%
  , with a year-on-year increase of only 3.7%

This data indicates that the market share of LFP has increased significantly from approximately 60% in 2023 to over

in 2025, showing an accelerated expansion trend[4][5].

In the past, LFP batteries were regarded as low-end products only suitable for models with short driving ranges. With the launch of new-generation iron phosphate batteries such as CATL’s “Shenxing Battery”, LFP batteries have achieved

capability and while maintaining cost advantages, successfully entering the market for models priced between RMB 200,000 and 300,000, gradually eroding the core territory originally belonging to ternary lithium batteries[1].

Energy storage projects are cost-sensitive and require batteries to have a cycle life of over 10,000 times, and the characteristics of LFP perfectly meet this demand. In the first three quarters of 2025, CATL’s energy storage battery shipments were approximately 90GWh, with a year-on-year increase of over 40%, a growth rate significantly higher than that of power batteries[1].

The cathode material of LFP batteries does not contain precious metals such as cobalt and nickel, so the raw material cost is lower and the price fluctuation is smaller. Against the backdrop of geopolitical complexity, supply chain self-reliance has become a core consideration[6].

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CATL’s move is by no means an isolated act, but rather a microcosm of the resource competition among leading battery enterprises. Enterprises such as BYD, EVE Energy, Sunwoda, and Chuna New Energy have also successively tried to bind leading material suppliers in the LFP track by building joint factories or signing long-term agreements[2].

• Reached a 2025-2028 LFP material procurement and development cooperation agreement with Fengyuan Co., Ltd.
• Signed an 80,000-ton/year LFP commissioned processing agreement with a subsidiary of Xingfa Group
• Grasp the initiative of LFP supply through full-industry-chain vertical integration

• EVE Energy
  : Signed a 152,000-ton supply agreement with Longpan Technology (2026-2030)
• Sunwoda
  : Signed a 106,800-ton supply agreement with Longpan Technology (2026-2030)
• Chuna New Energy
  : Signed a 1.3 million-ton supply agreement with Longpan Technology (2025-2030), with an order value exceeding RMB 45 billion

CATL has built an LFP supply network covering multiple technical routes and regions through the “capital + market” dual-binding model[1].

Supplier	Technical Characteristics	Degree of Binding with CATL	Market Position
Hunan Yuneng	Solid-phase process, strong cost control	Third largest shareholder, holding nearly 10% of shares	Industry leader (annual capacity over 1 million tons)
Dynanonic	Liquid-phase process, cycle life advantage	Joint factory construction (Sichuan 80,000-ton project)	Core supplier in the energy storage field
Wanrun New Energy	High tap density products	1.32 million-ton long-term agreement + 80% purchase commitment	Leading in high-end products
Fulin Seiko	Ferrous oxalate process, high tap density	Largest order of 3 million tons	Core supplier for Shenxing Battery
Rongbai Technology	Transformation from ternary material leader	Dual-route cooperation for sodium-ion and LFP batteries	New entrant, rapid capacity expansion

It is worth noting that

, a traditional ternary material leader (ranking first in the global ternary material market share), had no mature LFP production lines before, and its receipt of a 3.05 million-ton large order has attracted regulatory attention. The Shanghai Stock Exchange has issued a letter of inquiry regarding its performance capability[7][8].

CATL’s large-scale locking of leading suppliers’ capacity will have a significant impact on second- and third-tier battery enterprises:

• The capacity of leading suppliers is locked in by long-term agreements, increasing the difficulty for second- and third-tier enterprises to obtain high-quality raw materials
• Under the expectation of price increases, second- and third-tier enterprises with weak bargaining power will face higher procurement costs

• The price of LFP raw materials rose from less than RMB 40,000/ton in November 2025 to
  over RMB 50,000/ton
  in January 2026
• During the same period, lithium carbonate prices rebounded from a low of approximately RMB 60,000/ton to
  over RMB 140,000/ton
  [6][9]

The industry’s “Matthew Effect” will become more prominent. According to a BOC Securities research report, due to supply tightness, processing fees and profitability of high tap density LFP products are significantly better than ordinary products, and the technological, cost, and customer advantages of leading enterprises will accelerate industry differentiation[6].

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After two years of price decline cycle, LFP prices showed a significant rebound at the end of 2025[1][6]:

Time Node	LFP Price	Industry Cost Line	Profit Status
June 2025	~RMB 36,000/ton	~RMB 40,000/ton	Generally loss-making
November 2025	~RMB 40,000/ton	~RMB 40,000/ton	On the brink of loss
January 2026	>RMB 50,000/ton	~RMB 40,000/ton	Profitability restored

According to data from the China Chemical and Physical Power Sources Industry Association, the average market price of LFP in November 2025 was

, while the industry cost ranged from , and over 80% of enterprises were in a loss-making state[9].

In late December 2025, four leading LFP enterprises—Hunan Yuneng, Dynanonic, Wanrun New Energy, and Anda Technology—successively announced maintenance and production reduction plans, with maintenance concentrated in January 2026 for a one-month period[9].

• Hunan Yuneng
  : Expected production reduction of 15,000-35,000 tons (up to 35% of capacity)
• Wanrun New Energy
  : Expected production reduction of 5,000-20,000 tons (up to 50% of capacity)
• Dynanonic
  : Technical transformation and maintenance carried out simultaneously

The four enterprises together account for approximately

of the LFP industry’s market share. This joint production reduction and price support action has achieved significant results, pushing LFP prices to successfully break through the RMB 50,000/ton mark[9].

Lithium carbonate, as the core raw material for LFP (accounting for over 40% of costs), has a strong correlation in price trends[6]:

• June 2025
  : Battery-grade lithium carbonate prices fell below RMB 60,000/ton
• November 2025
  : Broke through the RMB 100,000/ton mark
• January 8, 2026
  : Rose to
  RMB 140,300/ton

CATL’s Jianxiawo Mine in Yichun, Jiangxi (the largest lithium mica mine in China, with an annual lithium carbonate output of approximately 42,000 tons) suspended production in August 2025, further exacerbating expectations of supply tightness[6].

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According to the latest data, CATL’s dominant position in the power battery field continues to strengthen[0][5]:

Indicator	2024	2025	Year-on-Year Change
Loading Volume	219.6 GWh	333.57 GWh	+51.9%
Market Share	45.09%	43.42%	-1.67 percentage points
LFP Proportion	Approximately 62%	Approximately 75%	+13 percentage points

Although its market share declined slightly by 1.67 percentage points, its loading volume achieved a high growth rate of 51.9%, reflecting the rapid expansion of the overall industry scale. CATL’s absolute leading position remains stable.

• Lock in long-term procurement prices at the bottom of the cycle to hedge against raw material price increase risks
• The current LFP price is approximately RMB 52,000/ton, and long-term agreement prices usually have a certain discount

• Ensure raw material supply for the explosive growth of the energy storage business (energy storage shipments are expected to exceed 120GWh in 2025)
• Address supply chain uncertainties (such as overseas trade barriers, resource country policy risks)

• Jointly promote the iterative mass production of high tap density LFP products with suppliers
• Fulin Seiko’s ferrous oxalate process and Rongbai Technology’s new generation process are key areas of technical cooperation

• Longpan Technology’s capacity layout in overseas bases such as Indonesia meets the raw material origin compliance requirements of the US and EU
• Provide stable localized supply support for overseas factory construction

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Indicator	2025	2026E	Year-on-Year Change
LFP Material Shipments	3.9 million tons	6 million tons	+54%
LFP Power Battery Loading Volume	625 GWh	800+ GWh	+28%
Energy Storage Lithium Battery Shipments	580 GWh	700+ GWh	+21%

GGII (Gao Gong Industry Research) Energy Storage Research Institute predicts that China’s energy storage lithium battery shipments will reach 580GWh in 2025, with a growth rate of over 75%. The National Development and Reform Commission’s “Special Action Plan for Large-Scale Construction of New Energy Storage (2025-2027)” proposes that the country’s new installed capacity of new energy storage will exceed 100 million kW from 2025 to 2027, further supporting demand growth[6].

• High tap density (>2.6g/cm³) products will become the focus of competition. In 2025, the shipment proportion of fourth-generation high tap density products of leading enterprises has exceeded 30%, and it is expected to increase to 50% in 2026
• The premium capability of fast-charging and long-cycle-life products is enhanced

• Leading battery enterprises will further penetrate into upstream raw material links
• Equity participation, joint ventures, and mergers and acquisitions will become common methods

• Overseas LFP power battery market starts to take off (Europe, North America)
• Raw material origin compliance requirements spawn a race for overseas capacity layout

• Rongbai Technology’s chairman predicts that the ratio of LFP batteries to sodium-ion batteries may be 4:6 in 2035
• CATL will large-scale apply sodium-ion batteries in four fields: battery swapping, passenger vehicles, commercial vehicles, and energy storage in 2026[10]

• Leading Raw Material Suppliers
  : Manufacturers bound to leading battery enterprises such as Hunan Yuneng, Dynanonic, and Wanrun New Energy will receive stable orders and cash flow
• CATL
  : Lock in costs, ensure supply, and consolidate leading position

• Second- and Third-Tier Battery Enterprises
  : Increased difficulty in obtaining high-quality raw materials, rising procurement costs
• Small and Medium-Sized LFP Suppliers
  : Market share further squeezed

• Overcapacity Risk
  : Continuous capacity expansion in the industry may lead to oversupply (warned by Rongbai Technology)
• Price War Risk
  : Whether the industry’s “anti-involution” actions can continue remains to be seen
• Performance Risk
  : Uncertainty remains whether new entrants such as Rongbai Technology can deliver on schedule
• Technology Substitution Risk
  : The development of new technology routes such as sodium-ion batteries and solid-state batteries may change the competitive landscape

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CATL’s large-scale locking of LFP capacity is a strategic measure to respond to profound changes in the industry competitive landscape. In the short term, this move has clear value in

, , and . In the medium and long term, this action will accelerate the evolution of the industry competitive landscape:

1. Increased Concentration of Leading Enterprises
   : CATL and BYD together account for 65% of the market share, and their leading position is unshakable
2. Intensified Supplier Differentiation
   : Raw material suppliers bound to leading battery enterprises will gain significant competitive advantages
3. Pressure on Second- and Third-Tier Enterprises
   : Increased difficulty in obtaining raw materials, rising costs, and narrowed survival space
4. Accelerated Technological Innovation
   : Products such as high tap density and fast-charging types become the focus of competition

The current LFP industry is gradually emerging from the dilemma of “increasing volume without increasing profits”, and price increases have brought a long-awaited breathing space for the industry. However, under the influence of multiple factors such as overcapacity expectations, technology substitution risks, and intensified international competition, industry participants still need to maintain strategic resolve and seek a balance between capacity expansion and technological iteration. For investors,

deserve focused attention.

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[1] Caijing Magazine - CATL Increases LFP Procurement, “CATL Chain” Enterprises Sign Huge Orders (http://yuanchuang.caijing.com.cn/2026/0114/5136621.shtml)

[2] Sina Finance - 6 Million Tons! Over RMB 240 Billion LFP Orders Locked In (https://finance.sina.com.cn/stock/relnews/cn/2026-01-16/doc-inhhnuut2536382.shtml)

[3] Shanghai Nonferrous Metals Network - RMB 120 Billion! CATL Signs LFP Exclusive Supply Agreement with Rongbai Technology (https://news.smm.cn/news/103718107)

[4] Sohu Auto - Domestic Power Battery Loading Volume Reached 93.5GWh in November, LFP Accounts for 80% of the Market (https://www.sohu.com/a/968516694_122189)

[5] Eastmoney - Annual Power Battery List Released: Market Share of First-Tier Battery Factories Eroded (https://finance.eastmoney.com/a/202601203624876985.html)

[6] China Economic Net - Behind the LFP Price Hike: Anti-Involution Game in the Lithium Battery Industry (http://auto.ce.cn/auto/gundong/202512/t20251222_2658108.shtml)

[7] Caixin Global - Regulators Question Battery-Materials Supplier in $17 Billion CATL Deal (https://www.caixinglobal.com/2026-01-14/battery-materials-maker-draws-regulatory-scrutiny-over-17-billion-catl-deal-102403710.html)

[8] Caifuhao - Rongbai Technology Responds to Receiving RMB 120 Billion Order from CATL Without Mature LFP Production Lines (https://caifuhao.eastmoney.com/news/20260116172032722529510)

[9] Wall Street CN - “Half of the LFP Industry” Jointly Supports Prices (https://wallstreetcn.com/articles/3762204)

[10] 36Kr - Unveiling CATL’s 2026 New Game Plan: Sodium-Ion Batteries on the Left, Solid-State Batteries on the Right (https://eu.36kr.com/zh/p/3645721778524036)

[0] Jinling API Real-Time Market Data